Surface partners CBZ on contract soyabean farming

Published: 12 March 2014

Cooking oil manufacturer Surface Investments has devised a new mechanism for funding contract farming that prevents side marketing, an official said on Tuesday.

Surface chairman Narottam Somani told New Ziana that under the new mechanism, the company channelled loans to farmers through a bank.

"As far as soya beans are concerned we have certain arrangements done on contract farming indirectly," he said.

"The problem that we face on doing things directly is that soya bean is a freely marketable crop. There is no guarantee that once a crop is harvested it will come back to you," he said.

Somani said under the new arrangement farmers would be funded through the CBZ.

"We have tied up for the coming season with CBZ bank where they will fund the farmers. We give the money to the bank, the bank gives us a guarantee for the money so our money is secured. Then the bank goes to the farmers, it gives them the money and assures them that this crop will be taken by Surface.

"This is the channel by which the funding will flow otherwise if the company keeps on distributing the money we will lose money."

Another cooking oil manufacturer Olivine Industries is reported to have lost about $3 million after farmers that it financed to produce soya beans sold the crop to other buyers.

Due to the decline in soya bean and cotton production over the years, coupled with competition from cheap imports, cooking oil manufacturers have been failing to optimize their operations.

Production of the crop has been low from a peak of 170 000 tonnes in 2001 to as little as 37 000 tonnes in 2010.

Zimbabwe has a crushing capacity of about 450 000 tonnes per annum.

- New Ziana

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