Wednesday, May 22, 2024

Agricultural marketing board entices farmers with contracts

In a bid to encourage production of more grains in the country, the Botswana Agricultural Marketing Board (BAMB) has come up with a raft of initiatives that will make farming a lucrative undertaking, while also helping producers that are sponsored by government financial institutions.

Under the leadership of the Chief Executive Officer, Masego Mphathi, the marketing board has come up with contract farming for producers and price stabilisation moves that will prop up farming.

Mphathi told Sunday Standard at a press conference that contract farming is deliberately made for local farmers because ‘one day’ they want to see the country producing everything it needs.

“We want to promote local production. This (contract farming) is limited to local farmers because we want to see one day producing everything that we need,” explained the former NAMPAAD chief.

Under contract farming scheme, the marketing board identifies a particular crop that is in demand in the market and contracts farmers to produce it at an agreed prices and quantities prior to planting.

A minimum of 200 bags is required for a farmer to enter into a contract with BAMB.

Mphathi revealed that in the 2008/09 ploughing season, contracts worth 18, 874 metric tonnes of sorghum, millet and a variety of cowpeas and beans were sealed with farmers in Pandamatenga and some in the southern part of the country.

To this date under this arrangement, the marketing board has received over 16, 000 metric tonnes of sorghum, about 1100 metric tonnes maize and a little over 300 metric tonnes of cowpeas.

“To illustrate the advantage of contract farming to participating farmers, during 2008/09 ploughing season BAMB contracted farmers to produce sorghum at P1900/metric tones,” explained Mphathi, adding that since the beginning of the 2008/09 harvesting season, prices started dropping due to an increased supply both locally and internationally.

However, he said BAMB still maintained the contract prices of P1900, while the prevailing import parity was P1650.

The marketing board sets producer prices on a monthly basis rather than the South African Futures Exchange (SAFEX), which sets the prices daily.

When market conditions permit, and local produce is of a higher quality than imports, the board is able to set buying prices above the market.

Under this arrangement, the risk is passed from the farmer to the board because BAMB moderates price fluctuations.

“This is meant to entice farmers to deliver. On our side, we are taking risk. When we sell, we are probably going to sell the product at a lower price.”

“We are capable of reading the market. That is why we are able to advise farmers to plough,” Mphathi told Sunday Standard.

“The mitigating factor (to risk) is the ability to read the market, but things can go wrong. We have taken these decisions,” he said, adding that BAMB has been given P9 million by government to set the Price Stabilisation Fund, which in itself is not enough.

BAMB recently signed a Memorandum of Understanding with the National Development Bank (NDB) and moving to Citizen Entrepreneurial Development Agency (CEDA) that sponsors farmers and Young Farmers Fund.


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