Tag Archives: ARDA

Can joint ventures revive large-scale commercial agriculture in Zimbabwe?

Ndodana Sibanda shows how the center pivot works to water the wheat in Arda Jotsholo recently. (picture by Nkosizile Ndlovu)

The Agricultural and Rural Development Authority (ARDA) has a substantial land holding across the country, including 21 estates of varying sizes, with a total of 98,000 ha of arable land, 19,000 ha of which is irrigable. In the last decade most of these fell into disrepair, with production plummeting. Financing of parastatal operations became increasingly challenging, as government issued bonds via the Agricultural Marketing Authority were no longer available. In the last few years, as part of a reform programme focused on parastatals, the government has encouraged ARDA to go into public-private partnerships with private companies in an attempt to revive their fortunes, seeking new finance and investment from the private sector. 40 companies bid for such partnerships in 2014, involving a mix of local and foreign capital.

Currently there are 12 estates with such joint ventures: Chisumbanje, Middle Sabi, Katiyo, Mkwasine, Sisi, Nandi, Faire Acres, Jotsholo, Antelope, Ngwezi, Sedgewik and Doreen’s Pride (see a profile of each here, including details on the production focus and contract length). Those that remain wholly managed by Government include; Balu, Sanyati, Muzarabani, Mushumbi Pools, Nijo, Katiyo Main Estate, Rusitu, Magudu and Kairezi.

The most (in)famous is the Chisumbanje estate, where tycoon Billy Rautenbach took over operations, and built a mill for processing sugar cane. Land disputes and controversies over ethanol pricing and markets have plagued the operation for some years. Others have established operations in the last few years, and have been widely hailed as seeing a dramatic turn-around in ARDA’s fortunes.

A variety of private enterprises have seen the availability of high quality land and good infrastucture (although much of it in urgent need of renewal) as a good business opportunity. Both local and international investment has flooded in.

We must ask though, whether this sort of large-scale, capitalised farming is the most appropriate use of this land, and whether these operations genuinely contribute to employment, food security and local economic development, as well as boosting government revenues.

The Trek Petroleum-ARDA partnership in Matobo

Trek Petroleum has invested in several estates, including the Antelope estate near Maphisa mentioned last week and Doreen’s Pride near Kadoma, where beef ranching with imported Namibian animals is underway. It also has contracts with the Cold Storage Company, and with ARDA Ngwezi, and works with Northern Farming on a contract with ARDA Mashonaland. For foreign investors, particularly from South Africa, the US dollar environment in Zimbabwe is very attractive.

Trek has imported state-of-the-art equipment, including several 350 HP Casey tractors which can pull 24 disc harrows each. Huge seed and fertiliser planters are drawn by these tractors, which are fitted with sensors that analyse soil fertility status and automatically adjust application rates. 12 centre pivots are in place and irrigate 520 hectares of winter wheat and summer maize. Hi-tech driers are in place to ensure timely harvesting of grain and drying to 12.5 % moisture. It has been a substantial investment that has resulted in massive boosts in production from the estate.

The level of mechanization has a downside too, as discussed with the estate manger during a visit earlier this year. For example, only 12 workers are employed to run the centre pivots. In the past, 250 workers were needed to irrigate the 230 hectares that were then cultivated. Equally, there is only one section manager compared to three in the past. There are now just 48 permanent workers in place of around 90 in the past, while now 162 temporary workers are required to detassle maize for a 7 day contract, compared to hundreds in the past for a season (although these figures are disputed by ARDA, who claim over 200 jobs have been created, although mostly in the land clearance and establishment phase).

With the revived irrigated area, ARDA Antelope has entered into seed multiplication contracts with Seed Co, Pannar and ICRISAT.   ARDA provides land, labour and electricity, as well as agronomists. Pannar’s contract is for 60 hectares with Pan 473 and G90 varieties bulk produced, while Seed Co has a 40 hectare stake producing SC 513 and SC 621. The balance of the 520 ha is planted with commercial maize in summer and wheat in winter sold to National Foods Company. Trek also has a joint venture with the Cold Storage Company, and currently feeds 700 cattle brought from Namibia, with a further 1300 to come. There has been a massive expansion of both area and intensity of production. There are plans for another 800 ha of irrigation, harnessing water from the Shashane dam, as well as expansion of grazing land. An investment in processing plants, including for livestock feed, is planned.

