An evaluation of the Southern Tombwe Growers Association out grower credit scheme for small holder farmers in Choma District
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Date
2007
Authors
Lukwesa, Herman
Journal Title
Journal ISSN
Volume Title
Publisher
University of Zambia
Abstract
The general objective of the study was to evaluate the credit delivery scheme provided to
small scale tobacco farmers by Southern Tombwe Growers Association (STOGA) in the
out grower scheme arrangement. The specific objectives were to determine (a) the loan
recovery rate from small scale farmers at STOGA (b) the factors influencing small scale
farmers to default in their loan repayments (c) the appropriateness and effectiveness of
the credit delivery scheme offered by STOGA to small scale farmers.(d) strategies out
grower schemes have in place to reduce high default rates by small-scale farmers.
This study was carried out in Choma District of Zambia. The study was done with
STOGA which was running an out grower scheme with small scale farmers in this area.
The study focused on a single crop (tobacco) for easy evaluation. The association had
378 members benefiting from the scheme and only 80 farmers were selected for the study
using simple random sampling techniques. Both primary and secondary data was
collected from the Board members and extension officers at STOGA who are the scheme
managers. A case study conducted on STOGA. Interviews were conducted with small
scale farmers to collect primary data using questionnaires and focus group discussions.
According to the research findings, the number of farmers who had defaulted was 57.5%
i.e. they fell below the cut- off point. Of the factors that contributed to the farmers
defaulting {54.3%) attributed the default to drought, (63.0%) to low price fetched by the
tobacco on the market, (41.7%)) to poor harvest due to late delivery of inputs and (67.5%)
due to delays by the contracting firm to pay farmers for their produce were among some
of the reasons farmers attributed to causing them to default. Despite the default rates
being 57.5% of the farmers defaulting, 62.5%) of the farmers indicated that they were
benefiting from the out grower scheme in terms of increased income and improved
livelihood and the defaults were not to the extent that can close down the out grower
scheme.
It was recommended that the out grower scheme should consider revising the terms and
conditions of paying back the loan in instances were yields are affected by natural causes.
Farmers need to be consulted when it comes to setting the selling price of tobacco rather
than imposing these prices on them. Prices of tobacco on the floor to be quoted in kwacha
and not in dollars so that farmers can better understand the pricing system. Extension
workers to intensify their visits during harvesting and curing time as this would help the
farmers increase their income by achieving a better grade when selling tobacco on the
floors. The out grower scheme to include programmes that incorporate the growing of
staple foods such as maize side by side with tobacco to reduce on the number of farmers
side selling the produce to buy food.
Description
Student Project Report
Keywords
Agricutural Credit-Zambia