Geoforum 43 (2012) 573–584

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Geoforum
journal homepage: www.elsevier.com/locate/geoforum

Contests and struggle: Cotton farmers and COTTCO in Rushinga district,

Zimbabwe, 1999–2006
Godwin Masuka
Department of Resource Management and Geography, The University of Melbourne, 3010 Victoria, Australia

a r t i c l e i n f o a b s t r a c t

Article history: The paper examines the relations between farmers and The Cotton Company of Zimbabwe (COTTCO) in
Received 19 November 2009 Rushinga district of Zimbabwe. Based on interviews with farmers and secondary data, it examines the
Received in revised form 9 October 2011 practice of side marketing of contracted seed cotton. While a large body of literature has discussed the
Available online 2 December 2011
social and economic effects of contract farming on farmers, there are less critical studies on side market-
ing of crops by farmers in unstable economic and political environment such as Zimbabwe. The paper
Keywords: demonstrates that farmers taking advantage of the macroeconomic environment in Zimbabwe violated
Zimbabwe
contracts by selling seed cotton to other buyers. In the process, farmers renegotiated the meaning of
Economic crisis
Contract farming
the contract and appealed to market rationality embedded in the neo-liberal ideology. For these farmers,
COTTCO side marketing was part of a survival strategy, albeit in imperfect markets and a difficult economic envi-
Farmers ronment. Nonetheless, side marketing of seed cotton strained relations between farmers and COTTCO.
Side marketing The paper shows the tensions in contracts that require regulation by the state and the neo-liberal ideol-
ogy that promote free markets and argue against strong regulation.
Ó 2011 Elsevier Ltd. All rights reserved.

1. Introduction district took advantage of competition among seed cotton buyers

Research on contract farming suggests that the outcomes are
complex and contested (Dorward et al., 1998; Eaton and Shepherd,
2001; Glover and Kusterer, 1990; Little and Watts, 1994; Raynolds,
2000). The literature states many problems associated with
contract farming ranging from biased contracts against farmers,
cheating by companies on producer prices, failure to supply farm-
ers with inputs and extension advice and cheating (Clapp, 1994;
Kirsten and Sartorius, 2002; Little and Watts, 1994). For compa-
nies, side marketing of crops by farmers is one of the major prob-
lems experienced in contract farming (Dorward et al., 1998). Side
marketing occurs when a farmer sell his/her produce to a different
buyer than the one which provided inputs. Side marketing is pre-
valent in liberalised agricultural markets particularly where there
is high competition for crops among buyers (Coulter et al., 1999;
Poulton et al., 1998). In deregulated markets, farmers have an
incentive to side market crops to buyers offering higher prices
(Dorward et al., 1998).
The paper examines how market-regulated contracts were
negotiated by farmers and companies in Rushinga district. It high-
lights the contextual factors that influenced contract farming and
impacted on the relations between farmers and The Cotton
Company of Zimbabwe (COTTCO). I argue that farmers in Rushinga
E-mail address: godwinmasuka@yahoo.com
to side market, thereby disadvantaging COTTCO to whom they
were contracted. Cotton production is the main source of liveli-
hood for farmers in Rushinga district, therefore their recourse to
side marketing was a tactical strategy to survive in the harsh mac-
roeconomic and political environment. I argue that in deregulated
markets as in Zimbabwe which also experienced macroeconomic
instability and a collapse of inputs markets, there are trade-offs be-
tween short-term profits (by farmers and opportunistic buyers)
and long-term investment in financing crop production. By exam-
ining how side marketing works within the broad framework of
the political economy of African agriculture and contract farming
in particular; the paper contributes to the literature on smallholder
agriculture, neo-liberalisation and the role of private companies in
agriculture. As argued in this paper, there are tensions and con-
tradictions between contracts that require state regulation and
the neo-liberal ideology that is against regulation of markets or
strong government interference. Arguably, there are discrepancies
between neo-liberal theory and practice, primarily because of neo-
liberal theory’s failure to recognise that markets are socially
embedded (Polanyi, 1944) and influenced by social, political and
economic factors within which individual agents operate. In the
context of Zimbabwe, neo-liberalism and contract farming was
being negotiated and adjusted to work in specific geographic, eco-
nomic and political environments described in this paper. In this
sense, I examine how neo-liberalism and contract farming was

0016-7185/$ - see front matter Ó 2011 Elsevier Ltd. All rights reserved.
doi:10.1016/j.geoforum.2011.11.001
574 G. Masuka / Geoforum 43 (2012) 573–584
negotiated instead of merely being dictated in Zimbabwe’s
deregulated cotton sector. It could be argued that this development
occurred in a peculiar operating environment and could not hap-
pen elsewhere where capitalist systems were strongly rooted or
in stable economic and political environments.
The paper is divided into six sections. Section 2 discusses con-
tract farming and neo-liberal reforms in order to set the context
for the discussion that follows. Section 3 focuses on the political
economy of Zimbabwe and the cotton sector. Such a discussion is
important because contracts exist in imperfect markets and are
influenced by political and economic factors in specific geographic
settings (Morrison et al., 2006). Section 4 outlines the research
methods used in this paper. Section 5 discusses contract farming
(the input credit scheme) in Rushinga. It focuses specifically on
side marketing of seed cotton. It discusses the tensions between
farmers and COTTCO and exposes the contradictions in market-
regulated contracts. Section 6 concludes the paper and draws
implications of this discussion.
2. Neo-liberalism and contract farming
Contract farming is an agreement between farmers and a pro-
cessing and/or marketing company for the production and supply
of agricultural products (Eaton and Shepherd, 2001, p. 2). Most
contracts stipulate production and/or marketing conditions; how-
ever, in some contracts companies simply provide inputs to farm-
ers and pay market prices for the crop at the selling stage minus
the costs of inputs provided (Little and Watts, 1994). In this case,
companies use the farmers’ expected crop harvest as collateral
for credit repayment (Dorward et al., 1998; Mather, 1999). Con-
tracts in Zimbabwe’s cotton sector follow the latter.
In the past decades, agro-companies in both the developing and
developed countries increasingly used contract farming in agricul-
tural production (Little and Watts, 1994; Minot, 1986; Murray,
2001). This is associated with the industrialisation and globalisa-
tion of agriculture, particularly in the agro-food sector (Friedland
et al., 1991; Whatmore, 2002). Further, competition for supplies
forced companies to adopt vertical integration strategies and con-
tract farming in agricultural production in order to secure raw
materials at the source (at farm gate) (Minot, 1986; Kirsten and
Sartorius, 2002). The agro-industrial restructuring heralded a
‘new political economy of agriculture’ in which traditional systems
of ‘farming’ were integrated into the world economy through
contract farming, vertical integration and distribution networks
controlled by transnational companies (Friedland et al., 1991, pp.
3–4; McMichael, 1994). Although the impact varied geographically
and was contested, these strategies increased the power of compa-
nies over producers (Mather, 1999). For example, through contract
farming companies have better control over product quality, prod-
uct price and timely passage of information to producers (Minot,
1986). In theory, contract farming enables companies to control
or influence production decisions at the farm without incurring
the costs of buying land or hiring labour (Grosh, 1994; Key and
Runsten, 1999; Mather, 1999).
