1. Introduction
Tobacco accounts for over 10% of the Zimbabwean Gross Domestic Product (GDP) (Ngarava, 2020), and is the country’s second largest source of foreign currency after gold (Mahando, 2020). Zimbabwe is the sixth largest tobacco producer in the whole world, but its pole position was at one time lost during the last two and a half decades after the government had embarked on the Fast-Track Land Reform Programme (FTLRP) that dispossessed the few large commercial farmers of their land in favour of the landless peasants (Moyo, 2022). Despite having vast tracts of land in their possession, the new beneficiaries of the FTLRP could not finance their farming activities (Shonhe et al., 2021). Serendipitously, contract farming, which is a form of supplier development initiative in agricultural supply chains (Mukucha & Chari, 2021), emerged as the tobacco merchants sought to avert the tobacco supply chain disruptions (Mukucha & Chari, 2022). The growth of contract farming as a financing model for tobacco farming grew from scratch in the year 2004 to 93% of all the tobacco currently produced in Zimbabwe.
Contract farming is an arrangement between a merchant (buyer) and a farmer (supplier) that involves a merchant providing a farmer with farming inputs, and in return, a farmer would be obliged to sell all his/her produce to a contracting merchant (Ruml et al., 2021). Contract farming increases yield (Mukucha et al., 2024; Mukucha & Chari, 2021) and ensures that the merchants receive an uninterrupted supply of commodities of good quality and at a sustainable cost (Mukucha & Chari, 2021). However, recently most tobacco merchants have been receiving fewer returns from their investments as a result of contracted farmers indulging in side marketing practices (Mukucha et al., 2024). Side marketing practice is a criminal offence under SI 2022-077 of the Tobacco Industry and Marketing (Prohibition of Side Marketing) Regulations, 2022. Despite side marketing being a breach of contract, some contracted farmers continued to indulge in that malpractice.
Preventing farmers from side marketing practices can only be achieved if agribusiness merchants are cognisant of how contacted farmers evade detection in practising side marketing. This can help contracting merchants to come up with appropriate policies and create a sustainable business environment that ensure a smooth supply chain velocity that sustains the resilience of their value chain processes. Thus, this study seeks to find out the execution of side marketing among tobacco farmers and how they evade detection. In accomplishing this study’s objectives, the rest of the study is organised as follows: a literature review based on the theoretical framework involving the expectancy theory (Vroom, 1964) and empirical evidence that brings forth the current research gap, the methodology adopted, the presentation of the results as well as the related discussion and proffering of recommendations.
2. Literature Review
2.1. Side Marketing
Side marketing refers to a practice whereby a contracted farmer deliberately avoids selling the produce to the contracting merchant who had financed his farming operations in favour of third parties who contributed nothing to the farming operations (Alemu et al., 2021). It is argued in this study that input diversion is an extended form of side marketing, as it also results in other third parties getting the inputs meant for assisting in growing the contracted crops at the expense of the yield that should accrue to the contracting merchant. These practices are a violation of a contract farming agreement (Gerard et al., 2020), since a contracted commodity should receive adequate provision of inputs and be bought by the financing merchants (Mukucha et al., 2024a). The mechanisms that involve the motivation of side marketing can be explained by the expectancy theory.
2.2. Theoretical Perspective
The expectancy theory was conceptualised by Vroom (1964) as a motivational theory for explaining how individuals’ choices are driven by the expected outcomes emanating from their behaviours. The theory suggests that individuals are motivated to take certain courses of action on the basis of the outcome expectations and value (Shell, 2023; Feather, 2021a). The proposition of the theory is that the desired results lead to engaging in specific behaviours (Özaslan & Özaslan, 2023; Nikulina & Wynstra, 2022; Mehboob & Othman, 2020) influenced by the three psychological constructs: expectancy, instrumentality, and valence (Vroom, 1964).
The first component of the expectancy theory is expectancy (E→P), which posits that improved performance is a function of efforts. Expectancy is shaped by several factors such as goal attainment difficultness, self-efficacy, and perceived control (Raynor, 2021; Weber et al., 2020). Expectancy in the context of contract farming involves farmers assessing their ability to effectively engage in side marketing practices while evading detection. This could be motivated by the availability of alternative markets and the marketing conditions in those markets (Yeshitila et al., 2020). Usually alternative markets are set up closer to the farming operations of the contracted farmers during the marketing season (Benos et al., 2024).