Land disputes

Despite investments in ‘social responsibility’ programmes, involving support for local educational institutions, the new arrangement has run into trouble, as the land area has been expanded, apparently without consultation and ‘free prior informed consent’.

For years the ARDA estate only operated on a small extent of its area, and villagers regarded the land as theirs. With many parallels with the disputes that arose in Chisumbanje, wrangles over land have emerged around the estate. In September, villagers organised protests in Maphisa, stopping traffic. Graffiti linking the estate investment to the notorious Gukurahundi massacres in Matabeleland were seen. A visit by VP Mnangagwa was abandoned, and villagers were arrested, although later freed. Villagers claimed their land was being taken and that they were not benefiting from the new scheme.

Protesting villagers’ views are in sharp contrast to the narratives of government officials. A queue of high-profile visitors have come to praise the operations, from the First Lady onwards. Recently, Deputy Minister of Agriculture, Paddy Zhanda, has congratulated ARDA for its operations in Maphisa. The resurrection of large-scale farming on state land, is central to the envisaged approach of ‘command agriculture’, where production priorities are set by the state. Joint ventures with ARDA supporting (mostly) A2 farmers with irrigation infrastructure, but under-production, have also been hailed as key to the future success of agriculture.

What role should parastatals play?

But we have to ask what roles should parastatals play in the revival of Zimbabwean agriculture? The PPP model is certainly attractive. New infrastructure and finance allows for the revival of moribund operations. With a ‘command agriculture’ perspective these revitalized farms could, ministers hope, provide just the sort of backbone to the agricultural economy needed. But as we have seen conflicts can arise, as people are removed from land that they thought was theirs. Highly capitalized operations may not provide the employment once offered. As the land reform has shown, with the right support small scale farmers can produce often produce significant quantities of maize and other crops, but at far lower costs, and generating more employment. Maybe it would make more sense to redistribute the land instead?

The parastatal assets of ARDA however should not be seen just as a cheap, underutilized source of land and water, either to be redistributed to the masses or to be handed over to well-connected corporates as part of partnerships benefiting elites. We should recall the role ARDA used to play in providing an important development coordination function. In the ‘roll back the state’ zeal of the 1990s, combined with the obvious corruption and poor management of many parastatals, we sometimes forget the importance of such organisations, notably ARDA, but also the CSC, in offering credit, markets and a brokering facility for smaller operators.

Unlike the new enclaves being created in a desperate attempt to raise revenues, the effective parastatal operations of the past were more integrated into the wider agricultural economy landscape. In thinking about the future, the alternatives need to be carefully balanced. Further land reform – particularly to A1 farmers – is certainly an option in some areas, as small farmers may be best able to make use of existing irrigation facilities. But in other cases new investment is clearly needed, but the obsession with large, command-oriented agriculture or divesting state assets to the private sector through PPPs must be tempered.

Lots of big, shiny centre pivots look impressive, but they may not be economic or generate employment. This was often the lesson of large-scale commercial agriculture before. Having large farms as part of a wider landscape of agriculture may be important for some crops and in some places, but making sure these operations are integrated not isolated enclaves, are employment generating not just mechanized, and have a coordination function to support wider development is essential.

This post was written by Ian Scoones and appeared on Zimbabweland

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How land reform is transforming a small town in southern Zimbabwe

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Maphisa in Matobo district in Matabeleland has transformed from its early days as a TILCOR (Tribal Trust Land Development Corporation) growth point linked to the nearby Antelope farm estate. Like Mvurwi and Chatsworth that I profiled in the earlier series on small towns and economic development, Maphisa is booming in the post land reform era.

An African town in an African area

Maphisa was established in the 1970s as part of the TILCOR attempt to create ‘African’ towns in ‘African areas’, aimed at maintaining the dual economy, and racial separation, while encouraging economic growth in ‘African’ areas. Mrs N, who was born nearby, explained:

“Maphisa was a forest. It was a grazing area for communal livestock. The place where Omadu Motel was located, was an aerodrome for the white farmers and those on the estate. In the 1970s, a white man called Fish was sent to address the local community about justification for building Maphisa township. He explained that Antelope dam and irrigation were going to create jobs and benefit communities who would in turn invest at the township and grow rich. The chiefs and local leadership present at the meeting agreed and Maphisa was established”.

