Why TBL’s contract farming is a game changer for farmers

Some farmers in Tanzania now worry less about meeting their financial obligation including preparing children’s future, this is thanks to contract farming arrangement with the Tanzania Breweries Limited (TBL).

The brewer, which started direct contract farming four years ago, has so far engaged with 4,524 barley, sorghum and grape farmers from Dodoma, Arusha and Manyara regions, with the beer makers’ contribution to direct contract farming during the period, standing at Sh68 billion.

Going by the TBL Smart Agriculture Report 2022, Mwamkosi Group in Arusha confirmed that 62 percent of farmers who are part to the arrangement worry less about their children’s tomorrow because the school fees challenge is now a thing of the past.

The icing on the cake, 51 percent of farmers were able to build their own houses.

“I get money for schooling my children and building my house,” says Arusha barley farmer Mathew Musa during the launch of the TBL Smart Agriculture Report 2022 on Thursday.

Again, among barley and grape farmers that impact has been seen more significantly as also their yield and price increment has been much more drastic compared to sorghum farmers.

A sorghum farmer from Manyara Region, Abel Daniel says contract farming has transformed the lives of farmers.

“We have been able to buy tractors to facilitate farming,” reveals Daniel wearing a broad smile.

He goes on saying: “We are able to start other projects from this income.”

The fact that farmers can realise their dreams now has been reported by 53 percent of farmers overall.

However, among barley and grape farmers, that satisfaction is even higher at 76 percent and 73 percent respectively.

Under the farming contract, the beer maker supports its direct farmers to be skilled, connected and financially empowered for them to improve their productivity, profitability and efficient use of natural resources such as soil and water.

Slightly over three quarters (77 percent) of grape farmers have been involved in one way or the other in building skills and capacity, according to the report.

Farmers on the other hand, report an increase in access to information as they receive both training and direct messages.

For farmers to be digitally connected, the accessibility of mobile phones, smart phones and internet are eminent preconditions.

While access to mobile phones is nearly universal, with 92 percent of farmers owning a set, access to smart phones and internet remains minimal.

However, a significant difference can be found among sorghum farmers where only nine and four percent have access to smart phones and internet respectively.

On the aspect of access to finance, 85 percent of farmers were reported to have been financially empowered.

Among grape and barley farmers, 100 percent were reported to have been connected to financial products and services.

“Penetration of bank services among grape farmers is high. However, most farmers mainly use their personal accounts to do business transactions,” reads a part of the report.

A grape farmer from Dodoma Elizabeth Nelson says: “The bank lends us money because we have a TBL contract, without which we would not access a loan.”

Sorghum farmers for their part, 74 percent of them were reported to have been receiving direct financial empowerment.

But, according to the report, they have the lowest level of access to financial services from banks because the majority of them use mobile money accounts.

A sorghum farmer from Kongwa, Dodoma, Damaris Mashite says, for instance, farming direct contract completely has changed his life for the better.

“With contract farming, TBL has provided us with market guarantees,” says Mashite, adding that through the TBL Smart Agriculture Programme he has managed to school his children and build a house. Though farmers are able to gain access to loans, almost half of them report that there is a delayed payout.

“This has a tremendous impact on the farming cycle,” reads a part of the report.

For his part, TBL managing director Jose Moran Ramirez says the smart agriculture initiative has a goal to achieve 100 percent skilled, connected and financially empowered.

Crucially, he says, the report found that the Smart Agriculture Initiative has delivered beyond its impact matrix by increasing income, providing income security and opportunities for farm expansion and asset creation – all factors that contribute to the breaking of intergenerational poverty cycles.

He adds that the report also identifies areas of potential improvement to the program.

Specifically, he explains, the gaps identified that only 26 percent of farmers working with TBL are female.

“This is a huge gap, however, provides an opportunity to curate our farming programs to attract gender into farming, specifically grape farming which fall into the horticultural farming practices,” he recounts.

Ramirez also underscores the power of partnerships for its Smart Programme to become more successful.

He says during the research it was identified that various other agricultural projects are run in the TBL Smart Agriculture intervention areas and one of them is the Climate Smart Agriculture Program funded by the World Food Programme (WFP) and largely implemented by Farm Africa.

“The objective of the Climate Smart Agriculture Program does align with the Smart Agriculture Program and more strategic synergies could be explored to allow TBL to deliver directly to the farmers through partnerships,” highlights Ramirez.

“We are committed to the long-term success of our farmers, and therefore to continuously enhancing the methods we have of supporting them.” The TBL’s boss also expressed the need for device financing to address the challenge of low uptake of smartphones among farmers.

With only 22 percent of farmers being in possession of a smartphone, he cautions, the possibilities of increased digital connectedness are limited.

On the other hand, he recommends partnership with agro-dealers and suppliers to ensure high –quality delivery and increase bargaining power when it comes to pesticides and fertilizers.

“Farmers still report access to approved and high quality pesticides at 24 percent and fertilizers at 18 percent as a challenge towards improved farming outcomes,” said Mr Ramirez.

Agriculture deputy minister Anthony Mavunde commended TBL for its program, saying the government will continue collaborating with the company in an effort to empower farmers.

“To us agriculture is a business. The government is ready to partner with the private sector in the entire agricultural value chain so that we can take the agricultural sector to the next level.”

Achieving the United Nations’ Sustainable Development Goals remains a challenge in many developing countries, and practically in rural areas.

Smallholder farmers are often trapped in a vicious cycle of low-intensity farming, low yields, limited market access, and insufficient profits, all of which prevents beneficial investments.

Contract farming is commonly seen as a suitable means of linking poor farmers to markets, improving household welfare, and promoting the modernisation of the agricultural sector.

The available evidence supports the notion that contract farming increases welfare.