The second component of the expectancy theory is instrumentality (P→O), which alludes to the belief that indulgence in a specific performance is associated with certain outcomes and rewards. This component is associated with control, trust and policies (Amir et al., 2023; Feather, 2021b). In contract farming arrangements farmers would evaluate the positive consequences of breaching contract farming clauses through side marketing, such as increased revenue and access to better markets (Hambloch, 2022). They also assess the negative consequences (Benos et al., 2024), which include prosecution and permanent exclusion from future engagements. However, considering that there are very few cases that have been prosecuted for the practice of side marketing, the temptation still remains much higher for the contracted farmers.
The third and last component of the expectancy theory is valence (V(R)), which relates to the value placed on anticipated rewards or outcomes by the individuals. Valence reflects the alignment between the outcomes and the personal goals of the individuals (Mehboob & Othman, 2020). In the context of contract farming initiatives, farmers may find additional income more important, as it offsets what they perceive to have been unfair arrangements imposed on them by the contracting merchants (Benos et al., 2024). The unfair arrangements are usually presented as high contract farming inputs against low producer prices (Nyamamba et al., 2022), which lead to what is generally considered the proletarisation of smallholder farmers (Vicol et al., 2022).
2.3. Empirical Evidence
Side marketing has received considerable empirical attention, with various studies aligning to specific research streams. A recent research stream focused on profiling the demographics of farmers inclined towards practising side marketing (e.g., Repar et al., 2018). More specifically, in a study by Mukucha et al. (2024a) that focused on the tobacco industry, it was found that farmers who are likely to practice side marketing are male and young-aged farmers who are inherently risk-takers. A similar earlier study conducted by Repar et al. (2018) in the horticultural sector found the determinants of side marketing to be the level of education and the level of remoteness from the operational base of the contracting merchants.
The other stream of research paid attention to the psychological factors that drive the farmers into side marketing practices. For instance, previous research found that side marketing practice is driven by lack of mutual trust (Yeshitila et al., 2020), feelings of being in an unfair relationship (Nyamamba et al., 2022), lack of transparency in the form of information asymmetry (Benos et al., 2024), and when faced with threats of market failure (Geng et al., 2023). Researchers have also dwelt on finding solutions to eliminate side marketing, such as implementing vertical integration with suppliers (e.g., Nyamamba, 2023), expelling defaulting farmers from the scheme (Benos et al., 2024), and providing incentives for ethical conduct and disincentives for side selling (Alemu et al., 2021). However, missing in the extant research is how the farmers execute side marketing while at the same time evading detection. This information is important to agricultural merchants who need to protect their investments as well as avoid supply chain disruptions. In seeking to gain that understanding from the farmers, this study used the methodology outlined in the section below.
3. Research Methods and Materials
3.1. Population and Sampling
The studied population was made up of contact farmers. The inclusion criteria involved selecting farmers who had practised side marketing within the last 2 agricultural seasons. The exclusion criteria involved excluding independent tobacco farmers and contracted tobacco farmers who had never practised side marketing. In line with the stated inclusion and exclusion criteria, the sampling method adopted was purposive sampling. Purposive sampling enabled the researchers to interview the relevant respondents with the information related to the research objectives (Saunders et al., 2018). Convenience sampling supplemented the purposive sampling method.
Convenience sampling targeted the willing respondents who could be conveniently accessed and were willing to partake in this study (Bell et al., 2022). The search for willing participants was motivated by having most of the targeted respondents declining to partake in this study on the basis that the subject matter involved their practising of an illegal activity. They were not sure whether the researchers were not disguised investigators who were collecting evidence to build a prosecuting docket. Despite giving assurances, some of them still remained adamant in their refusal to partake in the study. However, the researchers still managed to get a good sample that saturated at twenty (20) respondents.
3.2. Data Collection Procedures
The farmers who took part in this study were contacted at the tobacco floors in the city of Harare. All the licensed tobacco floors operating in Zimbabwe during the 2023/24 agricultural season are in the city of Harare, although they have branches scattered around the four tobacco-growing provinces. Data was collected through semi-structured interviews. Interviews allow for collecting data that provide new insights into the research problem as well as allowing for probing in order to gain some clarifications on new issues raised (Holloway & Galvin, 2023; Bell et al., 2022). The farmers were asked whether they had been involved in side marketing before and how they executed their side marketing malpractices.
In conducting the data collection process, some ethical considerations were observed. The adherence to research ethics ensures the acceptability of the research findings (Lindheim, 2022). In a bid to observe the research ethics, the farmers were requested to provide their verbal informed consent before data collection. The respondents’ anonymity was also preserved through excluding their personal details from the data collection records. The respondents were also free to disengage from the study at any stage without facing any consequences. Respondent validation, an ethical practice, was also used on some of the respondents whom the researchers managed to contact post the data collection process.
