By Charles Dhewa
African countries are called less industrialized economies for genuine reasons. If the majority of people in a country depend on more than 80 agricultural commodities and less than 10 can be turned into processed products, such a country is obviously less industrialized. For instance, in Zimbabwe, only maize meal, flour, sugar, wheat flour, margarine, tomato sauce, baked beans, milk, and beer are some of the few processed products. It just shows agriculture and food cannot be considered an industry and commerce thing but a food systems domain under the ministry of agriculture especially during uncertain times characterized by pandemics like Coronavirus.
Besides the absence of processing and value addition technology in most African countries, the nature of most African foods makes industrial processing a non-starter. What processed products can an African country produce from okra, magaka eminzwa, beetroot, tsvubvu, nyii, nzimbe, nzungu nyoro, nyimo nyoro, madhumbe, sweet potato, mazhanje and many other diverse commodities that are part of seasonal African food systems? Such food has to be consumed or nutritionally used in a fresh and raw state.
Using mass markets to ensure food supply during uncertain times
During times of crisis like the current Coronavirus that has spread across the world like wildfire, securing food systems should take a granular view of local reality and recognize the fact that mass markets are still the backbone of African food supply chains and systems. To that end, countries that decide to declare a 21-day lockdown should carefully think about food supply and demand pathways during and after the lockdown.
While manufacturing has an important role, it is not yet the backbone of most African food systems. Relationships and trust are the bedrock of African mass markets and have an enormous influence on food availability as well as price setting. It is not just about forces of supply and demand but sometimes food travels through kinship-based relationships, among other avenues. That is why it is important that as part of understanding the supply chain, decision-makers become aware of different contractual arrangements through which food moves from farm to fork.
Contracts between mass markets and smallholder farmers
The following are major types of contracts in African mass markets like Mbare in Harare and others:
- The farmer just comes to the market after producing commodities using his/her own resources. Although the farmer relies on information from other farmers who visit the market, this is an ad hoc approach which, for some reason, is most popular and constitutes 40% of the trading systems.
- The farmer gets into a marketing contract with a trader who comes to collect commodities when ready at the farm and remit the farmer’s payment after selling the commodity. This is the second popular arrangement (20%)
- The farmer agrees with the trader who comes to pay for the commodities at the farm gate, guided by prevailing market prices. In most cases, the trader will have agreed with the farmer to ring-fence the commodity by paying a deposit (Hallo). This accounts for 10% of the entire contracts in the market.
- The farmer produces through sponsorship or partial-sponsorship from the trader in the form of inputs like seed, chemicals, and fertilizer (15%).
- The farmer produces commodities with guidance and knowledge from the trader in terms of shortage periods for particular commodities and other critical factors. When s/he brings commodities to the market, the farmer does not get into the market but gives commodities to the trader who pays the farmer promptly. The trader goes on to sell using his/her networks while the farmer goes back to do what s/he is good at and the relationship continues. This accounts for 15% of the contract arrangements and overlaps with others like
Major commodities produced under the above contractual arrangements include tomatoes, butternuts, cucumber, green beans, carrots, onions and, watermelons, especially from dry regions.
Large scale commercial scale contracts between farmers and mass markets
- The farmer produces using his/her own resources and traders come to fetch from the farm. Commodities that are traded under this marketing contract arrangement include potatoes, cabbage, tomatoes, green mealies, onion, butternut, cucumber, and sweet potatoes.
- The farmer produces and the trader secures the commodity with a bit of money to ring-fence against other buyers. The trader can put some inputs and get paid after selling.
- In addition to assisting the farmer to produce through market-driven guidance, the trader sponsors the farmer through inputs and pays for commodities at the farm gate. This arrangement builds strong relationships between the farmer and the trader.
- The farmer produces and gives commodities to the trader who has a market stall in the market. The trader pays the farmer as commodities are sold.
Both large scale commercial and smallholder contractual arrangements are not based on legal documents but trust and relationships built over time. Value chains built through these contracts support specialization. Each farmer ends up doing what s/he is good at in order to satisfy demand and orders. The market and related contractual arrangements create pathways for generating and sharing knowledge. This avoids cases where one farmer comes to the market with no idea of who to talk to and how prices are set as well as sources of knowledge. Unless policymakers understand some of these issues, it is easy to disrupt food systems in times of crisis like the COVID19 and expose the majority to malnutrition.