A temporary solution that effectively introduces a new system for dividing earnings from sisal has been agreed between Katani Limited, the local company that pioneered the scheme (Sisal Smallholder and Outgrower Scheme –SISO) and the smallholder farmers it helped to mobilize into the farming approach.
The provisional arrangement was announced by Tanga Regional Commissioner Martine Shigela, when he visited the five estates to cool tempers resulting from suspension of production activities in decorticators owned by Katani Limited.
A provisional arrangement sets the division of earnings which touched off discontent among farmers, where the formula sets an earning share formula at 54 percent to Katani Limited and 46 percent for the smallholder farmers, he said.
The provisional formula would be in force for at least three months until a final report that sets new agreeable formula and regulations to guide relations between the two partners is presented by a consultant who was commissioned to work out the new guidelines, he further noted.
The decision to hire the consultant was made after a long push and pull struggle between the two sides on what could be deemed as a better arrangement to share proceeds of sisal production.
The RC put a stop to production activities in Katani Limited processing plants thus halting all harvesting and processing activities from August 21.
“We decided to work out a provisional plan to save the situation. We saw it would be disastrous to smallholder farmers and families who depend on sisal production, the company and the government to continue with the ban on production activities to await the consultant’s report,” said Shigela in meetings with farmers, Katani Limited and officials of the Tanzania Sisal Board (TSB) in all the five estates.
He said that the scheme which was established to enable small farmers to take part in sisal farming about 20 years ago had several challenges that must be solved to enable both sides to operate profitably.
He mentioned the challenges as including complaints over prices and payments. While the provisional regulations set the tone for competitive sisal sales and ownership, it does not allow for farmers to sell sisal fibre as individual farmers, he pointed out.
Explaining the provisional guidelines, TSB Director General Yunus Msika said that under the provisional guidelines and proposed permanent regulations the two sides would operate a joint account of the proceeds from sisal fibre sales, but the farmers’ share (46 percent) would be deposited in their own account whose signatories would be drawn from amongst themselves.
“Farmers’ payments would be posted directly in their own account and they would be responsible for processing farmers’ payments,” he specified.
He said that under the new plan every farmer would be given a receipt showing how much fibre he produced and what category of payment he deserves.
The plan also introduces a sales committee, which would be comprised of farmers’ representatives, Katani Limited and board officials. The committee would oversee sales and select the highest bidder.
Speaking on accumulated debts on both sides, Msika said that the Controller and Auditor General (CAG) needs to go through Katani Ltd and Agricultural Marketing Cooperative Societies (AMCOS) to determine who owes what.
The audit would be paid by both sides under the same formula of 54 percent (Katani) and 46 percent (farmers). Arrangements on how to pay the debts would be made after the audit, he said.
The government would take steps to strengthen sisal farmers’ coops to enable them to oversee smallholder sisal farming.
Engineer Mark Njiu. the TSB deputy chairman, said that what was happening in the SISO scheme was a normal situation in the development of commercial activities.
Eng. Njiu said that after 20 years since the scheme was established, the players were now ready for new commercial relations. “People should not take this crisis as strange, or that it can kill the contractual agriculture approach. This, on the contrary is a sign of growth where each side now wants to relate to the other on commercial and profitable terms.”
Katani Limited Managing Director Juma Shamte thanked the RC for coming up with the provisional arrangement which he cited as the road to establishing a better arrangement that would benefit both sides.
“What has been decided is in agreement with our objectives for establishing the scheme 20 years ago. We wanted to create a class of farmers who would also be owners of the process through shareholding,” he said.
This was a good example of public private partnership (PPP), Shamte intoned, elaborating that it showed how the government is ready to work with the private sector in the development process.
The company hopes that meetings with the farmers and the government side would go on to iron out remaining differences, he added.