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When contract farming goes awry for the producer

Saturday April 13 2019

Jean Munene in her banana grove in Kirinyaga County.

Jean Munene in her banana grove in Kirinyaga County. She has been a banana farmer for the past seven years. PHOTO | JOSEPH KANYI | NMG 

IRENE MUGO
By IRENE MUGO
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Jean Munene from Kanyekini ward in Kirinyaga County has been a banana farmer for the past seven years.

On her six-acre farm which hosts 2,000 plants, huge banana stems stand heavy with fruits.

The retired teacher grows four varieties of bananas namely the Fhia-17, Williams, Grand Nain and Plantain, with every hole holding a maximum of four plants.

Last year, Jean and 104 other banana farmers in Kirinyaga considered themselves lucky after an agro-processor, Twiga Foods, started buying their produce after signing a contract with the growers.

The agreement dictated that the company would be buying 40 tonnes of bananas per month at Sh21 per kilogramme.

The group was also to receive tips on growing the fruit and managing diseases and pests.

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In the past one year, Jean and other members of Ramiini Banana Growers, where she is the secretary, enjoyed good returns enabling several farmers to increase the acreage under bananas.

But things took a turn for the worse in January when the company scaled down its purchases, buying at most five tonnes.

Farmers are now stuck with overgrown bananas, some that are rotting on the farm while others are being fed to domestic animals.

“We feel shortchanged. We have nowhere to take our bananas because we have a contract with the buyer who is also buying from some non-contracted farmers at a lower price,” she notes.

Twiga Foods said that they have reduced the tonnage they collect from farmers as they are upgrading their cold storage facilities.

CROSS-BENEFIT ANALYSIS

“The low purchases have largely been driven by ongoing work to upgrade our cold storage facilities. This has constrained our capacity to store produce,” notes Cosmas Butunyi, a spokesperson of the company.

He says the company is working on prices at which they can buy produce on and off season since they fluctuate.

“We strive to ensure that we offer farmers better prices than the alternative markets,” he adds.

The firm is working with 1,700 farmers in Kirinyaga, who are part of a network of 14,000 spread in 20 counties.

Robert Thuo, the acting Agriculture executive in Nyeri County, says contract farming is binding. In case a buyer pulls away from the deal without meeting his side of the bargain, Thuo says he should pay the loss to farmers. Second, he says in contract farming, farmers should ensure they register their contract with a lawyer.

“Those people drafting the contract on behalf of the buyers must include the farmers’ input. Farmers need to register the contract with a legal office so that in case a buyer breaches it, the law can take its course. More so when the contract is legally binding it becomes easier for them to be compensated,” he says.

Thuo further adds that one should carry out a cost-benefit analysis to know if they are in a profitmaking venture or they are making losses.

“They should analyse the costs of production and the buyer’s price. I would also encourage farmers to conduct a market research to know if there is any other company that can buy their produce as well as gain market intelligence on how much the buyers are making and who they are,” he adds.

Farmers must also adhere to the specifics of the contract in terms of quality and ensure good husbandry such as not use chemicals while farming, he offers.

Thuo urges farmers to multi-contract for better gains. “Farmers must not sell their produce to one firm. Rather, they should explore more options and sell their produce to several companies, provided they break even.”