Groundnuts Subsector study.

Report of a study commissioned by SNV Zimbabwe, 6th Caithness Road, Eastlea, Harare.

November, 2012,

1
 2.7 Projected Financial Returns in the Subsector ................... 15

Table of Contents 3.0 Conclusions and Recommendations ..................................... 16

1.0 Introduction and sector overview............................................ 1 3.1 Conclusions ....................................................................... 16
1.1 Study approach ......................................................................... 2 3.2 Recommendations. ............................................................ 16
Table 1: Data sources by category .............................................. 3 References .................................................................................... 19
2.0 The groundnuts subsector in Zimbabwe ................................. 3
Table 1: Groundnuts input suppliers and producers ................... 3
Graph 1: Groundnuts producing areas (hectarage and yields) ... 4
2.1 Key players ..................................................................... 4
Table 2: Subsector buyers and processors .................................. 4
2.2 Input supply: issues and prospects ........................................... 4
2.3 Production ........................................................................... 6
Graph 2: Groundnuts production trends by land category ......... 8
Table 3: Groundnuts production trends ...................................... 9
2.3.1 Private sector participation in subsector .......................... 10
2.3.2 Farmers’ perspectives on subsector problems ................. 10
Graph 3: Leading groundnut producing areas (2011/12) ...... 11
2.3.3 Groundnuts subsector map .............................................. 12
2.4 Buyers, Shellers and Processors ........................................ 13
2.5 Wholesaling and retailing.................................................. 14
2.6 Marketing .......................................................................... 15

i
List of Acronyms
ATA Appropriate Technology Africa

AGRITEX Agricultural Technical and Extension Services

CIT Cash in Transit

CFU Commercial Farmers Union

CCZ Consumer Council of Zimbabwe

FAO Food and Agriculture Organisation

GMB Grain Marketing Board

IRD International Relief and Development

NGO Non Gorvemental Organisations

NFU National Farmers Union

SNV Netherlands Development Organisation

VCA Value Chain Analysis

ZFU Zimbabwe’s Farmers Union

1
 groundnuts consumed by producers themselves (mainly as green,
roasted and in the form of peanut butter) and informally marketed are
not readily available. This suggests that the proportion of local
1.0 Introduction and sector overview commercial demand met through local smallholder produce is
Groundnuts in Zimbabwe are principally grown by communal and difficult to establish without undertaking a comprehensive study of
resettlement farmers in Natural (Farming) Regions 2 to 3 under dry all processors big and small in terms of the make-up of their
land conditions. The principal growers of groundnuts are groundnuts raw materials. As such, the 120 000t to 130 000t demand
smallholders and in this farming sector the crop is predominantly estimate may refer to commercially marketed or handled produce
considered a woman’s crop. Groundnuts are also grown in regions 4- rather than the total demand. Overall, processors meet their raw
5 under irrigation. The smallholder groundnuts growers are estimated material demands through local produce and imports from within the
to be above 1.5 million. The number of commercial groundnuts region mainly from Malawi and Zambia.
producers is estimated to be below ten thousand farmers.
The subsector has distinct players as shown in tables 1 and 2. Large
There is private sector willingness to support subsector activities groundnuts processors depend on imports for their processing
focusing on benefiting producers while ensuring dependable requirements (USAID 2010). Two factors explain why they
availability of industrial raw materials. In fact the study learnt of complement local sourcing with imports. One is that groundnuts are
contract farming programmes by national agencies like the Grain available for at most four months after any harvest. After that
Marketing Board, a Government of Zimbabwe enterprise and mobilizing output becomes extremely difficult and expensive. To
Agriseeds, a private company alongside international NGO support ensure all year round operations processors therefore resort to
by, among others IRD and Concern. The latter two international imports. The second reason is that smallholders in Zimbabwe use
organizations supported smallholder farmers in Buhera and Gokwe returned seed and the varieties grown are not readily suited to
respectively working closely with government extension staff. confectionery uses. Additionally some of the groundnuts are small,
which presents processing difficulties.
National commercial demand for groundnuts is estimated at between
120 000t and 130 000t per year (USAID 2010). Production figures for 1.1 Study approach
the 2010/11 and 2011/12 seasons were 230 475t and 120 001t This report follows an assessment of the groundnuts subsector using
respectively (GRZ 2012). Because of the weak marketing the Value Chain Analysis (VCA) approach to establish prospects for
arrangements for groundnuts produced by smallholders not all the boosting smallholder production and productivity through market-
produce is marketed formally. At the same time, the figures for

