Payments conflict among farmers brings sisal production to standstill

31Oct 2018
By Financial Times Reporter
Financial Times
Payments conflict among farmers brings sisal production to standstill
  • Farmers in five sisal estates - Mwelya, Hale, Ngombezi, Magunga, and Magoma - said the continued closure of the processing plants was compounding their individual financial hardships

PRESIDENT John Magufuli has been asked to intervene to end a stand-off between farmers under the Sisal Smallholder and Outgrower Scheme (SISO) in Korogwe district and their partner, Katani Limited, so as to enable resumption of sisal production activities in Tanga region.

Eight sisal processing plants belonging to Katani Limited, which initiated the scheme, were closed by the Tanga Regional Commissioner Martin Shigela on August 21 this year due to a simmering conflict between the two parties over how to share the earnings.

The farmers expressed their sentiments following the passing of the deadline set by the Minister of Agriculture and Irrigation, Dr Charles Tizeba, for an end to the conflict which is affecting not only the lives of the farmers and the company but also causing a loss of nearly 10 million/- per day in taxes since the processing plants were closed.

In interviews conducted in five sisal estates - Mwelya, Hale, Ngombezi, Magunga, and Magoma - the farmers said the continued closure of the processing plants was compounding their individual financial hardships.

During his visit to the estates, Dr Tizeba had promised to end the conflict by October 10 this year, saying a payment system being worked by a consultant commissioned by the Tanzania Sisal Authority (TSA) would have been ready by then.

“Our lives have suddenly been reversed from financial well-being back to difficulties after closure of the plants," said Habiba Mbelwa, a woman farmer who defied the odds to become one of the most successful smallholder farmers under the scheme.

Habiba agreed that there are problems within the scheme that must be solved between them and Katani Limited that initiated the scheme. However, she also said she believes the problems are solvable, and expressed hope that the new payment system being worked out will prove the antidote.

But she minced no words in underlining the fact that the continued closure of the processing plants is exacerbating the farmers’ hardships.

“What we want is for President Magufuli to intervene and ensure that we are supported by the government to solve our liquidity problems, and also address the delays in being paid by the buyers of our sisal produce,” Habiba said.

Another farmer, retired civil servant Mohamed Mgaya, said they want the government to find a final solution. “The profits we were getting from continued operation of the scheme were greater than the losses we are now getting through closure of the processing plants,” he bemoaned.

Minister Tizeba had promised that the final report of the consultant would have been complete by October 10 and other issues like an audit of debts by the Controller and Auditor General (CAG) would have been dealt with to enable resumption of sisal production and processing.

Katani Limited chief executive officer (CEO) Juma Shamte, whose company has been losing 50 million/- in production every day since August 21 through closure of its eight plants, said the company believes there is a chance for them to make improvements to the scheme without both sides incurring further losses due to the impasse.

According to Shamte, the government has also been losing nearly 10 million/- in taxes since August 21 due the closure of production activities.

He said Katani Limited had pledged to continue to offer guarantees for getting services on credit without interest, using a friendly income-sharing system just like the one being used in the tea and sugarcane smallholder and outgrower schemes.

The proposed system has been researched by farmers, the company and consultants from the Sokoine University of Agriculture (SUA).

Other recommendations offered by the company include strengthening the marketing committee composed of farmers and sisal plant owners, helping farmers to buy 40 per cent shares in the processing plants, and giving them seats on the company’s board of directors.

But Shamte also said there are some snags standing in the way of involving the farmers in the company’s ownership, including the Tanzania Sisal Board (TSB)’s delay in giving Katani Limited land title deeds.

Shamte also proposed an official investigation of how agricultural marketing cooperatives (AMCOS) are being run, to detect mismanagement of funds, poor overall management of the AMCOS, poor keeping of farmers’ records, and the like.

He said there is a need to strengthen the managements of the AMCOS which were established through mobilization by Katani Limited when initiating the SISO scheme.