The main advantage of contract farming is that it allows small-
holder farmers access to credit and inputs (Grosh, 1994; Minot,
1986; Webber and Wang, 2005). As a result, farmers overcome in-
put market imperfections and credit constraints due to a lack of
collateral required by commercial banks (Delgado, 1999; Kirsten
and Sartorius, 2002). Furthermore, contract farming guarantees
farmers market access for their produce (Key and Runsten, 1999;
Minot, 1986). In principle, contract farming allows farmers and
agribusinesses to share the risk in case of crop failure (Glover,
1984). However as this paper demonstrates, the practice of con-
tract farming is somewhat different from the theory. For example
in Rushinga district, contracted farmers did not access all inputs,
particularly fertilisers; neither was COTTCO guaranteed seed cot-
ton from farmers. Furthermore, not all farmers overcome input
imperfections. In particular, farmers outside contracts can be dis-
advantaged when companies buy inputs in bulk, thereby causing
shortages on the open markets. In contrast, contracting companies
could benefit from economies of scale by purchasing inputs in bulk
from manufacturers (Da Silva, 2005).
2.1. Contract farming in Africa: an overview
The institution of contract farming dates back to Ancient Greece
(Eaton and Shepherd, 2001, p. 1). Over time contract farming be-
came a central institution in agricultural production in Western
Europe, North America and Japan (Watts, 1994). In Africa, contract
farming started in the colonial period. It involved production of
non-traditional crops such as fruits and vegetables (Little and Watts,
1994). However, by the 1990s, contract farming expanded to in-
clude the production of cotton, coffee, maize, tobacco, sorghum
and cashew nuts (Dorward et al., 1998; Kindness and Gordon, 2001).
The growth of contract farming in Africa occurred hand in hand
with the World Bank’s neo-liberal economic reforms which began
in the early 1980s (Morrison et al., 2006; World Bank, 1994). In
particular, the reforms promoted market-oriented and export-ori-
ented growth in place of state-led and inward-looking policies
(Bates, 1981; Gore, 2000; World Bank, 1981, 1989). In agriculture,
the main objective was to abolish state marketing boards and to
liberalise input and output markets in order to promote efficiency
and competition. In addition, reforms would end governments’
policy biases against farmers (e.g. through low producer prices
and taxes), which allegedly contributed to a decline in food pro-
duction in Africa in the late 1970s (Bates, 1981).
The assumption was that under liberalisation the state with-
draws from input and output markets and it would be replaced
by the private sector which then enters into mutually beneficial
contracts with farmers (Townsend, 1999; World Bank, 1981). The
private sector would provide farmers with inputs hence bridge
the input supply gap left by the withdrawal of state marketing
boards from input markets (Gibbon, 1992; World Bank, 1981). Fur-
thermore, contract farming would promote export-led growth and
generate foreign currency for struggling developing countries (Del-
gado, 1995; Jaffee and Morton, 1995; World Bank, 1981). In theory,
contract farming had positive externalities in the form of rural
development by creating employment, increasing farmers’ income,
promoting infrastructural development and developing markets in
local areas (Glover and Kusterer, 1990; Key and Runsten, 1999;
World Bank, 1981). This neo-liberal objective blended well with
some developing government’s ‘populist rhetoric’ of targeting the
poor and promoting rural development in the face of limited state
resources (Watts, 1990).
Despite the enthusiasm by neo-liberal proponents regarding the
positive outcomes of reforms and contract farming in particular,
there was increasing evidence that in many cases the reforms did
not deliver the expected outcomes (Gibbon, 1992; Ponte, 2001).
In several agricultural sectors, the entry of the private sector was
low, particularly in the input market (Dorward et al., 1998;
Shepherd and Farolfi, 1999). As a result, smallholder farmers
experienced input supply problems (Crawford et al., 2003; Ponte,
2001). This somewhat supports the argument of those critical of
the neo-liberal reforms that they failed to address the structural
problems that impeded and militated against agricultural develop-
ment and smallholder production (Gibbon, 1992). The problems
faced by farmers included undeveloped input and output markets,
poor infrastructure, underfunding in research and extension
services, weak or no contract enforcement measures which in-
creased the risks and costs of doing business for the private sector
 G. Masuka / Geoforum 43 (2012) 573–584
(Dorward et al., 2005; Kydd and Dorward, 2001; Sugden, 2009).
Critics argue that the abolition of state marketing boards which oc-
curred under liberalisation without putting in place alternative
measures or institutions to enable farmers to access inputs and
to enforce common quality standards was counterproductive
(Mather and Greenberg, 2003; Van Donge, 2002).
There is debate in the literature on the outcome of neo-liberal
reforms and in particular the benefits of contract farming on farm-
ers (Clapp, 1994; Kirsten and Sartorius, 2002; World Bank, 1994).
For some farmers, contract farming allows them access to produc-
tion inputs and markets. Yet for others, contract farming leads to
exploitation (Clapp, 1988). The critical literature argues that con-
tracts are sites of struggle, conflicting interpretations, manipula-
tion and dishonesty (Grossman, 1998, p. 7). More importantly,
contract farming is influenced by local institutional and historical
factors, the political and economic environment as well as by geo-
graphic settings within which farmers and companies operate
(Jackson and Cheater, 1994, p. 141; Morrison et al., 2006). This pa-
per contributes to these debates by highlighting contextual factors
that influenced contract farming and the relations between farm-
ers and COTTCO in Rushinga district.
3. Zimbabwe: Recent political economy and the agricultural
sector
Zimbabwe adopted neo-liberal economic reforms in 1991 after
a decade of state-led economic policies (Skalnes, 1995). The aim of
the Economic Structural Adjustment Program (ESAP) was to re-
dress economic decline, increase productivity and competitiveness
of the economy (Government of Zimbabwe, 1991; Mlambo, 1997).
The government aimed to liberalise the agricultural sector in order
to create competitive and efficient multi-channel marketing sys-
tem that allowed farmers to sell their products to whomever they
wish (Oni, 1997).
Liberalisation of Zimbabwe’s cotton sector occurred as part of
these neo-liberal economic reforms. The government sequenced
reforms in the cotton sector to smoothen the transition to a liber-
alised market (Larsen, 2002). This began in 1991 when the govern-
ment granted the state-owned Cotton Marketing Board (CMB)
managerial autonomy to run on a commercial basis. In 1994, the
government stripped the CMB of its statutory monopoly in pur-
chasing, ginning, marketing, and export of cotton lint. As a result,
private traders could participate at various stages of the cotton
chain. In the following season (1995/1996), three companies
namely Cargill, Cotpro and Boka Auctions entered the cotton sec-
tor. However, COTTCO continued to dominate the purchasing, mar-
keting, ginning and export of cotton (Goreux, 2003). This was
mainly because at liberalisation COTTCO inherited a developed
infrastructure from the Cotton Marketing Board (CMB). Further,
none of the new companies could match its input credit scheme
(Poulton et al., 2004). It was not until the new millennium that
more players entered the sector. By 2006, over twenty companies
and individual business people operated in the cotton sector,
mainly at the purchasing stage of seed cotton.
Zimbabwe experienced an economic crisis from the late 1990s
following a series of questionable economic policies and controver-
sial political decisions (Brett, 2005). These included paying the
nearly 60,000 war veterans unbudgeted gratuities of ZW $50,000
in 1997. This costed the treasury over ZW$ 4 billion (about US$
2,150,537 at the official exchange rate) (Moore, 2003). Again in
1997, the government’s decision to intervene in a civil war in the
Democratic Republic of Congo costed over US$ 200 million (Moore,
2003). Further, policy reversals on taxation and the imposition of
price controls in 1998 following the food riots affected the viability
of businesses and eroded investor confidence (Brett, 2005).