3.3. Data Analysis Procedures
Data was analysed thematically. Thematic data analysis is in sync with the non-numerical data collected within the realms of the interpretivist research philosophy (Gichuru, 2017). The data analysis technique involved several procedures that included systematic data coding, using descriptive tags for identifying themes, and then interpreting the deduced themes for understanding the underlying phenomena (Braun & Clarke, 2022). The interpretation of data leveraged the use of critical thinking and reflection (Duffy et al., 2022).
3.4. Validity and Reliability
The validity and reliability of the results were demonstrated through assessing for the tenets of qualitative studies that include the need for the results to be credible, transferable, and dependable. Respondent validation was used to ensure the credibility of the results. This involved presenting the results to the respondents in order to assess whether the findings resonate well with their submission (Burrows, 2023). This strategy also served as an enhancement to the ethical considerations (Lindheim, 2022). Thick description of the entire research process, including the research settings, was used to demonstrate the transferability of this research’s findings. Finally, rigorous data collection and analysis procedures were employed in order to ensure the credibility of the research findings (Johnson et al., 2020; Jones et al., 2019).
4. Results and Discussion
4.1. Sample Characteristics
The surveyed sample was made up of 20 tobacco contract farmers. The sample size of 20 was determined through the principle of saturation point. The themes started recurring until the researchers had to stop at the 20th respondent. The demographics of the surveyed respondents comprised 75% males and 25% females. 80% of the respondents were married, while 20% were single. 70% were smallholder farmers from the A1 and 2 plots, while 30% were communal farmers.
4.2. Findings
The results in this study indicated how contract farmers practise side marketing as part of contract breaches. The farmers indicated that side marketing takes two forms, which are namely side marketing of farming inputs and side marketing of farm outputs. The farmers indicated the motivations behind the practice of each form of side marketing.
4.2.1. Inputs diversion
The respondents indicated that the first type of side marketing they practise is inputs diversion. They said that they divert the inputs that are meant for producing cash crops to finance food security crops. The reasons for input diversion from the respondents are presented as follows:
Liquidating the inputs
The respondents indicated that they divert the inputs through selling to the grey market. The grey market consists of the independent farmers that look for a cheap supply of agricultural inputs. These views are shown in the excerpts below.
“Usually after receiving the inputs, we find the buyers from the neighbouring farmers who are willing to pay us instant cash”. (Respondent 3).
“There is always a ready market for the farming inputs since we normally sell below the market prices. Our major markets are those independent farmers that would have failed to enter into contract farming arrangements or have enough cash resources to finance their own farming operations (Respondent 16).
The farmers indicated that they tend to divert some of the inputs provided to them by the contracting merchants in order to finance the pressing domestic needs. The remarks submitted by some of the respondents are indicated as follows:
“Sometimes we run short of domestic supplies such as groceries, and without anyone to provide us with some financial relief, we end up just liquidating some of the inputs provided under the contract farming arrangements (Respondent 14).
“I could not stand seeing my children failing to attend school, so I had to sell some of the pesticides and fertilisers in order to raise the school fees for my children (Respondent 19).
The other farmers indicated that the reasons for liquidating the inputs received under the contract farming arrangement relate to the late distribution of the inputs. Late delivery of the inputs affects the farmers’ yield due to ineffectiveness of late input application. Therefore, the farmers would realise that late input application would be wastage of inputs, so they sought to recoup value through liquidating the inputs. One respondent summed up the situation as follows:
“Most of the time the contracting merchants supply us with inputs such as fertilisers, herbicides, and pesticides very late when it will be uneconomical to apply them to our crops. We therefore simply convert those inputs to cash and content ourselves with the plight of having failed to apply the necessary inputs”. (Respondent 4).
Food security financing
Most of the contract farmers divert the inputs availed to them by the contracting merchants to financing their food crops. The most commonly diverted inputs are fertilisers, pesticides and herbicides. Two of the interviewed farmers explained that;
“We take some of the inputs to support our farming of food crops such as maize and small grain crops”. (Respondent 9).
“We no longer buy fertilisers and pesticides for our staple food crops; we simply viramend from the contract farming packages and support the growing of our domestic food”. (Respondent 16).
The farmers gave several reasons why they get tempted to divert some of the inputs meant for contracted cash crops to the farming of food security crops. The farmers indicated that;
“We usually can’t afford to buy our own farming inputs for growing cereal crops, so in order to enhance our food security, we tend to help ourselves with the provisions from the contract farming package”. (Respondent 5).
