Joint ventures: A new approach to boost agricultural yields

Approximately 2 400 local landholders have formed joint ventures encompassing 218 000 hectares to attract investment, increase production, and maintain black farmer ownership under the land reform programme.

Of the approved joint ventures, 756 have been finalised, covering 2 400 hectares, while others are in various stages of completion, according to the Ministry of Lands, Agriculture, Fisheries, Water, and Rural Development.

An additional 20 600 hectares have been proposed for joint ventures under a revised regulation stipulating that all areas with irrigation infrastructure will be designated for JVs to enhance production.

The Government formalised the joint ventures to boost farming activity by attracting private capital, as local banks are reluctant to lend to farmers due to a lack of security.

While issuing 99-year leases has been advocated as a viable solution for agricultural funding, there were concerns that farmers might lose their land to lenders in case of default.

“Joint ventures will be promoted to encourage production without reversing the benefits of the land reform programme,” said the Ministry.

Low yields

Low farm yields have often been attributed to black farmers who benefited from the land reform programme. This perception stems from two factors: first, some farmers lacked experience in producing technically demanding crops that require significant capital investment and second, vast tracts of land have remained idle due to a lack of capital.

Although the Government has intervened with various support programmes for new farmers since the land reform programme began, the high rates of inputs abuse and defaults have raised concerns among potential private lenders.

“We observed significant defaults among individuals who failed to repay loans received from the Government or private institutions with Government guarantees. This created concerns among banks, particularly in the absence of adequate security,” said Tobias Musara, a Harare-based development economist.

In his recent remarks, CBZ Agri-Yield chief operating officer Mr Mhungu explained how the Government had to assume the huge debt after farmers failed to repay their loans. CBZ Agri-Yield, one of the country’s largest agricultural lenders, was established as a joint venture between the Government and CBZ Holdings to mitigate risks in the agricultural sector and ensure long-term food security.

“And we are all very well aware as to what has happened in the past with CBZ Agri-Yield funding, agriculture having high NPLs (Non-performing loans) under Government guarantee and government having to pay off that particular guarantee, which can lead to some macroeconomic instability due to the inflationary pressure and funding that is required.

“So we definitely tightened the book until we got what we call stable farmers, tightened our systems, ensured that we could get the confidence of not only Government funders or public funders but private funders in order to allow us to give you more money at a duration.”

Securitised permits

The Ministry also said that the process of converting A2 offer letters into securitised A2 permits is underway and should incentivise farmers to increase production. Additionally, Annual Production and Productivity Returns (APPRs) are now mandatory under Section 9 of SI 140 of 2023, as per the AMA Act [Chapter 18;24].

APPRs gather essential information about the agricultural production and productivity of individual farms. The data is used to assess the effectiveness of the land reform programme and identify areas for improvement.

The data collected through APPRs provides a solid foundation for policymakers to develop and implement targeted agricultural policies. These policies can address specific challenges faced by farmers, such as access to inputs, market linkages, and extension services.

APPRs are a key factor in determining the eligibility of farmers for 99-year leases. Farmers who consistently demonstrate productive and sustainable farming practices are more likely to be granted these long-term leases.

“There are various aspects of the land reform programme that require refinement to enhance production, and enhance productivity, including attending to the bankability, transferability and volarisation of 99 leases.

“In this regard, a comprehensive Land Policy is nearing completion, and will be presented to cabinet soon,” said the Ministry.

Initially, farmers received A2 offer letters and could apply for 99-year leases after five years of development and an assessment fee.

However, the Land Commission Act introduced a second level of verification, slowing down the process.

This resulted in fewer than 500 99-year leases being issued to 23 000 A2 farmers.

To streamline the process, the Government has implemented several changes. A2 offer letters are being replaced with securitised A2 permits, and farmers will automatically qualify for 99-year leases.

However, the new annual production and productivity return form is required as the basis for granting the securitised permits.-ebsinesswekl