575
From 2000, the government seized white-owned farms and em-
barked on a land redistribution programme to benefit landless
black people (Government of Zimbabwe, 2001). Although the
objectives were noble, the land redistribution process was accom-
panied by violence which disrupted commercial agricultural pro-
duction (McGregor, 2002; Richardson, 2007; Willems, 2004),
including commercial cotton production by white farmers (see
Fig. 1).1 For example, in the early 1990s over 155 white farmers pro-
duced cotton (accounting for about 10%), but by 2003, only 12 farm-
ers were left (accounting for less that 1% of national cotton
production) (Keeley and Scoones, 2003).
In the process of land redistribution, the government overruled
Supreme Court decisions against land seizure, arguing that the law
was an obstacle to historical and social justice (Helluma and
Derman, 2004). Consequently the international community,
western think tanks and the International Financial Institutions
condemned the land distribution and criticised the government’s
failure to protect private property rights (IMF, 2005; Moyo and
Yeros, 2007). Western countries went onto impose sanctions on
Zimbabwe’s ruling elite and the country was isolated internation-
ally. Despite this, several African countries supported the land
redistribution programme (Moyo and Yeros, 2007).
These economic policies and political developments coupled
with intermittent droughts in 2001 and 2002 had a severe impact
on the economy. For example, Zimbabwe’s economic growth de-
clined from 1% in 1999 to 5% in 2000, to 10% in 2001 and to
15% in 2003 (Muir-Leresche and Sikume, 2006). Overall between
1999 and 2003, Zimbabwe registered a cumulative economic de-
cline in real GDP of 28.4% (Ministry of Finance, 2005). Annual infla-
tion increased from 50% in 2000 to 200% in early 2003, before
shooting up to over 11 million per cent by August 2008 (Central
Statistical Office, 2000–2008). Furthermore, corruption and rent
seeking activities drained resources from the already struggling
economy (Bracking, 2009; Mumvuma et al., 2006).
As the economy contracted, Zimbabwe experienced severe
shortages of foreign currency2 and could not import enough agricul-
tural inputs and raw materials,3 resulting in declining agricultural
production and food shortages (National Economic Consultative
Forum, 2006; Sachikonye, 2002). As agricultural production declined
so too did the value of exports. For example, from 1998 to 2004, the
value of agricultural exports fell from US$ 805 million to US$ 384
million (a decline of over 40%) (IMF 2005; The Reserve Bank of
Zimbabwe, 2007). Meanwhile, cotton lint exports which in 1998
had generated US$ 150 million, declined to US$ 53 million in 2002
before rising to US$ 122 million in 2004 (The Reserve Bank of
Zimbabwe, 2007). This paper examines contract farming in the
context of this unstable environment.
4. Research methods and background to Rushinga district
I conducted research for this paper in Rushinga district, in the
north east of Zimbabwe, over a period of 12 months, commencing
in February 2006 and continuing until May 2007. In 2002, Rushin-
ga district had a total population of 67,187 of whom 31,996 were
1
Critics argue that the land redistribution was marred by corruption and nepotism
and did not benefit a majority of landless people (Makadho, 2006; Sachikonye, 2003);
however, others argue that the land redistribution was successful and benefited the
landless people (Scoones et al., 2010).
2
This led to the growth of a parallel market for foreign currency. For example, from
mid 2006 to August 2007, the official exchange rate was ZW$1: US$ 250, but on the
parallel market the exchange rate was about US$1: ZW$ 1500–2000 (in November
2006). By April 2007, the parallel market rate had increased to US$1: ZW$ 200,000–
250,000. The Reserve Bank of Zimbabwe allegedly participated in the parallel market
and this fuelled exchange rates (Makochekanwa, 2007).
3
Zimbabwe required US$ 2.5 million annually to import sulphur and ammonia for
fertiliser production (Utete, 2003).
576 G. Masuka / Geoforum 43 (2012) 573–584
Fig. 1. Seed cotton production trends in Zimbabwe (1990–2006). Source: The Agricultural Sector of Zimbabwe, Statistical Bulletin, 2000; Crop Forecasting Committee
Estimates (various years).
males and 35,191 were females (Central Statistical Office, 2004).
Land tenure is of the communal type in which the state owns all
land and users have usufruct rights (Tshuma, 1997). The average
farm size in communal areas is between 3 and 5 ha. Farmers in
Rushinga have an average of 5 ha.
Rushinga district lies in agro ecological region four4 and receives
an annual rainfall of 450–600 mm. The district experiences mid sea-
son droughts, and is suitable mainly for drought resistant crops. The
colonial government introduced cotton production in Rushinga dis-
trict in the mid 1960s as party of its rural strategy to promote pro-
duction of cotton in rural areas (Nyambara, 2000). In Rushinga,
cotton was the main cash crop with about 90% of households pro-
ducing cotton. As elsewhere in Africa,5 cotton was the main source
of income and therefore central to the livelihoods of the people of
Rushinga district. Further, there were limited economic activities
and employment opportunities outside agriculture, which accounts
for 91% of the work force (Central Statistical Office, 2004).
I used participant observation and in-depth formal interviews
with farmers, officials from COTTCO, the government extension
departments and local elected leaders. I also used secondary
sources including reports by COTTCO, the government, academic
literature and newspapers which published stories related to the
topic.
In interviews, I asked farmers’ opinions on contract farming and
side marketing. I wanted to know if the prevailing economic envi-
ronment and competition for seed cotton had influenced farmers’
decisions to side market. My interviews with officials from COTTCO
focused on side marketing and strategies the company was adopt-
ing to reduce losses from side marketing. By asking these ques-
tions, I wanted to understand the historical and contextual
factors that mediated and impacted on contract farming in geo-
graphic environments like Rushinga and Zimbabwe in general.
Participant observation involved me visiting and observing the
buying and selling of seed cotton at COTTCO depots at Rushinga
and Chomutukutu business centres. Participant observation is use-
ful when the primary aim is to find out what is going on (in a social
event) when the event is repeated frequently (Robson, 2002, p.
315). By observing farmers repeatedly while they sold seed cotton,
I gained insights on the actual processes of marketing as ‘practiced’
4
Zimbabwe has five agro-ecological regions based on rainfall patterns, soil fertility
and agricultural potential. The region’s suitability for crop production decreases from
region one to five.
5
See, Minot and Daniels, 2002; Mosley, 2005; Oxfam International, 2002.
by farmers and how they bargained with buyers. I also witnessed
how farmers were misled by false ‘price promotions’ advertised
at the entrances of company depots. For example, several farmers
realised that the price advertised by COTTCO and other buyers
were false when the transactions were complete (at the payment
stage) and could not reverse them. In other cases, alert farmers left
their seed cotton bales or packets a few metres away and inquired
about the price offered by different buyers. These insights could
only be gained by observing the behaviour of farmers during the
transaction process.
I used purposive sampling and snowball approaches to identify
farmers. In purposive sampling, the researcher selects people that
provide relevant information about the specific phenomenon under
investigation (Mason, 2002; Robson, 2002). Following this ap-
proach, I used the list of names of the group leaders and secretaries
provided by the local staff at Chomutukutu Ward to indentify partic-
ipants. In turn, the group chairperson and secretaries provided the
names of their group members, from which I selected participants.
In total, 35 farmers participated in the interviews. Farmers lived
in the villages of Rupate, Chari, Hoko, Mandendera, and Chip-
amuriwo. The villages are within a radius of 10 km from Chom-
utukutu business centre. Famers interviewed belonged to eight
groups. Eight were women, and their age ranged from early twen-
ties to mid fifties, with an average age being 38 years. The average
age for men was 45 years. All of them were married and lived in
the villages. Farmers’ production history was diverse. Older farm-
ers (above 55 years) had a long history of cotton production, some
stretching as far back as the late 1970s. By contrast, three farmers
below the ages of 25 had spent a year to two in contracts. On aver-
age, they produced 2 or 3 bales in the previous three to four sea-
sons. Most of the farmers interviewed had more than 5 years
experience in cotton production and at least 2 years in contracts.