“We have realised that if we don’t help ourselves with increasing the yield for our food security, we may not be able to buy food from contract farming income because it is very low. Therefore, we tend to take some of the inputs as part of increasing our benefits because these merchants are simply after exploiting us”. (Respondent 7).
4.2.2. Outputs diversion
Outputs diversion is another form of side marketing practised by some of the contract farmers. The tobacco farmers indicated that they divert their outputs from the contractual channels to grey market channels through the assistance of illegal middlemen that buy tobacco from the farmers and sell it to the tobacco auction floors as their own produce. These middlemen buy from the contracted farmers at a cost that is below the market price in order to improve their profit margins. The defaulting farmers accept this arrangement because the loss from the malpractice is borne by the official contracting tobacco merchants. The respondents made the following submissions:
“We sell our produce to the fly-by-night merchants who mushroom during the tobacco harvesting and marketing months”. (Respondent 8).
“Sometimes we sell to other merchants via other contract farmers who have no grievances with their contracting merchants”. (Respondent 10).
“We sell our tobacco through our friends and relatives who are not contracted to anyone. When our friends and relatives have sold, they will then remit what is due to us”. (Respondent 20).
There are several reasons that tobacco farmers gave on why they indulge in side marketing of their produce when they are supposed to channel all their output produce to the contracting merchants. The reasons offered include the need to raise extra income for meeting their operational costs and remaining with a decent profit. Some of the respondents made the following illustrative remarks:
“The merchants tend to underpay us because we always get to know that the international prices for our commodity are higher than what is offered to us”. (Respondent 2).
“We tend to recover the lost revenue that merchants rob us of by offering very low prices by selling some of the produce to the unscrupulous merchants who offer better prices”. (Respondent 15).
4.3. Discussion
The results indicated that breaches of contracts between farmers and tobacco merchants, commonly known in the extant literature as side marketing, take the form of inputs and outputs diversion. The major reasons for side marketing practices found in this study resonate with what already is documented in the extant literature: that side marketing revolves around transaction-related issues (Ewusi et al., 2022; Nyambara & Nyandoro, 2019). However, the nature of transactions differs from one context to another, and that is what this study has tried to explore.
Contract farming inputs diversion takes two forms. The first form of input diversion involves using the contract farming inputs on non-contacted crops, especially food security crops such as maize and a host of small grains. Inputs diversion is usually conducted on inputs such as fertilisers, pesticides, and herbicides that are also useful on other crops such as food security crops. Ironically, the application of tobacco compound fertilisers on other crops such as maize may not yield the expected results since compound fertilisers are customised to each crop depending on the differential nutrient requirements (Barłóg et al., 2022). For instance, tobacco requires fertilisers high in nitrogen content in order to become vegetative (de Marchi Soares et al., 2020), whereas maize requires fertilisers high in potassium and phosphorus for flowering and grain filling (Sinha & Tandon, 2020).
The second form of input diversion involves liquidating contract farming inputs. Contract farming inputs are diverted through selling them in the grey market. Previous research has shown that when farmers are cash strapped, they do not hesitate to sell whatever is possible to bring in fast cash (e.g., Geng et al., 2023). Moreover, since most of the inputs are delivered very late, their application to the designated crops would miss the optimal timing (Shiringo et al., 2022). Missing the optimal timing in fertiliser and pesticide applications leads to stunted growth, increased disease and pest infestation risk, and delayed maturity (Troldborg et al., 2022). Therefore, liquidating them in the grey market would be a way of salvaging some economic value. These findings support previous findings in a study by Ewusi et al. (2022) where side marketing was established as a function of transaction-related issues related to late delivery of inputs.
Contract farming output diversion was also found in two forms. The first form involves dealing with unscrupulous merchants who are middlemen or agents specifically set up to assist or provide conducive conditions for violating contractual terms (Shonhe, 2021). The preference for these unscrupulous merchants emanates from the fact that contract merchants take long to pay the farmers for their produce (Ewusi et al., 2022), while unscrupulous merchants promise to provide spot payments (Shonhe, 2021). Considering that the farmers are always faced with pressing needs for money, they tend to find offers from the unscrupulous merchants very tempting (Taringana & Nyambara, 2023).
The second form of contact farming output diversion is executed through using a friend or relative who is also a registered tobacco grower to sell the defaulting farmer’s produce as a way of evading dealing with the official contracting merchant. The success of these evasions is likely to be a result of a weak monitoring system (Makoye et al., 2022). It seems the contracting merchants are deploying inadequate numbers of agricultural extension officers to monitor the agronomic practices of the contracted farmers (Shiringo et al., 2022). With proper monitoring systems, contracting merchants can come up with accurate production estimates that they can compare with the delivered produce.
