Breaches of farming contracts worry Govt
GOVERNMENT has expressed concern over rising breaches in farming contracts as such violations were impeding the badly needed investments into the agriculture sector. It warned corrective measures will soon be taken against the offenders. Several corporates have been investing in the agriculture sector through contract farming models as most local farmers lack capacity to borrow from the banks due to lack of security.
Tobacco is one of the sectors that have benefited most from the contract schemes were more than 85 000 small scale farmers are being financed by the tobacco merchants.
While farmers have largely been blamed for breaches, known as side marketing, the contractors have also been found wanting as they also chased the crop financed by others.
Lands, Agriculture and Rural Resettlement Deputy Minister Davison Marapira told The Herald Business that contractual breaching were scaring away potential investors.
“We have always told our farmers that contract farming is the way to go as funding in agriculture continues to be a problem,” Marapira said.
“To deal with the funding glitches we want our farmers to be in the joint ventures and Public private Partnerships.
“Surprisingly some of our farmers who are being helped by these programmes now have a habit of profiteering and double crossing contractors for their benefit.
“This is not good for our agriculture investment as most of the contractors are threatening to pull out their contracts due to an increase in contractual breaching.
He said local banks and other financial institutions have not been lending farmers due to lack of security.
“We as Government is warning against such bad practices as it is affecting investment in the agriculture sector due to cancellation of many lucrative contracts.”
“We will take stern steps in protecting this type of funding. Anyone who is found on the wrong side of breaching will be under scrutiny and in some cases some will lose their offer letters.”