Data collection was iterative. I used information from the initial
interviews to frame questions in later interviews. I wrote notes as
farmers refused to have their views tape-recorded or names pub-
lished for fear of political backlashes. All interview information
was transcribed, and later manually coded. During cording, I
indentified conceptual categories. I used a thematic approach to
analyse data.
5. COTTCO and contract farming in Rushinga district
The Cotton Company of Zimbabwe (COTTCO), formerly the Cot-
ton Marketing Board (CMB) was established through the Cotton
 G. Masuka / Geoforum 43 (2012) 573–584 577

Marketing and Control Act (Chapter 106) in 1969 (Blackie, 1983). It Table 1
had statutory monopoly in purchasing, ginning, marketing, and ex- Number of contracted farmers and COTTCO’s market share in Zimbabwe. Source:
Cotton Company of Zimbabwe, Annual Reports (1993–2006).
port of cotton lint. The government commercialised the CMB in
1992, and later privatised in September 1997 (Ministry of Agricul- Year/season Farmers contracted Percentage market share
ture, 1998). of purchased seed cotton

COTTCO participated at all stages of the cotton chain. At the 1992/1993 28,000 100
production stage, it contracted farmers to produce seed cotton 1993/1994 42,000 94
1994/1995 71,636 80
through its input credit scheme. It operated the largest input credit 1995/1996 86,426 81
scheme in Zimbabwe’s cotton sector (Table 1).6 The CMB (now 1996/1997 75,511 70
COTTCO) established the scheme in 1992 with the financial backing 1997/1998 48,000 74
of the Government of Zimbabwe and the World Bank7 following a 1998/1999 53,868 67
1999/2000 76,500 79
drought that reduced cotton production by 60% (Goreux, 2003).
2000/2001 66,100 71
The scheme aimed to ‘‘spearhead a revival of small and communal 2001/2002 80,000 71
sector cotton production at a time when the situation appeared 2002/2003 70,000 68
hopeless for most. . . growers’’ (Cotton Marketing Board, 1992/ 2003/2004 –a 58
1993, p. 5). Therefore at inception, the input scheme was largely 2004/2005 –a 40
2005/2006 50,000 50
developmental; however, with the privatisation of COTTCO in 1997
a
the scheme was commercialised. Under the input scheme, the CMB Figures for these years are missing.
and later COTTCO supplied farmers with inputs such as fertilisers,
seeds and agro-chemicals to farmers on credit and deduct the costs
of the inputs provided at the selling stage (plus a small interest fee, their seed cotton. It also expelled farmers who cheated by putting
which is usually below commercial rates). foreign products in packets (for example, stones or water) to in-
In Rushinga district like elsewhere in Zimbabwe, COTTCO oper- crease the weight of seed cotton. COTTCO could track farmers
ated two main types of input schemes: the ordinary and the gold using grower’s numbers and national identity numbers attached
class. To qualify for COTTCO’s ordinary scheme, farmers produced on each seed cotton pack. In theory, COTTCO could follow the legal
800 kg, had at least 2 ha of land and other assets (such as cattle, channel and have farmers who break contracts prosecuted. How-
goats or carts). To qualify for the gold class, farmers produced ever, in practice this was difficult largely because there were no
6,000 kg or 25 bales.8 Farmers in the latter group constituted the clear legal rules governing the operation of contract farming. Fur-
‘elite club’ and were considered low risk farmers (Larsen, 2002). ther, this was uneconomic because litigation costs were high and
COTTCO signed individual contracts with these farmers, and some- time consuming for the small loans given to farmers.10 As a result,
times provided cash loans in order to build mutual trust and increase COTTCO used group pressure and self-regulatory mechanisms such
loyalty (Gordon and Goodland, 2000). In Rushing district, COTTCO as excluding farmers from future contracts to force farmers to repay
contracted an average of 2300 farmers from 2002 to 2006. loans.11
The ordinary scheme was the largest, involving over 90% of It appears the contract was biased in favour of COTTCO. For
COTTCO’s contracted farmers in Zimbabwe and over 99% in Rush- example, the contract did not state the penalties that COTTCO
inga district.9 Farmers in this scheme were organised into self- would incur if the company failed or decided not to honour the
selecting groups of 10–30 people. Each group was headed by an contract by not supplying inputs to farmers, or purchase seed cot-
elected chairperson and a secretary. In theory, self selecting groups ton, yet it punished farmers if they side marketed. In theory, COTT-
were more likely to be effective compared to groups formed with CO could manipulate this silence in its favour. The observation that
outside influence from donors or companies (Stringfellow et al., contracts are biased against farmers is widely acknowledged in the
1997). Farmers signed asset declaration forms, stating the assets literature (Clapp, 1988; Mather, 1999; Raynolds, 2000; Singh,
they owned (such as cattle, goats, wheelbarrows and ox drawn 2002). According to Watts (1994), most contracts whether written
carts). A reputable witness like the Village Headman or an elected or verbal favour companies. In interviews, farmers were critical of
Councillor verified assets declared by the farmers. These assets, to- COTTCO’s decision to demand all seed cotton even though the
gether with the expected crop harvest were used as collateral company had not supplied them with all inputs particularly from
against the loan of inputs (Dorward et al., 1998). By signing con- 2003 to 2006. Some farmers argued that they were not bound by
tracts, farmers agreed to sell seed cotton to COTTCO and group mem- the contract and were free to sell their seed cotton to buyers. By
bers were jointly and severally liable for loan defaults. In theory, this so doing, they exercised market freedom. Arguably, farmers’
not only reduced administrative costs for COTTCO, but also increased unwillingness to comply with COTTCO’s demands contributed to
social pressure from group members to repay loans. COTTCO also the breakdown of relations between the two parties.
employ Loans and Extension Officers (LEOs) in all cotton growing re-
gions of Zimbabwe. LEOs provided extension advice and were the
point of contact between COTTCO and farmers. They also monitored 5.1. Loan repayment and side marketing of seed cotton
farmers to reduce side marketing.
At the time of selling, COTTCO deducted the costs of inputs sup- At the national level, COTTCO recorded high loan recovery rates,
plied. It accepted repayment of inputs only in the form of seed cot- averaging 90% from 1992 to 1999, and 95–98% from 2000 to
ton. COTTCO blacklisted or expelled farmers who side marketed 2006.12 In Rushinga district, COTTCO had loan recovery rates averag-
ing between 98% and 99% from 2002 to 2006.13 Over 95% of the
6
farmers interviewed in 2006 had repaid their loans (by the end of
Cargill which began operating an input credit scheme in 2002/2003 had about
18,000 contracted farmers. Others contract between 100 and 5000 farmers, Interview
10
with cotton company officials, May 2006. On average, 30–40% of farmers received Interview with Head of Crop and Inputs Procurement COTTCO, Harare, 25/09/
inputs from companies and they accounted for about 60% of national cotton 2006.
11
production. In Slovakia, the lack of public institutions to enforce contracts forced sugar
7
The government and the World Bank provided ZW$ 36.5 million and US $5.7 contracting to use private enforcement mechanisms (Gow et al., 2000).
12
million respectively. Communication with Head of Inputs, COTTCO, Harare, 24/10/2006, see Gordon
8
A standard bale weighs between 200 and 250 kg. and Goodland (2000).
