From rice to sugar, from smallholder to businessman : a case study of outgrower schemes within the EcoEnergy Bagamoyo project, Tanzania

Sammanfattning: Many governments in Africa envisage the potential to create rural employment, improve energy balances and strengthen their national economies by encouraging investment in large-scale agriculture. This trend is being intensified by global demand for alternative sources of energy and food, against a background of high oil prices and growing world population. Bagamoyo EcoEnergy is a Swedish-owned, large-scale agriculture investment project taking place in Bagamoyo district, eastern Tanzania. The company has been allocated land for producing sugar for the domestic market and is promoting new jobs, wealth creation, power and better infrastructure. In 2013, EcoEnergy (EE) received a credit guarantee of 120 million SEK from the Swedish International Development Cooperation Agency (Sida). One of the main components of the project is an outgrower scheme intended to organise farmers to produce and sell sugar cane to the company. Outgrower schemes have become a commonly used model throughout Africa for generating mutual benefits between ago-food companies and smallholders. Features characterising outgrower schemes are often use of contracts, organisation of farmers, technical support, advisory services and market access for the farmers, in exchange for their produce. EcoEnergy has targeted smallholders in two rice growing schemes in two separate villages to potentially become the first commercial sugar cane outgrowers. This thesis examines some key organisational aspects of these smallholder groups, particularly potential risks and opportunities associated with implementation of the outgrower plans in the respective villages. In semi-structured interviews, the main method used for data collection, members of the two organisations shared their experiences of the rice schemes and their views on the planned outgrower schemes for sugar cane. The results revealed a rice production enterprise fraught with difficulties and threats, such as cooperation issues, insufficient credit for maintenance costs and purchases, poor marketability, infrastructure and quality of rice variety, and environmental calamities. Changing the crop from rice to sugar cane is a major uncertainty and further potential threat to the organisations. Smallholders have no experience of sugar cane production and no tradition of farming collectively on the land. Moreover, the huge commercial loans required are arguably disproportionate to smallholders‟ current management capacity, while their visions and objectives are being heavily influenced and determined based on the plans of EE. To avoid dependence, members should be allowed to devise an organisation that best suits their needs.