The Herald (Zimbabwe) | 22 September 2009
By Golden Sibanda
THE 2009 World Investment Report was launched in Harare last week with calls for Zimbabwe to put in place institutional frameworks that support foreign investment in agricultural contract farming.
It emerged that developing countries such as Malawi, Mozambique, Tanzania, Brazil and the Lao Peoples Democratic Republic had done well in increasing agriculture-related foreign direct investment and enhanced their domestic food security.
The 2009 World Investment Report, under the theme, "Transnational Corporations, Agricultural Production and Development" was launched at the Food and Agriculture Organisation sub-regional office for Southern Africa by the Zimbabwe Investments Authority acting chief executive Mrs Elina Karwi.
The report is published by the United Nations Conference on Trade and Develop-ment and focuses on matters related to foreign direct investment and Trans National Corporations.
Mrs Karwi said the most basic requirement towards facilitating agriculture-related FDI was making land for agriculture available.
Against this background Zimbabwe could take a cue from Malawi, which did not necessarily sell the land to TNCs to promote investment in contract farming, but provided the land on long leases in addition to a supportive legal and policy framework.
Contract farming in Zimbabwe has not blossomed as a result of problems caused by side marketing of crops by farmers seeking better prices. This has however been in breach of contracts.
Farmers blamed farming contractors of offering unfair prices for the contracted crops, which forced them to side market.
It was in this regard that the country needed to put in place a pricing policy that ensures uniformity of prices on the market and other critical support structures.
"Government needs to come up with policies that ensure fair prices to prevent side marketing.
"Agriculture is one sector that can contribute towards meeting millennium development goals through poverty alleviation.
"We need to acknowledge that we are not doing as much as we can. It is up to us to go and present to the outside world that we need investment in agriculture. We need to come up with a policy framework to be able to go out and say can we now have investment in contract farming," said Mrs Karwi.
Currently, there are a few local companies that sponsor farmers in contract farming, but apart from the problem of side marketing, contract farming in the country is not coordinated.
Farmers are also interested in certain crops they believe would make money for them as opposed to the suitability of climate to a particular crop.
The World Investment Report noted that TNCs were rarely and not the only agents driving commercialisation and modernisation in agriculture but played an important role in many countries.
"FDI can help fill the investment gap in agriculture in developing countries, as well as that in technology and other resources," the report noted.
The report also noted that contract farming had benefits that included provision of inputs, skills transfer to a very large number of farmers, ease financial and technological constraints facing farmers and enhanced access to global markets.
TNC participation in agriculture touched on four dimensions of food security namely agricultural production, productivity, development and modernisation of the economy and the enhanced the development of the agribusiness domestic value chain.
The report stressed the need for countries to develop internationally agreed core principles for large-scale land acquisitions by foreign investors for agricultural production.
It also encouraged FDIs by reducing import tariff barriers, non-tariff barriers and agricultural subsidies in the developed countries among other measures.
TNC participation in contract farming accounts for 75 percent of Brazil’s poultry production and 35 percent of soya bean output while in Vietnam contract farming accounts for 50 percent of cotton, 50 percent of tea and 40 percent of rice production.
In Kenya the scheme accounts for 60 percent of the country’s total tea output.