9 13
Interview with an informant, Rushinga district, 15/03/2006. Interview with a senior officer, COTTCO, Rushinga Centre, 11/03/2006.
578 G. Masuka / Geoforum 43 (2012) 573–584

Table 2 As a result, members who failed to repay loans faced immense so-
Number of farmers contracted by COTTCO in Rushinga district. Source: COTTCO, cial pressure and this sometimes resulted in tensions and the
Rushinga depot, 2006.
breakdown of social relationships. The people of Rushinga district
Year 2002/2003 2003/2004 2004/2005 2005/2006 belong to a collectivist culture and farmers had a high regard for
Total farmers 3000 3000 1600 1685 social capital existing among group members. This helped them
to organise and cooperate in various areas (through arranging
work parties to weed or harvest cotton, they assisted each other
in the event of sickness or when a natural disaster occurs).
Table 3
COTTCO’s seed cotton intake and amount side marketed in Rushinga district (2004–
In addition, social pressure occurred because the majority of
2007). Source: COTTCO, Rushinga depot, 2006. members of the input groups were from the same villages and
lived within a radius of two kilometres. Some were related through
Year 2003/ 2004/ 2005/ 2006/
2004 2005 2006 2007
kinship ties, lineages, marriages or shared the same totems. For
example, in one group, two members were brothers and another
Intake (tonnes) 7512 2506 4511 4209
two were father and son. Therefore the possibility of breaking up
Side marketed (tonnes) 751 1882 1895 2152
Expected intake 8263 4388 6406 6361 valued social relations added pressure on farmers to avoid default.
(tonnes) The vice chairmen of an input group summed up this concern by
% Side marketed 9.08 42.89 29.58 33.83 saying that, ‘‘It is better to remain without any money after paying
your loan’’. It could be argued that while participation in the input
credit scheme had benefits, it placed farmers under immense pres-
sure to repay loans for the good of others in the group. Indeed, in
September 2006) but several of them still went onto side market sur-
these collectivist cultures group interests or objectives are priori-
plus seed cotton. The section below discusses the reasons for loan
tised over individual interests. COTTCO recognised the importance
repayment before turning to side marketing of seed cotton.
of culture, social relationships and kinship ties among farmers and
It appears economic and social reasons motivated farmers to re-
relied on these to force farmers to repay loans.16
pay loans. Economic reasons included the possibility of losing as-
The foregoing shows that a combination of economic and social
sets, blacklisting and exclusion from the input credit scheme. An
pressures increased loan repayments. For example, loan recovery
input group chairperson explained that farmers knew that if they
averaged above 95%; however, not all farmers sold ‘all cotton to
did not repay loans, COTTCO could confiscate their assets. Another
COTTCO’ as stipulated in the contract.17 Instead over half of farmers
farmer agreed when he said, ‘‘being in an input group places farm-
sold enough seed cotton to repay what they owe COTTCO and sold or
ers under significant pressure to work hard since they are aware
side marketed surplus seed cotton to other buyers who offered high-
that they have a debt that needs to be repaid at the end of the
er prices. In Rushinga, side marketing (of surplus seed cotton) cut
season’’.
across gender, age and socioeconomic classes. For example, a 40-
Apart from losing assets, farmers were also aware that in the
year farmer who produced six bales of seed cotton in 2006 sold four
case of default on a loan repayment COTTCO could exclude them
bales to COTTCO (in early June at ZW$ 60,000/kg), one to Cargill (at
from the input credit scheme. Access to inputs was the main rea-
ZW$ 65,000/kg) and another bale to Alliance ginneries (at ZW$
son for farmers to join contract farming. For example, over 90%
72,000/kg). Another farmer sold three bales to COTTCO in mid July
of farmers admitted that they could not afford to buy all inputs
2006 at ZW$ 95,000/kg and one and half bales to Alliance ginneries
on cash on the open market at the start of the season. They had nei-
at ZW$ 120,000/kg. Yet another farmer produced six bales and sold
ther cash nor access to credit with which to buy inputs.14 However,
two to COTTCO (at ZW$ 100,000/kg), two bales each to Alliance gin-
the unstable macroeconomic environment resulted in severe short-
neries (at ZW$ 145,000/kg) and Grafax (at ZW$ 140,000/kg) respec-
ages and the escalation of prices of inputs. This resulted in distor-
tively. Several farmers interviewed sold seed cotton to different
tions in the input market as unscrupulous traders took advantage
buyers depending on the price offered.
of the shortages to sell inputs on the parallel market where prices
Table 3 shows COTTCO’s total intake of seed cotton in Rushinga
were much higher.15 Some farmers recognised these constraints
district. It shows that in the 2003/2004 season, 9% of contracted
and preferred to participate in contracts as companies had a better
cotton was side marketed but this increased drastically to over
chance of sourcing inputs. A farmer in Mandendera village summed
40% in the 2004/2005 season (COTTCO Rushinga depot, 2006). Side
up this concern when he said, ‘‘it is better to be in an input group be-
marketing was not limited to Rushinga, but occured in other parts
cause these companies know where to get inputs’’. For these farmers,
of Zimbabwe. COTTCO estimated that in 2001 about 30% of seed
the long term benefits of participating in COTTCO’s input credit
cotton it was due under contract was side marketed (COTTCO,
scheme outweighed the costs. However, in the short term and in
2002). In 2002 over 30,000 tons of seed cotton out of a total pro-
the context of the prevailing economic environment farmers’ selling
duction of 195,670 tons (about 15%) was side marketed (COTTCO,
decision were influenced by prices offered by different seed buyers.
2001/2002). It is likely that side marketing increased in the past
Another related factor that explains farmers’ behaviour to repay
couple of years, as a result of the proliferation of new buyers
loan was social pressure. As earlier indicated, COTTCO advances in-
who capitalised on the economic crisis.
puts to self-selecting farmers organised in groups. Members were
A majority of farmers side marketed seed cotton to get higher
individually and jointly liable for loan repayments. This means that
prices. In the period under review (1999–2006), there was in-
the whole group was punished when a member defaulted and
creased competition among buyers for a limited supply of seed cot-
could not receive inputs until the outstanding loans were paid.
ton both in Rushinga and in Zimbabwe generally.18 In Rushinga
district, up until 2001 COTTCO and Cargill dominated the buying
14
This applies to other smallholder farmers in Africa (Dorward et al., 2004; Ponte,
2001).
15 16
In mid 2006, a 50 kg bag of fertiliser was priced between ZW$ 2.5 million and Interview with a senior official, COTTCO, Harare, 25/09/2006.
17
ZW$3 million in retail shops, while the government regulated retail price was ZW$ Interview with an Officer, Rushinga, June 2006.
18
252,000. The price of government-subsidised petrol was ZW$ 350–400 per litre, but For example, from 1993 to 2000, national cotton production averaged 248,000
on the parallel market it costed nearly ZW$ 5000 per litre (The Sunday Mail, 12/02/ tonnes and was purchased by eight buyers, but in 2006 production fell to 198,000
2006). Corruption was rife and politicians allegedly bought inputs from state-run tonnes and was purchased by over 20 buyers (supplying ginneries with a capacity of
institutions and sold them at the parallel market at exorbitant prices (Zumbika, 2006). 519,000 tonnes per annum).
