Market Linkages

Zimbabwe Agricultural Aggregation Model (ZAAM)

International experience has shown that the primary producers of horticultural crops face numerous problems in marketing their high value produce to the urban markets. Zimbabwe is not an exception. In the process, the farmers do not only lose profit margins on their output but also become victims of intermediaries who garner the major chuck of income from sale of high value horticultural crops. Essentially, the total loss of revenue to the poor farmers is not only enormous, but also rarely noticed as a decision situation by public agencies/ departments responsible for implementing government schemes for farmers’ welfare. Further, the problem is never tackled from a management perspective, taking into account the inefficiencies of agribusiness supply chains arising from losses to major stakeholders including consumers of farm produce.

Evidence has also shown that the markets for horticultural produce are dominated by traders and commission agents who appropriate about 75 percent of the total net margins accruing to the entire supply chain. The farmers get only 25 percent of the total net margins despite bearing a disproportionately high market risk and the entire production risk in the value chain (Tapasvi, 2009). This observation was confirmed by Zimbabwe Economic Policy Analysis and Research Unit (ZEPARU) and Knowledge Transfer Africa (KTA) (2015) study.

The problems of the farmers are complicated by several factors such as climatic events and weather conditions, low productivity of horticulture crops, and small land holding size. Apart from these, no other value-added operations are performed by the farmers on their crop output and they do not have awareness of international benchmarks for quality of crops and processed food. The lack of good quality infrastructure, ignorance about crop prices, and remote locations of whole-sale crop markets compel most farmers to sale their produce to the local traders in villages.

In order to help in addressing these challenges, Africa Economic Development Strategies (AEDS), in conjunction with the Zimbabwe Agricultural Society (ZAS), is working on the establishment of an aggregation model titled Zimbabwe Agricultural Aggregation Model (ZAAM) with a view of improving returns to the farmers. In line with World Bank (2016), FAO (2015) and Africa Development Bank (2015) recommendations, AEDS, working with the ecosystem around the farming community, will support farmers in aggregation or pooling of the produce; simple value addition like cleaning, sorting, drying and storing; and the complex value adding activities like biochemical transformation and retailing.

In this regard, AEDS will use the information communication technologies (ICT) platform to create virtual warehouses which will be used to show commodities available at each point in time (with farmers) and demand from buyers (retailers and manufacturers). On the basis of information available on the virtual warehouse, AEDS will coordinate the procurement of commodities and building critical mass through aggregation and work with an array of players in the ecosystem of agricultural sector/ value chain to deliver the product to the final market. This will be done under the market system development or making markets work for the poor.

In implementing the ZAAM, a number of aggregation models which have been successfully tested such as linking farmers to agro-processors, linking farmers to retailers, local procurement of international food aid, food for education programmes and local procurement, linking farmers to food-by-prescription programmes, contract farming and cooperatives, will be explored.