The motivations for the output diversion form of side marketing were reported to be a desire to maximise the returns from farming business due to the contract merchants’ offering of very low producer prices against high input prices. A previous research by Mango & Kugedera (2022) noticed that low producer prices were a threat to tobacco farming viability among other challenges. This finding resonates with the findings in previous research by Nyamamba et al. (2022), which has already indicated that contract farming rewards are very low to the extent that they barely sustain the farming operations beyond a considerable number of agricultural seasons.
Late honouring of the farmers’ purchase invoices after the delivery of the tobacco harvest was also revealed as one of the reasons for side marketing. In a study by Shumeta et al. (2018), it was revealed that the late payment for delivered produce inadvertently drives contracted farmers into breaking their contracts by seeking alternative markets that make spot payments. Mango and Kugedera (2022) regarded delayed remittances of what is due to the farmers as one of the pitfalls in tobacco contract farming in Zimbabwe.
5. Conclusions
The results from this study indicate that there is a poor buyer-supplier relationship in the tobacco industry resulting in destructive opportunistic behaviours. Contact farmers perceive that there is an unequal power relationship between themselves and the buyers (Sakata et al., 2022). The inequality in power distribution is common in monopsonistic and oligopsonistic situations (Hambloch, 2022), such as the one prevailing in the tobacco industry. This perception is not without substance. More often than not, the buyers fail to meet their contractual obligations, such as timely supply of inputs. The delay in the supply of inputs affects the farmers’ yield and quality of the produce, leading to fetching lower market prices. This tends to squeeze the farmers’ profit margins to the extent that they end up looking like poorly remunerated labourers. In fact, such a scenario makes the farmers feel as though they are being proletarianised (Vicol et al., 2022). There is therefore a need to create an egalitarian environment where the parties to contract farming treat each other as equal partners who are not after exploiting each other.
The side marketing practice, as can be deduced from the findings of this study, is related to the buyer-supplier relationship matrix. The relationship is largely transactional. It seems the transactional relationship currently prevailing in the tobacco industry is a fertile ground for side marketing indulgence. This is based on the fact that both buyers and suppliers are either ignorant or unappreciative of the sustainability tenets of maintaining a smooth supply chain velocity. Both the parties are preoccupied with short-term gains that not only harm their relationship but also hinder the sharing of ideas that can result in a win-win situation, resulting in a transactional relationship (Mukucha & Chari, 2023). Transactional relationships are characterised by information asymmetry (Hung Anh et al., 2019). This asymmetrical information leads to individualistic decisions that seek to maximise returns at the expense of the other partners.
Lastly, the study concluded that side marketing is driven by transaction-related issues such as late delivery of inputs and late payment for delivered produce. These behaviours send wrong signals to the farmers, who may perceive the contracting merchants as irresponsible and less concerned about their welfare. The farmers would then devise survival strategies that are anchored on short-termism. Therefore, the contracting merchants should address all the concerns raised by the farmers and then cultivate higher levels of coordination and interaction. While it may not be possible for contracting merchants to regularly deal with all the contracted farmers, considering that the tobacco farming industry is largely an oligopsony, the contracting merchants can devise a default reduced supply base. This can be achieved through putting the farmers into unions and then dealing with union members. This strategy has already been implemented with some measure of success in the milk (Geng et al., 2023) and cocoa cooperatives (Sellare et al., 2020).
Policy implications
This study has numerous implications for both the policy makers at the central government level and the participants in the agricultural value chains. Firstly, the government must put in place a strong legislative framework that criminalises the exploitation of vulnerable farmers. The existing legislations, such as the Statutory Instrument (S.I.) 140 of 2013, Statutory Instrument 77 of 2022, Agricultural Marketing Authority Act (No. 26 of 2004), and Statutory Instrument 140 of 2013, do not contain strong deterrent penalties. As a result, there are persistent malpractices in the agricultural value chains that create a toxic environment that is less attractive to the international investors.
The existing legislation that governs procurement in the agricultural sector, such as the statutory instrument number SI 77 of 2022, though weak, should be enforced in order to create a conducive business environment. This should involve having law enforcement agents operating closer to the agricultural value chain centres to maintain sanity in the agribusiness environment.
Lastly, the individuals operating in the agricultural supply chains must be empowered to understand their rights and how to deal with exploitative tendencies from speculative agro-processing merchants. This advocacy campaign needs the deployment of agricultural extension officers to areas that are active in agricultural value chains. The mainstream media, which is generally more accessible to the farmers in Zimbabwe, should be utilised to alert farmers of the prevalence of unscrupulous agro-processing merchants.
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