One of the early black shopowners, Mr T, recalled the beginnings of the growth point:

“In 1973 I cut down trees and built my shop. It started operating in July 1975, as the authorities made it difficult for a black person to possess a liquor licence. In 1975 TILCOR drew a masterplan for Maphisa, started clearing land and built three shops and rented these out. Four other private shops including mine were operated by teachers”.

Post-independence these early growth points were incorporated into the wider spatial planning approach for mixed development. The TILCOR estate was taken over by ARDA, and for several decades Maphisa became intimately linked to the success of the nearby estate. ARDA created opportunities for outgrowers on 150 ha of the irrigation scheme, with plots averaging 1-2 hectares. ARDA also began to build infrastructure in Maphisa in the mid-1980s , including housing for workers and some general dealer shops. The government also established administrative offices for various government departments at the time, and built the Hlalanikuhle location with high density housing. The ARDA irrigation scheme was central to the economy of the town, as it employed up to 8000 people at the height of the 1990s cotton boom.

But through this period Maphisa remained an enclave, reliant on the ARDA estate, and surrounding by large-scale commercial farms, owned by whites (although with one black-owned farm belonging to Chief Ndiweni). These were huge ranches, supplying beef to CSC abbatoir in Bulawayo, and many with commercial gold mines on them. The impact of this largely white-owned farming-mining economy on Maphisa was limited. This all changed with land reform, with most farms taken over, and allocated to resettlement land. In this period too the fortunes of ARDA declined, with many laid off, and the estate production collapsing. The outgrowers (now numbering 132 families) have carried on making use of canal irrigation, but got little support from the estate.

With new people on the land, Maphisa changed from an estate-linked enclave town to one serving the wider area, with a whole range of new businesses established. The decline of ARDA though had a negative effect, as revenues from labourers working on the estate vanished. In 2015 a new investment partnership was agreed, with Trek Petroleum, a local company, taking over the estate operations, and investing substantially in 12 new mobile centre pivot irrigation systems and 350 HP tractors, growing maize over 520 ha (including seed maize contracts with various companies). As I will discuss next week, this highly mechanized operation has not created the level of employment of before, but it has nevertheless meant that new life has been injected into the economy.

New people, new enterprises

Our enterprise survey in Maphisa showed that the local economy has grown since 2000, despite challenges. There are now 6 supermarkets (when before 2000 there were none), 8 butcheries (from 4), 5 hardware stores (from 1), 10 bottle stories, some including ‘nightclubs’ (from 6), and more than 30 kombi operators. Plus today there are more welding shops, tailors, hair salons, service stations, car washes, internet cafes, photocopy/typing shops, and ecocash outlets.

There are now more people living in the town, and investing in property. The occupied high density stands have increased from 223 to 1118, while the medium density stands have increased from 121 to 498. Low density stands have not had such a take-up but overall the size of the town has increased significantly, and with this business activity.

Mr T, a local businessman and long-term resident in Maphisa, as well as A2 land reform beneficiary with 350 ha, explained the impacts of land reform on business:

“Land reform opened up more grazing land and opportunities for livestock marketing. I have 80 cattle, mostly Simenthal crosses. I hire private transporters who charge USD 40 per animal to Bulawayo, where I get around USD 800 per beast. I have just too many goats at the farm! Prices are good. I can get USD 50 per goat. The new cattle business is helping Maphisa to grow. For example, hides and skins are available for establishing a tannery industry. Also, there are plenty of mopane worms. Value addition and packaging could be done here”.

Mr N was also born in the area, and has owned shops in Maphisa over many years. He established a large supermarket in 2012 to complement his four other shops, his transport business (he owns ten 30 tonne trucks), his mining claims, and Mopane worm collection and sale business. He comments:

“The supermarket business is good – we are the leaders here at Maphisa. I employ 34 people. Yes liquidity is a challenge that forces prices down. ZESA high tariffs are a concern too but plans are on to change over to solar power. We sell products to civil servants, ARDA employees, irrigation outgrowers, miners, communal and resettlement farmers and in transit customers. Up to 200 customers cross our doors per day”.

