Zimbabwe’s sugar politics

In 2000, as land invasions occurred around Zimbabwe, there were many calls for the sugar estates to be taken over. Indeed, there were a number of occupations of ‘white’ outgrower farms on the lowveld estates. This coincided with major strikes, and the burning of large areas of cane. Yet high-level negotiations and political manoeuvring averted wholesale takeover. Despite the rhetoric, the strategic importance of the sugar industry to the national economy was recognised and the state and the sugar companies brokered compromises. The result was the subdivision of former settler outgrower areas in Hippo Valley and Mkwasine estates and their transfer to now around 800 land reform beneficiaries who had applied through the A2 scheme, designed for medium-scale enterprises and suited to those with capital and expertise. The sugar outgrower land reform represented nearly 16,000 ha, leaving about 30,000 ha as core estate land.

How have the new outgrowers fared? In a new open access paper published as part of the Journal of Southern African Studies special issue on the political economy of sugar in southern Africa (see last week’s blog for an overview), we explore this question with data over 12 years from Hippo Valley from 2002. Following land reform, company officials, government extension agents and others were sceptical that the new outgrowers would be able to supply sugar in amounts and at the quality required for Tongaat Hulett’s two mills at Triangle and Hippo Valley. They argued that the new outgrowers were given portions of land that were ‘unviable’, and that commercial sugar growing could only occur on irrigated plots of more than 35 ha. Further, they argued that the land reform beneficiaries did not have the skills for the highly technical and demanding process of sugar production. And finally they suggested that a politically-driven land reform process was inimical to economically successful production, and that the investors would flee, abandoning Zimbabwe for more stable contexts.

The new outgrowers: how have they fared?

In the years since, the sceptics have been proven wrong. Outgrowing on A2 resettlement plots is now a central part of the business, supplying 852,000 tonnes of cane in 2013 of a total throughput of 3.9 million tonnes. Yields are up too, with our sample of cane farmers producing 86 tonnes/hectare since 2009, higher than the estate average of 83 tonnes/hectare in 2014. Outgrowers must hand over 26 per cent of their crop to the mill, and pay additionally for irrigation water, transport and inputs. Many complain, but the company ‘rips us off’ and ‘cheats on price’, but sugar growers have little option, and are tied intimately into the company’s operation. Tongaat Hulett makes considerable profit from its Zimbabwe business ($30 million in 2014), and land reform farmers are central to this. As part of the rehabilitation of cane land, the company (via the Canelands Trust, and supported until recently by over 30 million euros in aid from the European Union as part of the sugar adaptation fund) subsidises the replacement of cane, and improvement of infrastructure.

In our Hippo Valley sample, the average plot size is 24.3 ha (with a range from 9.8 to 58.1 ha), with on average 20.9 ha under sugar. Only four farmers (of 38) have centre pivot irrigation equipment, although everyone has access to canal water. Farm labour compounds exist both in the new resettlements and on the estate, from where labour for the range of sugar production tasks is derived. The new outgrower farmers on land reform plots come from a mix of backgrounds, including teachers, extension workers, estate employees, as well as well-connected politicians and security service personnel. Not everyone is doing well, and some recent arrivals have taken time to establish, but across our sample the levels of production and management are good. Making a go of sugar production is however tough, as explained in one our ‘voices from the field’ videos. Organising inputs, hiring and managing labour, dealing with cash flow, and negotiating with the company is always a challenge. But despite the early scepticism, the new farmers are by and large doing well, investing and accumulating, as well as providing employment and providing sugar for the profitable company mills.

The land reform in the sugar outgrower areas was not a ‘land to the people’ redistributive move to combat landlessness and poverty. This was part of an accommodation of a middle-class demand for land, creating a very particular type of outgrower arrangement, quite different to other sugar outgrower relationships elsewhere in the region, as discussed in other papers in the Journal of Southern African Studies special issue. The A2 beneficiaries are certainly not universally powerful and well connected, but the sugar allocations were definitely not addressing the poor, disadvantaged masses. Nationally, the land reform had to accommodate multiple class interests, and one was the middle-class aspiration for land, particularly in the context of declining living standards, wages and job opportunities in the post-structural adjustment period.