 G. Masuka / Geoforum 43 (2012) 573–584
Fig. 2. Comparison of seed cotton price in Chomutukutu ward in 2006 season. Source: Field notes/interview with buyers, 2006.
of seed cotton claiming over 80% of the market share. By 2006 there
were six other players in the market including, Insing, Grafax, COT-
TRADE, Olam, FSI Agricom and Alliance ginneries competing for seed
cotton purchases. Consequently, COTTCO’s market share for seed
cotton purchases declined to nearly 45%.19 As competition intensi-
fied in 2006, none of the eight companies operating in Rushinga dis-
trict graded cotton at the point of purchase.20 As the ‘scramble’ for
cotton increased buyers paid a flat price for all seed cotton irrespec-
tive of quality. Consequently, farmers could sell regardless of quality,
and were less concerned with grading than before. As one farmer
noted ‘‘even if I do not grade my crop companies will still buy it’’.
In this sense, competition benefited farmers by cutting labour costs
in grading at farm gate. However, these practices impacted on seed
cotton quality standards (Larsen, 2001; Jimat Development Consul-
tants, 2005).
Fig. 2 shows prices offered by the major buyers in Chomutukutu
Ward in the 2006 selling season. It shows significant price differ-
ences between buyers; as a result, farmers had an incentive to side
market. For example, by the end of August 2006, COTTCO paid ZW$
105,000/kg compared to ZW$ 155,000/kg and ZW$ 180,000/kg
paid by Alliance and Insing respectively. In the opinion of these
farmers, new buyers like Insing had a competitive edge over COTT-
CO. Market rationality dictated that farmers would sell their pro-
duce to the highest bidder. This was the case among many
farmers. As one farmer and chairperson of an input credit group
asked me rhetorically, ‘‘if it were you, would you sell all your seed
cotton to COTTCO when there are higher prices elsewhere’’? An-
other farmer concurred when he said, ‘‘COTTCO ngaikwidze mitengo,
isu chatinoda imari kwete company’’ (COTTCO should increase its
prices, what we want is more money not the company). Clearly,
farmers’ concerns at the time were to maximise profit and to be
able to support their families, because cotton was their main
source of livelihood.
COTTCO’s payment system may also have contributed to the in-
crease in side marketing among contracted farmers. Traditionally,
COTTCO had three forms of payment. It paid farmers an interim
price (at the time of selling); a bonus payment (in December of
each year) and gave farmers back-pay or price adjustments at
the end of the season (usually in August and September). As a re-
sult, farmers who sold their seed cotton at the beginning of the sea-
son benefited from price increases that occurred as the season
progressed. Prior to the economic crisis in 2000, COTTCO’s pay-
ment system was competitive and attractive to most farmers. For
19
Interview with a senior official, COTTCO, Rushinga depot, May 2006.
20
Personal observations, Rushinga, June, 2006.
579
example, the bonus payment in December allowed farmers to have
a cash injection during the festive season.21
These benefits notwithstanding, the unstable economic envi-
ronment from 2000 characterised by hyperinflation, escalation
of prices, shortages of cash and basic food commodities wiped
all the benefits that once accrued to farmers under COTTCO’s
staggered payment system. As one farmer noted, ‘‘by the time
we get price adjustments and bonus payments the money would
be valueless and cannot buy anything. . .may be just sweets for
children’’. In this sense, farmers had good reasons to demand full
payment at the time of selling. COTTCO insisted that it was
uneconomic to pay farmers full prices at the time of selling be-
fore assessing the movements of international lint prices, as this
could result in losses.22 This was a rational business decision in
the interests of COTTCO’s shareholders. However, this decision
meant that farmers could bore the risks and losses of declines in
international lint prices. In an inflationary environment like Zimba-
bwe (inflation reached over 11 million per cent in 2008), farmers
prioritised higher and full prices on the spot, hence their decision
to side market.
It could be argued that under the prevailing circumstances
COTTCO’s inability to meet farmers’ expectations resulted in them
selling seed cotton to other buyers who offered higher and full pay-
ment at the time of selling.23 Farmers’ behaviour in exercising mar-
ket freedom and COTTCO’s insistence that farmers follow the terms
of the contract exposes the tensions inherent in contract farming in
deregulated markets. As Little and Watts (1994, p. 221) observes
‘‘. . .it is when farmers begin to behave as free market actors, selling
their produce to the highest bidder, that the contract farming
schemes are jeopardized’’. Through side marketing farmers were
attempting to renegotiate the contract by appealing to market prin-
ciples embedded in the neo-liberal theory.
Undoubtedly, the entry of more buyers since liberalisation pro-
vided farmers with selling options. In contrast prior to and imme-
diately after liberalisation, COTTCO had a monopoly and dictated
21
See Hanyani-Mlambo et al., 2002.
22
Interview with a senior official at COTTCO, 26/09/2006.
23
Most of the new buyers did not finance cotton production through contract
schemes. They capitalised on the deregulated market system and lack of regulation to
free ride on other companies’ investments. As a result, they could offer farmers higher
prices. According to Poulton and Hanyani-Mlambo (2008, p. 56) ‘‘other things being
equal, a firm that does not provide pre-harvest support [operate inputs credit
schemes] to cotton producers can pay a 21% higher average seed cotton price than a
company that does’’.
580 G. Masuka / Geoforum 43 (2012) 573–584
the market terms for farmers.24 For example in 1999, a depot man-
ager at COTTCO responded to farmers’ demand for higher prices and
threats to boycott the selling season by saying, ‘‘we are not worried
even if they keep their produce for a year. They cannot take it any-
where. In the end they will still bring it here.’’ The manager went
onto say, ‘‘if I am a peanut butter processing company it is not my
business to see whether the person who makes containers also
makes profit, that is our business culture in the company.’’25 This
not only showed the arrogance and disregard for farmers’ welfare
by the manager, but demonstrated the skewed power relations be-
tween COTTCO and farmers.
Without alternative input or output markets, farmers were price
takers. However, in the period under review farmers had alternative
market outputs. They circumvented the contract principally
through side marketing. In this sense, side marketing was a form
of ‘tactical resistance’ (Watts, 1990, p. 158) to the terms of the con-
tract through which farmers sought to circumvent a system they
considered exploitative (Bassett, 2001; Scott, 1990). If contracts
were exploitative, why did farmers enter into these contracts? Ear-
lier I noted that farmers’ need to access inputs (often caused by thin
input markets), forced them to enter into unfavourable contracts
with companies. According to Clapp (1994, p. 91) ‘‘it is in the imme-
diate interests of the weak [farmers] to maintain the ideology [con-
tract] that subordinates them, for it also lends them sustenance’’.
Farmers also used social and kinship networks to their benefit.
Above I noted that even though these are market-regulated con-
tracts, COTTCO relied on kinship and social networks to enforce
loan repayment. On their part, farmers used kinship ties to circum-
vent the required production history set by COTTCO for new farm-
ers to join contracts. For example, a chairman of an input credit
group who produced an average of 15 bales each year had in the
past three seasons (2002–2005) sold two bales of seed cotton to
COTTCO under his son’s name in order to help him to build a pro-
duction history. The farmer ‘weaned off’ his son after he qualified
for contracts. In future, the son could possibly help others to do
the same. Although this was not allowed by COTTCO, several farm-
ers confirmed the practice. In this regard farmers relied on social
capital in order to meet and/or circumvent requirements of a mar-
ket regulated contract.
The paper contends that contracts do not exist in idealised mar-
ket setting, but in imperfect markets like Rushinga district. There-
fore the paper underscores the need to understand contextual
factors in different geographical settings that influence contract
farming and shape the behaviour of farmers. In the context of Zim-
babwe’s economic environment, farmers disagreed with the con-
tract and attempted to negotiate the meaning of the contract.
