Institutional arrangements of outgrower sugarcane production in Southern Africa

ABSTRACT

Management models are needed that empower local communities to produce biofuel feedstock in a manner that drives rural development. Much can be learnt through the accumulated experiences of sugarcane outgrower schemes in southern Africa. Early schemes provided limited empowerment, but protected outgrowers from the risks of volatile sugar value chains. In later schemes, processing plants were responsible for all operations and simply paid dividends to participating farmers. More recent schemes offer full ownership, which comes with greater rewards and empowerment, but also exposure to risks. The underlying institutional structures of outgrower schemes largely dictate their performance, and thus the factors that affect their viability or collapse. To understand the different institutional arrangements of sugarcane outgrower schemes we undertake a comparative analysis of 13 schemes in southern Africa employing a political economy framework that uses the three key questions: ‘who owns what’, ‘who does what’, and ‘who gets what’.

KEYWORDS:

• Biofuels
• sugarcane
• outgrowers
• contract farming

Acknowledgements

This research was made possible through funding from UNU-Wider and the Belmont forum project. The information provided by mill owners, plantation owners, small growers and industry representatives is greatly appreciated.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 We use the term ‘outgrowers’ synonymously with ‘contract farmers’. The term is well suited to describe the typical nuclear plantation model found in sugarcane growing where there is as core estate and then the ‘outgrowers’ who supplement the production from the core estate.

2 Sugarcane is a highly perishable crop that needs to be processed as soon as possible after harvesting. In the overwhelming cases in Africa only a single mill services a sugarcane growing area (Dubb et al., 2017).

3 In the sugar industry the processing plant is typically referred to as a sugar mill. Sugarcane crushing to extract the sucrose rich juice is the first part of sugarcane processing (whether for sugar or ethanol). Subsequent processes include the extraction and refinement of the sugar, or the production of ethanol. Ethanol production can happen from the fermentation of either sugarcane juice or molasses, which is a by-products of sugar refinement. The more generic term “processing plant” could apply to the mill, refinery or ethanol production facility.

4 In South Africa it was found that regions tended to have a common approach and it was easier to discuss this approach in totality rather than linking it to one of the many small projects.

5 Participants in the Kaleya outgrower scheme have been sourced from throughout Zambia (Schupbach, 2014).

6 The %RV refers to the % recoverable value and is a mechanism to compensate growers that harvest before or after their sugarcane reaches its peak value. This allows for the extension of the harvesting period and essentially for greater seasonal throughput from the mill. By extending their operating periods, mills can therefore provide a market to a larger area of sugarcane producers.

7 It is worth mentioning that in contrast to the irrigated farmers, the dryland farmers in Dwangwa operate/negotiate directly with the processing plant through their associations which are independent of state control.

8 As shown In this study outgrower models can produce sugarcane (and other industrial crops) as efficiently as core plantations, but without some of the negative social impacts.

Additional information

Funding

This work was supported by the UNU-Wider under Grant 605UU-0000000000000000000001572; NRF (National Research Foundation) under Grant Belmont forum FICESSA project.