 Zimbabwe’s sugar politics

Zimbabwe’s sugar politics since land reform – and indeed much earlier – involves a complex balance of competing forces. Large-scale international capital, seeing the opportunities for accumulation from the excellent climatic conditions and top-quality infrastructure and increasingly guaranteed supplies of irrigation water, has invested in the area over decades, despite the political and economic challenges. Tongaat Hulett sees Zimbabwe as central to its ability to make profit in the region, and so is prepared to weather the storms of economic and political crisis, and broker deals which are far from ideal.

Politically and economically, sugar is vital for Zimbabwe. Together with tobacco, these export commodities create a particular dependency politics, and are central to the imaginaries and processes of state-making. They are deeply implicated in both national and local politics. Today debates about indigenisation, restitution and resettlement colour these politics, and result in much rhetoric and frequent threats usually linked to the electoral cycle. But in essence the story is the same as it always has been; one about how the state makes deals with capital, and how farmers, and other local people, including workers, are incorporated, and on what terms.

It is such political-economic dynamics, rooted in often fragile, contingent elite alliances that have driven the transformation of the sugar industry, and with it the agrarian landscape in Zimbabwe since land reform. As has been the case since 1937, when Murray MacDougall first planted cane in the Lowveld, a contested political economy will continue to shape sugar, people and livelihoods over the next decades too. And the new land reform beneficiaries operating as sugar outgrowers will be central to the story.

This post was written by Ian Scoones and appeared on Zimbabweland

Southern African sugar: new trends and opportunities?

Sugar is becoming an increasingly important commodity across the region. New areas are being planted and mills are being commissioned in Malawi, Mozambique, Tanzania, Swaziland, Zambia and elsewhere. The implications of the changing sugar (and ethanol) economy were the subject of discussions at the inaugural meeting of the Southern African Sugar Research Network that was held at the Institute of Poverty, Land and Agrarian Studies at UWC in Cape Town last week, and we heard fascinating presentations from each of these countries, as well as from South Africa itself.

Most of the regional growth is being driven by the expansion of two South African companies – Illovo and Tongaat Hulett. A review of their turnover and profits shows that significant proportions are being made outside South Africa. For Illovo, a substantial proportion of their profits are generated in their still fairly limited operations in Malawi, while over 40% of Tongaat’s operating profit is derived from Zimbabwe, where revenue increased by 19% and profits by 11% last year. The influence of Southern Africa’s powerful BRICS country, South Africa, is through its corporate sector, and not the grand-sounding government statements full of regional cooperation and integration rhetoric offered at summits.

The region indeed is increasingly important for South African capital. In the agri-food sector, we have seen the expansion of retail, with Pick n Pay or Shoprite nearly ubiquitous, now it’s the turn of the big production players. The availability of land, cheap labour and benefits from state investments in infrastructure (often water supply and irrigation on now defunct state farms) has been important. The EU sugar regime also provides support to sugar industries outside South Africa under the sugar adaptation protocols that exists to support the switch of strategic national sugar industries to new market conditions in Europe. This comes in very handy for South African companies, and helps subsidise operations, and position marketing from a ‘low income country’ base.

Where does this leave the Zimbabwean sugar industry that has since the 1960s been the mainstay of the lowveld’s economy? Since then the industry has produced significant foreign exchange for the national exchequer not to mention employment, ethanol, various industrial products, and of course raw cane sugar which is consumed in large amounts in Zimbabwe. Tongaat Hulett dominates Zimbabwe’s sugar industry owning Triangle and being the majority holder of Hippo Valley. It produces sugar across over 40,000ha of irrigated land, has milling capacity of around 600,000 tonnes and employs around 25,000 people.

In addition, the company deals with the sugar produced by over 800 new outgrowers who were allocated land as part of Zimbabwe’s land reform after 2000. They farm around 15,000 ha, formerly estate and white owned outgrower land, with farm sizes averaging about 25ha. After a disastrous period during the collapse of the Zimbabwean economy, sugar production has increased again, with around 460,000 mt being produced last year. The rehabilitation of sugar land has been assisted by support from the European Union as well as significant investments by Tongaat Hulett and of course by farmers themselves.

Since 2002, we have tracked 38 outgrower sugar farmers in Hippo Valley in the southeast lowveld looking across the years at production levels, input applications, farm investment, labour hiring and so on. Plot sizes now average 24.3 ha, and all are irrigated. In our sample, the average output last year was 1690 mt, produced on 20.5 ha, representing a yield of 83.6 t/ha. This is a very respectable output and yield, and indeed better yielding than much nearby estate land.