The implications of these practices are far reaching. Firstly, it
shows that in a liberalised market environment where COTTCO
has no exclusive rights to seed cotton, it had to innovate and be
competitive to farmers. Secondly, it shows the challenges of oper-
ating contracts in an unstable economic environment. Thirdly, it
demonstrates the inherent contractions in the neo-liberal ideology
that on one hand promote free markets and argue against regula-
tion but on the other hand require state regulation to function
properly, especially to deal with opportunistic traders and those
free riding on other company’s investments. Therefore, in unregu-
lated agricultural markets there could trade-offs between short
term benefits and long term interests.
24
Despite this, producer prices prior to liberalisation and immediately after (when
there were a few competitors) were higher than in the period after 2001 (when
competition increased). Poulton and Hanyani-Mlambo (2008, pp. 46–47) attribute
this to increased operational costs during the economic crisis (after 2001), the
distortions in the economy and company’s unwillingness to pass the benefits of the
depreciation of the exchange rate to farmers.
25
COTTCO depot manger cited in The Sunday Mail, 02/05/1999.
It could be argued from an agribusiness perspective that side
marketing threatened the commercial sustainability of contract
farming and companies’ willingness to provide inputs to farmers.
Companies contract farmers to secure the supply of raw materials
at the source, if this is no longer guaranteed because of side mar-
keting, in theory companies could stop investing in cotton produc-
tion. In the absence of an alternative scheme, farmers would go
without inputs resulting in a decline in production. In theory, side
marketing is not in the long term interests of farmers. However, as
this paper showed in real markets the desire to maximise returns
influenced farmers’ decisions. The section below discusses COTT-
CO’s responses to side marketing. It considers COTTCO’s three
strategies namely; the threat to withdraw from contract farming,
reducing the number of contracted farmers and lobbying the gov-
ernment to re-regulate the sector.
5.2. Strategies of addressing side marketing
In 2003, COTTCO and FSI Agricom threatened to withdraw its in-
put credit scheme unless the government took stern measures
against buyers who promoted side marketing of contracted seed
cotton (COTTCO Annual Report, 2004).26 The company’s managing
director said at the time ‘‘as a private company guided by stakeholder
interests, COTTCO cannot continue with the role of national benefac-
tor, with competitors coming to reap where they did not sow’’ (The
Financial Gazette, 17/09/2003). COTTCO’s threat was received with
divided opinion. On the one hand, industry analysts and farmers
feared that this could reduce cotton production critical because
COTTCO contracted over half of cotton farmers in Zimbabwe (see Ta-
ble 1).27 On the other hand, the vice President of the Zimbabwe Farm-
ers Union was critical and arguing that if the two companies found
the cotton industry unprofitable, they could withdraw. COTTCO’s
withdrawal seemed unlikely because since privatisation in 1997 it
has declared huge profits despite the increase in side marketing.
For example, in 1998 COTTCO recorded a net profit of ZW$791 mil-
lion, well above its forecast of about ZW$246 million (COTTCO An-
nual Report, 1998/1999). While in 2002, COTTCO’s net profit was
ZW$2.3 billion, nearly a 116% increase from the previous year (COTT-
CO Annual Report, 2001/2002). In 2003, profit after tax was ZW$13
billon, before increasing to ZW$103 billion and ZW$172 billion in
2004 and 2005 respectively (COTTCO Annual Reports, 1998–2006).
As COTTCO and FSI Agricom threatened to withdraw their input
schemes, Grafax (an Asian-based company) announced a ZW$2 bil-
lion input credit scheme earmarked for newly resettled cotton
farmers.28 This somewhat proved that the sector was still attractive
to investors, although this was partly because of the distortions that
existed in the economy (Poulton and Hanyani-Mlambo, 2008). In the
end, COTTCO did not withdraw the contract scheme; instead, it first
suspended its input scheme and then later reduced the number of
contracted farmers and focused on what it called ‘loyal’ and highly
productive farmers (The Cotton Company of Zimbabwe, 2006). These
were mostly the better-off farmers who produced over 1000 kg of
cotton and own assets (Larsen, 2006). For example, Table 2 shows
that COTTCO reduced the number of contracted farmers in Rushinga
district from 3000 in the 2002/2003 season to 1600 in the 2004/2005
season and 1685 farmers in the 2005/2006 season (COTTCO,
Rushinga depot, 2006).29 This way COTTCO could reduce the losses
26
See, The Herald, 28/03/2003; The Financial Gazette, 17/09/2003.
27
Makamure et al., 2001; The Herald, 20/09/2006.
28
Interview with officials from Grafax, 20 July 2006, see also The Herald, 21/08/
2003.
29
Similarly, FSI Agricom scaled down its contracts, citing problems with side
marketing. Other companies like Cholima and Farmers’ World withdrew from the
cotton sector in 2003 allegedly because of side marketing (The Financial Gazette, 17/
09/2003).
 G. Masuka / Geoforum 43 (2012) 573–584
associated with side marketing and perhaps also be able to fulfil its
obligation to supply inputs in a difficult economic environment.30
It appears this approach was not very successful as the suppos-
edly ‘loyal farmers’ engaged in side marketing (see Table 3).31 The
problem was therefore not about trust or loyalty of farmers but
about COTTCO’s perceived lack of competitiveness in an unregulated
market environment. As argued above, this occurred because most of
the new buyers were free riding on other companies which financed
cotton production.32
COTTCO also appealed to the government to introduce reforms
in the cotton sector in order to establish what it called a ‘‘level
playing field’’.33 For example, in 2003 COTTCO took the unprece-
dented step to present a draft reform proposal for the cotton sector
to the Ministry of Agriculture (COTTCO Annual Reports, 2003, 2005).
In 2006, COTTCO reported that ‘‘the company is actively involved in
the setting up of a regulatory framework that would ensure enforce-
ment of quality standards and promote the growth of the cotton
industry’’ (COTTCO Annual Report, 2006, p. 15). However, COTTCO
advised its shareholders that ‘‘while we remain hopeful [about
new legislation] it is evident that this will be a lengthy process
due mostly to lack of industry consensus, particularly among some
players who appear to insist on reaping where they did not sow, thus
encouraging side marketing of the crop’’ (COTTCO Annual Report,
2006, p. 15).
It is important to note that since liberalisation in 1994 Zimba-
bwe had no regulatory framework on contract farming or the cot-
ton sector in general. Without the state to enforce contracts or
industry standards, players cooperated informally through the Na-
tional Cotton Council. The National Cotton Council was established
in 1994 for stakeholders to meet regularly to discuss issues affect-
ing the cotton sector. It had no legal powers to enforce resolutions
agreed by its members. Consequently, members agreed among
themselves to uphold industry standards on uniform grading and
quality (Larsen, 2001; Poulton et al., 2004); however as players in-
creased in the sector informal cooperation became ineffective
(Poulton et al., 2004). As competition increased buyers paid less
attention to grading procedures and quality standards. As a result,
there was increasing concern among stakeholders that Zimbabwe
would losing its international market share as a supplier of high
quality lint along with the premium prices it received (Larsen,
2001; Robinson and Ndlela, 1994).34
It was in this context that in 2004 industry stakeholders includ-
ing COTTCO, Cargill and the National Cotton Council drafted regu-
lations for the cotton sector and presented them to the Ministry of
Agriculture (Poulton and Hanyani-Mlambo, 2008). The Presidential
Land Review Committee made similar arguments for the establish-
ment of an industrial body that would among other things, monitor
and enforce common standards (Jimat Development Consultants,
2005; Utete, 2003). Similarly, in 2005 the then deputy Minister
of agriculture (who was a former managing director and a large
shareholder in COTTCO) argued that the government introduce
policies that stop buyers or ginners from operating unless they
put in place an input and cotton production finance scheme.35 In
30
However, in the 2006/2007 season, COTTCO increased the number of contracted
farmers following and agreement with the National Cotton Council, The Ministry of
Agriculture and The Ministry Industry and International trade that issuance of export
permits would be proportional to the support provided by a company towards crop
production (Poulton and Hanyani-Mlambo, 2008).
