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

Dar es Salaam. Some Tanzanian farmers are now less concerned about meeting their financial obligations, including preparing for the future of children, thanks to a contract farming agreement with Tanzania Breweries Limited (TBL).

The brewer, which began direct contract farming four years ago, has so far engaged with 4,524 barley, sorghum and grape farmers in the Dodoma, Arusha and Manyara regions, the contribution of beer manufacturers to direct contract farming during the period amounting to 68 billion shillings. .

According to the TBL Smart Farming Report 2022, Mwamkosi Group in Arusha confirmed that 62% of farmers who participate in the arrangement worry less about the future of their children, as the challenge of school fees now belongs to the past.

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

“I get money to send my children to school and build my house,” says Mathew Musa, a barley farmer from Arusha, at the launch of the TBL Smart Agriculture 2022 report on Thursday.

Again, among barley and grape growers, this impact was seen more significantly, as their yield and price increase was also much more drastic compared to sorghum growers.

Sorghum farmer from the Manyara region, Abel Daniel says contract farming has transformed farmers’ lives.

“We were able to buy tractors to make farming easier,” Daniel reveals with a broad smile.

He goes on to say, “We are able to start other projects from this revenue.”

The fact that farmers can now realize their dreams was reported by 53% of all farmers.

However, among barley and grape growers, this satisfaction is even higher at 76% and 73% respectively.

Under the operating contract, the brewer helps its direct farmers to be skilled, connected and financially empowered to improve their productivity, profitability and efficient use of natural resources such as soil and water.

According to the report, just over three quarters (77%) of winemakers have been involved in some way in skills and capacity building.

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

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

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

Regarding access to finance, 85% of farmers would have been financially self-sufficient.

Of the grape and barley growers, 100% were reportedly connected to financial products and services.

“The penetration of banking services among winegrowers is high. However, most farmers primarily use their personal accounts to transact business,” reads part of the report.

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

Sorghum farmers, for their part, 74 percent of them would have benefited from direct financial empowerment.

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

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

“With contract farming, TBL has provided us with market guarantees,” says Mashite, adding that through TBL’s smart farming program, he has managed to send his children to school and build a house. Although farmers can access loans, almost half of them report that there is a delay in payment.

“This has a huge impact on the agricultural cycle,” reads part of the report.

For his part, TBL chief executive Jose Moran Ramirez said the smart farming initiative aims to reach 100% skilled, connected and financially empowered people.

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

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

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

“It is a huge gap, however, which offers the opportunity to organize our agricultural programs to attract gender into agriculture, especially viticulture which falls under horticultural agricultural practices,” he says. .

Ramirez also points to the power of partnerships to make his Smart program more successful.

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

“The focus of the climate-smart agriculture program aligns with the smart agriculture program and more strategic synergies could be explored to enable TBL to deliver directly to farmers through partnerships,” Ramirez points out.

“We are committed to the long-term success of our farmers, and therefore to continuously improving the methods we have to support them. The TBL boss also expressed the need for device funding to address the challenge of low adoption of smartphones by farmers.

With only 22% of farmers owning a smartphone, he warns, opportunities for increased digital connectivity are limited.

On the other hand, he recommends partnering 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, high-quality pesticides at 24% and fertilizers at 18% as a challenge to improving agricultural outcomes,” Ramirez said.

Deputy Agriculture Minister Anthony Mavunde praised TBL for its program, saying the government will continue to work with the company with the aim of empowering farmers.

“For us, agriculture is a business. The government is ready to partner with the private sector across the 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, which prevent all beneficial investments.

Contract farming is generally seen as an appropriate means of linking poor farmers to markets, improving household welfare and promoting the modernization of the agricultural sector.

Available evidence supports the idea that contract farming increases welfare.