As with the other sugar areas, these ‘new’ A2 farmers are relatively elite, mostly men, and come from a variety of backgrounds. In our sample around half were civil servants (47%), while about a third were former estate employees (34%). The rest included NGO workers (3%); politicians (3%), and business persons (8%). 10% were ‘war veterans’, all civil servants at the time of land allocation. Over half were qualified with ‘Master Farmer’ certificates, and their average age is now 53. Today 39% stay at the plot, while the rest commute. 29% remain employed elsewhere, but this has declined over time as more have committed to sugar farming. Many challenges have been faced over the past 12 years, but the farmers are optimistic about the future.

With outgrowers producing a significant proportion of the total output, is this model the likely future for the sugar areas of Zimbabwe? Outgrowing approaches are much touted across the region, but the arrangements differ widely, as we heard in the presentations at the Cape Town meeting. In some areas, local people are offered dividends on land that is farmed by the estate, with their involvement simply receiving a cheque. This approach, exported from some ‘land reform’ schemes in South Africa, is used by Illovo for example in Zambia. In other areas, farmers have very small plots and often receive less than they put in. This massively discourages outgrowers who are forced to grow food to survive in plots elsewhere, as we heard from Tanzania. There are huge variations in the terms of the contract between farmers and the mill. In Zimbabwe, the mill retains 26% of outgrowers’ output to cover costs of milling, transport and so on, while in other countries this proportion is much higher.

The expansion of South African capital through the region is having, it seems, diverse effects. While the ‘logic of capital’ is to seek profit and accumulate wherever it can, it results in different arrangements and different deals – with states, with labour and with outgrower farmers. In some countries this deal seems highly detrimental to local livelihoods and employment conditions, simply resulting in extraction and exploitation. While in others, and this includes Zimbabwe, the deal is more balanced. Tongaat Hulett knows they are on notice in Zimbabwe, given the political pressure for land reform and now ‘indigenisation’. But equally the Zimbabwean state cannot afford to let the sugar estates fail. There are too many people employed, too much valuable infrastructure and too much tax revenue to lose.

Since the estates were first established by Murray MacDougall in the late 1930s, there has been a close interaction between private capital and the state. Sometimes coming in to bail out, sometimes letting the private sector have free reign, the relationship has always been carefully managed, and has always been intensely political. This is true today as it was before. The unspoken deal to spare most of the estates from mass land redistribution has been maintained, and while the estates were initially sceptical at the expansion of the outgrower model with smaller plots that they said were ‘unviable’, they have changed their tune of late. As the success of the outgrowers has grown, the rhetoric has shifted to one of ‘empowerment’ and ‘partnership’, and indeed the company has backed its words with substantial funds for cane rehabilitation.

For the longer term, my guess is that there will be shifts towards more land being released from the estates to new outgrower areas as part of deals with the Zimbabwean state, who will be in need of more high value land for redistribution in the future. Indeed the pressure is already on, with Shangaan leaders from the area demanding that they get a share of the sugar bonanza, while political elites and others have inserted themselves in the outgrower areas; shifting aside others particular around the 2008 election period, including most of the white outgrowers who were originally allocated smaller subdivisions of their farms. Today, the political rhetoric around the sugar estates, as ever, remains high.

For the estate owners, if outgrowers can deliver when given the right support, why not release more land? While outgrowing is often presented as a ‘win-win’ ‘inclusive’ business model for large scale farming, from another perspective it is a perfect solution for the estate and big capital. Trapped in a monopoly controlled supply arrangement, outgrowers take on all the production risks, and have to manage always troublesome labour; and anyway the profits in sugar, many observe, are to be made in milling and processing, not in farming. This is no doubt the logic for the diverse outgrower arrangements being pushed across the region by South African capital. And in Zimbabwe the same, if under rather different political terms, likely applies. Currently, it suits everyone: the company, the state and elite land reform farmers who make reasonable returns. For now at least, it looks like this carefully balanced political-economic deal is the only option for Zimbabwe’s sugar sector.

This post was written by Ian Scoones and originally appeared on Zimbabweland