Just when I think I have a grip on what Chinese people are doing in Zimbabwe something like this throws me for a loop:
Sino-Zim Development Company has registered 180 000 cotton farmers in Zimbabwe for contract growing and acquired 40 000 tonnes of fertilisers and 6 000 tonnes of seed ahead of the 2010/11 farming season.
The firm is targeting to contract over 300 000 cotton farmers* this farming season.
Sino-Zim operations manager Mr Tanga Matema said the organisation had mobilised enough inputs to cover 130 000 hectares of land so far.
“Our initial target was 200 000 hectares countrywide. Due to a few problems, we have managed 130 000 hectarage at the moment, but we still hope to reach our target. We have registered farmers from such districts as Chiredzi, Gokwe, Mt Darwin, Rushinga and Mhangura,” he said.
Mr Enderani said farmers would clear their debts at the end of the season after marketing their crops, but stressed that they would not victimise farmers for failing to meet their end of the bargain in the event of a bad season.
“In fact, we are flexible and will give a grace period in which we will try to work out a method of payment that will enable the farmer to survive and complete payments later.
“What we guarantee at the moment is that we will be offering good prices just like we did this past season so farmers contracted to us can bring their crop to us and we debit our dues leaving them with enough to go back and finance their operations. We do not export the cotton we buy, but intend to process it locally so we have no shipment costs, hence our capacity to pay good prices,” he said.
As I’ve mentioned elsewhere on this site, China is heavily, and somewhat bafflingly, involved in Zimbabwe’s agriculture industry. Chinese companies have received contracts for irrigation systems as early as 2003. China has also supplied a large amount of food aid, and has also been sending piles of machinery.
Though the system here seems to be somewhat deliberately opaque, as far as I can see they are transforming the small scale farming operations which Zimbabwean agriculture has turned into, into a sort of contract farming. Which would be a clever work around to the farm ownership laws – farmers could at least make use of economies of scale in financing and purchasing even if they can’t in the actual process of farming. The trick here though is that Zimbabwe has also recently passed laws that require 51% black ownership of all corporations based in Zimbabwe.
I talked to someone recently from Huadian Power who said that this new law kept them from investing in Zimbabwe despite originally being interested. This was just one man at a cocktail party, so who knows if it is representative of the situation with most Chinese investment. But in this case they either found a work around, or they have something else in mind other than profits. Like low-cost inputs for Chinese textile mills.
*There was an interesting study published by the BBC that showed that over the past decade Zimbabwean agriculture has transitioned away from tobacco and towards cotton. (The graph to the left shows the basic trend.)
While I’m sure there are a number of reasons that this took place, I don’t think its too far fetched to point out that during that time China became Zimbabwe’s number 2 trading partner (after South Africa), and China has the largest textile industry in the world and as well as being the world’s largest producer of tobacco. Which is fine. That’s just how trade works, and with cotton at a 140-year high it’s pretty good that Zimbabwe started growing it. But it does make the textile input idea a bit more appealing.
Correction: The story in the Guardian which I linked to above was later shown to be incorrect. The contract which was awarded to China International Water and Electric Corporation, was in fact for an irrigation system, and not farming. The project never got off the ground. (source: The Dragon’s Gift by Deborah Brautigam)