31
Interviews with COTTCO officials and farmers in Rushinga district.
32
See Poulton and Hanyani-Mlambo, 2008.
33
Interview with Head of Inputs and Crop Procurement of COTTCO, Harare, 25/09/
2006.
34
The deterioration of quality standards affected other liberalised markets in
commodities like cotton, cocoa and coffee (Gibbon, 1999; Losch, 2002; Shepherd and
Farolfi, 1999; Tollens and Gilbert, 2003).
35
Speech by Mr. S. Nguni at the official opening of the Zimbabwe Cotton Campaign
stakeholders meeting, Harare, 20–21 September, 2005.
581
2006, the Minister of agriculture Dr. Made expressed similar senti-
ments when he said, ‘‘we do not want a situation whereby COTTCO
gives inputs to farmers and other players come into buy the
cotton.’’36
Despite these recommendations and initiatives by industry
bodies and stakeholders, the government did not implement legis-
lation in the cotton sector. However, in 2006 and 2007 the Ministry
of Agriculture new requirements for buyers to be awarded export
permits. In early 2006, the Ministry of Agriculture noted that, ‘‘only
those who supported cotton farmers by giving seed and inputs will
be issued with export permits.’’37 Further, all companies were re-
quired to sell 30% of their lint to the domestic market. Thus, in the
absence of legislation the Ministry of Agriculture could use these
requirements to exert influence on buyers (Poulton and Hanyani-
Mlambo, 2008, p. 28).
There could be several reasons why this was the case. First,
there were disagreements between companies in the cotton sector
regarding the proposed reforms. On the one hand, companies
which financed cotton production and suffered most from side
marketing supported legislation. On the other hand, mostly new
players which benefited from the unregulated environment ap-
peared somewhat resistant to the reforms. In interviews officials
from the new buyers agued that big companies (COTTCO and Carg-
ill) wanted legislation to restrict competition in the sector and en-
act entry barriers for new players. In particular they were critical of
the proposal that all buyers should ‘respect the sanctity of the con-
tract’ arguing that this could restrict farmers’ freedom to sell to
whomever they wish. Further, they claimed that the National Cot-
ton Council (NCC) was dominated by COTTCO; as a result, the pro-
posal that the NCC should recommend a buyer for licensing to the
Ministry of Agriculture before they could participate would in-
crease COTTCO’s dominance and disadvantage new buyers.38
To compound this, there were differences within the state, with
some key actors publicly in favour of reforms while others ap-
peared reluctant. For example, the then Deputy Minister strongly
advocated for reforms yet there were allegations that some politi-
cians had shareholdings in the new companies accused of promot-
ing side marketing disregarding industry standards on quality and
grading hence their reluctance to support the proposed reforms.39
More importantly, in the context of the history and geographi-
cal space described in this paper, re-regulation of the sector could
have appeared like the state was siding with and promoting the
interests of cotton companies and disregarding the concerns of
farmers. Such a position could have been unpalatable to some pol-
iticians from cotton growing regions like Rushinga. For example in
2007, the Member of Parliament for Rushinga district was critical
of cotton buyers and encouraged farmers to stop cotton production
if buyers refused to increase prices.40 I argue that the divisions
among players in the cotton sector together with government’s inac-
tion possibly because some politicians benefited from the status quo
may explain why legislation was not enacted.
The paper examined the relations between farmers and COTT-
CO. In particular, it showed the tensions between contracts that re-
quire regulation and the neo-liberal ideology that argues against
regulation of markets. It could be argued that in deregulated agri-
cultural markets as in Zimbabwe which also experienced macro-
economic instability and the collapse of inputs markets, there
36
Dr. Made cited in The Herald, 25/08/206.
37
Internal document prepared by the Markets and Trade section, Ministry of
Agriculture, 2006.
38
Interview with the operations managers of two new companies, 26/09/2006.
39
Interview with an industry informant, 23/09/2006. In 2006, high ranking
government officials officiated at the new company’s events despite the accusation
that they were disregarding industry standards.
40
See The Herald, 26/04/2007.
582 G. Masuka / Geoforum 43 (2012) 573–584
were trade-offs between short-term profits and long-term invest-
ment in the sector. While it is clear that side marketing, non obser-
vance of grading procedures and quality standards are not in the
long term interests of the cotton sector, it is important to contex-
tualise and understand the behaviour of farmers and companies.
They operated in imperfect markets and specific geographic setting
outlined above. In these real market setting, farmers and buyers
faced severe challenges. It appears they both responded to the
challenges in rational ways and market principles informed this
behaviour. Because the two had conflicting objectives, tensions oc-
curred in the relationship.
6. Conclusion
The paper examined the relations between farmers and COTTCO
largely mediated by contract farming in Rushinga district of Zim-
babwe. It particularly focused on side marketing of seed cotton.
In so doing, the paper highlighted important aspects of the political
economy of African agriculture in the era of liberalisation. More
importantly, the paper examined the conflict between contracts
that demand regulation by the state or monopolies and the neo-
liberal ideologies that promote competitive markets and oppose
state interference or strong regulation. For example in Zimbabwe,
most of the new buyers did not finance cotton production and par-
ticipated only at the buying and marketing stages. As a result, they
were free riding on companies that financed cotton production
through contract schemes. This caused conflict between companies
that finance cotton production through contract farming and those
that did not, as the former lost seed cotton due to them because of
increased side marketing by contracted farmers. In some sense
therefore, in deregulated agricultural markets there were/are
trade-offs between short-term profits and long-term investments.
The contractual relationship between COTTCO and farmers was
distinctive in cotton production and in the rural economy of Rush-
inga district. However, this paper argued that side marketing of
seed cotton strained the relations between these two parties. On
the one hand, farmers exercised freedom and applied market prin-
ciples embedded in the neo-liberal ideology when they sold seed
cotton to whoever they wish after they paid loans owed to COTT-
CO. In addition, farmers sought to maximise their returns as cotton
production was their main source of income. On the other hand,
COTTCO also wanting to increase shareholder value and profits
wanted farmers to supply all seed cotton as stated in the contract.
The disagreements between the two parties over the meaning of
side marketing strained relations. The contest between farmers
and COTTCO tell a story about the difficulties of operating contract
farming in the period under review. In particular, it shows that the
outcome from contract farming was not determined by or merely
based on the written contractual agreement entered into by the
two parties; rather it was influenced by other actors/agents oper-
ating in the market, by the state and by local, national and interna-
tional factors. As these agents competed to maximise their returns,
they both sought to renegotiate the meaning of contracts with
varying levels of success. In this regard, neo-liberalism was not
merely dictated or imposed; rather, it was being negotiated and
changed to suit locally specific trajectories in Rushinga district
and to work in the prevailing economic and political environment.
Acknowledgements
I am grateful to the Department of Resource Management and
Geography, University of Melbourne for financial support. I thank
cotton farmers in Rushinga district for being generous with their
time and knowledge. I also thank Enocent Msindo and the
anonymous reviewers for useful comments on earlier drafts of this
paper. I take responsibility for any shortcomings.
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