Others have invested in shops more recently. Mr S for example comes from Gwanda, and worked in the civil service and then the diaspora for 20 years. His father had shops and he has invested in a bottle store/night club in Maphisa, which opened in 2014. Mr S commented:

“Proceeds from working in South Africa, the UK and the US helped me to build the business premises over a 5 year period. Some of the money was also raised from horticulture at the family’s 6 acre plot near Bulawayo city. I also did buying and selling cattle as an additional sideline to raise funds. We employ 4 workers in the restaurant and 2 in the bottle store. Business is up and down at the restaurants. We managed to keep ZESA bills down in the restaurant by using gas and firewood for cooking. Electricity is only for lighting and fridges. Beer sales go up when ARDA pays its workers but it is the miners contribute a lot towards beer sales”.

Others rent shops from the council or richer property owners. Comrade M explains:

“From 2009 I have been renting this shop where I operate a butchery and food outlet. I pay USD 350 per month rent. I buy cattle for USD 400 – USD 500 on the hoof after bargaining with the seller. I take the beasts to Maphisa Council slaughter facilities. I buy 2 – 3 beasts per week and sell meat to customers at USD 5 per kg. I prefer buying live cattle because after slaughter I gain from offal, heads and hooves. I used to sell hides to several buyers, who have since gone bust. The food outlet business is a strategy to increase turn-over of meat sales from the butchery. My wife supervises the business while I run around looking for slaughter stock. I also have a A1 villagised land reform farm, with 30 cattle. These support my business”.

Mrs N is a divorcee who stayed before in Gutu, but was born in the area. She has been building a house in the location, and renting a shop in Maphisa. She sells hardware now, having shifted from a grocery store, which was outcompeted by the new supermarket. She explains:

“I operate the shop on my own. We recently added an agro-vet section to the hardware. Our customers are local but we also sell hardware and livestock medicines to resettled farmers. To promote sales, we extend credit to those we know – based on trust. I used proceeds from the hardware to educate my children and to build my house. I also built another house at my parents’ home nearby”.

The growth of informal trading in Maphisa has been huge. The council rents out numerous stalls. Mrs N is a trader, and has been operating since 1986. Originally there were only 9 stalls, but now there are about 20. The traders sell vegetables. These were originally supplied by the ARDA estate, but now local farmers in the resettlements supply them.

“We use cellphones to communicate and they bring the produce here. I also order at the Bulawayo market. When business is booming I go for orders three times per week. I pay USD 10 bus fare to and fro, or get Kombis to go and bring our orders. Proceeds from the market have been critical in keeping the home going – purchasing food and groceries, paying school fees and council rates”.

Small-scale mining as a driver of economic growth

In addition to changes in the agricultural economy, it is also changes in the mining economy that have affected Maphisa in recent years. Before, mining was formal and relatively large-scale, with compounds built in farms, with little contact with the wider area. In the past the Falcon Gold company used to run many of the mines nearby.

Today this has changed dramatically, with many new mining operations in the area, established. Mr T, a bar owner commented: “There are now well over 100 black miners with licences here. Night life at the GP is alive due to gold miners”. Each small mine operation employs around 30 people in each mine, meaning there are substantial numbers working in the area, and purchasing goods and services in Maphisa.

Mining is not for everyone though. Mr S observes: “I would not like to go into mining – it is too much a game of chance. I know a guy who got 7kg of gold after mining for 6 months and he quit with his loot. Another guy has been mining for the last 6 years investing monies but reaping nothing substantial”.

From an enclave town, linked to an estate, created through colonial racial-based planning, Maphisa has transformed into a business hub linked to local economic activity in both agriculture and mining. The estate remains important, and especially since the injection of new investment from through the partnership with Trek Petroleum (see next week’s blog). But it has a more diversified base today, and like other small towns shows the opportunities, but also challenges, of small towns in a restructured economy.

This post was written by Ian Scoones and appeared on Zimbabweland

 

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