In Sugar Cane Land

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Individual outgrowers cannot sign contracts with the company. The CSA spells out the division of proceeds, and it requires the company to pay the outgrower for the sugarcane delivered to the company on the 15th day of the following month. Based on these adjustments, outgrowers are paid less if the sucrose level of their cane is too low; and all growers are paid based on final sales.

This man grew 100 tonnes sugarcane in one acre of land, made lakhs in profit

Payment is done on the ratio of 57 percent to 43 percent of the profits for outgrowers and the company, respectively. The outgrowers can participate in the sugarcane production business with as little as one acre of land.


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Since each farmer has full control of his or her land, he or she is still free to lease out such land or turn it to the production of other crops such as rice or maize — all suitable in the area, although their production is now affected by birds nesting in sugarcane fields. At the moment, KSCL is the largest miller in Tanzania; it runs two irrigated estates with a total 8, hectares and two factories.

Sugarcane land use and water resources assessment in the expansion area in Brazil - ScienceDirect

It buys sugarcane from over 8, registered outgrowers who own individual sugarcane farms amounting to 11, hectares. Currently, outgrowers supply 43 percent of the total sugarcane processed by the company annually.

This partnership is not without challenges. The inadequately planned and executed expansion of sugarcane production in the area is now causing problems for the outgrowers and the company. Recently, farmers have also registered complaints around the measurements of their sugarcane weights and sucrose levels by the company.

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Yet, as the sugarcane business becomes more lucrative, elites are buying out land from small farmers, and outgrowers have turned most of their farmland into sugarcane fields, increasing land scarcity for food crops in the area. This can negatively affect families, as their children are either left alone or with only one parent. Problems are aggravated by increased importation of cheap foreign sugar.


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Although, the importation of foreign sugar is necessary to fill the gap left by local producers, levy-free or subsidized sugar imports are far cheaper than locally produced sugar. To address these challenges, required immediate actions include improved transparency and accountability within the sugar board of Tanzania to avoid excessive importation of sugar. Also, efforts should be made to ensure KSCL has the capacity to process all produced sugarcane each season.

Otherwise, markets for other crops, such as rice, should be improved in the area to give farmers an opportunity to turn the extra sugarcane farms to rice producing fields. These new initiatives need to ensure that the positive aspects of the hybrid model -- such as few barriers to enter the sugar business, and the clear and respected division of business proceeds between the agribusiness and outgrowers -- are emulated. Important takeaways from this model include attention to the structure of resource ownership between the miller and outgrowers, institutional arrangements, and the contract flexibility which allows both partners to negotiate sugarcane prices whenever there is a need to do so.

Assuming the outgrower associations have access to adequate market information, this helps every partner in the business to maximize benefits and minimize business related risks.


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However, it is also critical to note that compared to the company, local farmers remain weak partners and effort is needed to ensure they have the knowledge and capacity to be able to negotiate reasonable terms with the company. The model suggests that for agricultural investments to work, an investor does not necessarily need large plots of land of up to 50, hectares as suggested in SAGCOT plans, but rather a moderate amount of land which could also encourage an investor to look for extra outputs from neighboring farmers as has happened with KSCL.

Payment is done on the ratio of 57 percent to 43 percent of the profits for outgrowers and the company, respectively. The outgrowers can participate in the sugarcane production business with as little as one acre of land. Since each farmer has full control of his or her land, he or she is still free to lease out such land or turn it to the production of other crops such as rice or maize — all suitable in the area, although their production is now affected by birds nesting in sugarcane fields.

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At the moment, KSCL is the largest miller in Tanzania; it runs two irrigated estates with a total 8, hectares and two factories. It buys sugarcane from over 8, registered outgrowers who own individual sugarcane farms amounting to 11, hectares. Currently, outgrowers supply 43 percent of the total sugarcane processed by the company annually.

This partnership is not without challenges. The inadequately planned and executed expansion of sugarcane production in the area is now causing problems for the outgrowers and the company.

Installing subsurface drip irrigation for Sugar cane

Recently, farmers have also registered complaints around the measurements of their sugarcane weights and sucrose levels by the company. Yet, as the sugarcane business becomes more lucrative, elites are buying out land from small farmers, and outgrowers have turned most of their farmland into sugarcane fields, increasing land scarcity for food crops in the area.

This can negatively affect families, as their children are either left alone or with only one parent. Problems are aggravated by increased importation of cheap foreign sugar.

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Although, the importation of foreign sugar is necessary to fill the gap left by local producers, levy-free or subsidized sugar imports are far cheaper than locally produced sugar. To address these challenges, required immediate actions include improved transparency and accountability within the sugar board of Tanzania to avoid excessive importation of sugar.

Also, efforts should be made to ensure KSCL has the capacity to process all produced sugarcane each season. Otherwise, markets for other crops, such as rice, should be improved in the area to give farmers an opportunity to turn the extra sugarcane farms to rice producing fields. These new initiatives need to ensure that the positive aspects of the hybrid model -- such as few barriers to enter the sugar business, and the clear and respected division of business proceeds between the agribusiness and outgrowers -- are emulated.

Important takeaways from this model include attention to the structure of resource ownership between the miller and outgrowers, institutional arrangements, and the contract flexibility which allows both partners to negotiate sugarcane prices whenever there is a need to do so. Assuming the outgrower associations have access to adequate market information, this helps every partner in the business to maximize benefits and minimize business related risks.

However, it is also critical to note that compared to the company, local farmers remain weak partners and effort is needed to ensure they have the knowledge and capacity to be able to negotiate reasonable terms with the company. The model suggests that for agricultural investments to work, an investor does not necessarily need large plots of land of up to 50, hectares as suggested in SAGCOT plans, but rather a moderate amount of land which could also encourage an investor to look for extra outputs from neighboring farmers as has happened with KSCL. In fact, all operating sugar mills in Tanzania have plantations of less than 10, hectares.

In addition, during the implementation of SAGCOT and BRN, proper land use planning must be done to ensure that the land allocated to nucleus and outgrower farms for cash crops includes food producing zones. In this way, the issues of food insecurity and farmers commuting from one location to the other in search of food producing land will be addressed.