2
driven initiatives. The study relied on mixed methods. These involved 2.0 The groundnuts subsector in Zimbabwe
review of literature and interviews with key informants or subsector
experts working in strategic organizations (see table 1). The focus was The crop originated in South America. It is now grown in almost all
on ensuring a grounded understanding of issues and prospects tropical and sub-tropical countries. The crop is beneficial in dietary
focusing on; terms as it is a good source of protein, edible oils, energy, minerals
and vitamins. Groundnuts are also a very good rotation crop because
1. Primary actors in the subsector, their roles, responsibilities and of its nitrogen fixing qualities while also useful in terms of the
relationships production of animal feeds. It is grown throughout Zimbabwe but
2. Market channels and trends within the subsector mainly concentrated in ecological regions 2-4 of the country with
3. Constraints that are holding back growth and competitiveness
parts of Manicaland and Mashonaland East provinces being the major
opportunities that can be exploited for the benefit of subsector
actors, more specifically the smallholder farmers producing areas in terms of area planted and output (see Graphs 1 and
4. Value chain governance structures, and 3).
5. Service providers to the value chain.
Table 1: Groundnuts input suppliers and producers
Table 1: Data sources by category
Examples of actors Remarks
Category of respondents/institutions, No, Function
Fertilizer companies; Have urban based distribution
Farmers 18 Zimbabwe Fertilizer points,
Company and Windmill Produce specialised fertilisers for
Farmer Organizations 4. groundnuts
Input suppliers Seed Companies; Seed Some have good networks of rural
Input Suppliers 3 (Fertilizers, Co, Pioneer, Prime agro-dealers and thus input
NGOs/Development Partners, 3 Seed etc) Seeds, Agri-Seeds and distribution networks
Pannar, Some, e.g. Agriseeds have
Processors, 3 contracted smallholder farmers to
grow groundnuts seed,
Public Sector/Regulator, 3
Smallholder farmers in North Eastern (Mount Darwin, Mudzi)
Research Institution 1 Producers and Eastern districts (Makoni, Buhera, Hwedza, Chikomba)
Masvingo (Gutu, Zaka, Bikita and Masvingo) and
Mashonaland (Chikomba, Hurungwe and Hwedza)

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Graph 1: Groundnuts producing areas (hectarage and yields) 2.1 Key players
The sub-sector has many players from production to processing.
Main groundnut producing area 2011-12 season
Table 2: Subsector buyers and processors
70000 Category, Company examples, Comments,
60000 Bulk buyers, Monakem Investments, Buyers purchase groundnuts at
50000 Agricom, Agriseeds, USD600/t unshelled and between
40000
30000
REAPERS, Predomn USD750 and USD1000 shelled,
20000 Investments and
10000 Area Planted Ha Berckabury,
0 Processors, Nutresco, REAPERS, Combine imports and local
Production (T) Lyons, Karima purchases with imports meeting up
Invetsments, Cairns etc, to 90% of raw materials when local
produce is out of stock,
Other combine growing own crop
and local purchases (e.g.
REAPERS) and still others contract
farmers
Source: AGRITEX August 2012
2.2 Input supply: issues and prospects
Smallholder farmers dominate groundnuts production with women
Inputs required for groundnuts production include;
playing a central role in both the production and marketing. They
(smallholders) contribute 75%1of output and grow the crop in light • Certified seed of suitable varieties (mainly short duration
soils. Production has traditionally been viewed as women’s socio- varieties for dry land production)
economic activity mainly for household consumption and to • Fungicide to dress the seed before planting
supplement household income through local sales of shelled and • Lime to correct the soil pH
unshelled nuts as well as peanut butter.
• Basal fertilizer with boron (Single Superphosphate or manure
can be used as cheaper alternatives)
• Gypsum for topdressing, and

1
Interview with Rob Kelly 19 September 2012

4
• Shelling equipment to ensure that farmers sell shelled nuts to 2. The certified seeds are too risky in drier climates where the
increase their returns, majority of the smallholder farmers are found. These varieties do
better under irrigation, and
In terms of seed, both Government and Seed Houses (SeedCo, 3. Smallholder farmers consider certified seed as requiring
Agriseeds etc) have bred over eleven groundnut varieties. SeedCo has additional external inputs for optimal production, which makes
developed three groundnut seed varieties (SC Orion, SC Nyanda and their operations expensive for a crop whose market is not fully
SC Mwenje). SC Orion is a long season (160 days) high yielding developed.
variety adapted to production under irrigation while SC Nyanda is a Smallholders use returned seed that does not require intensive
short-season variety, drought and heat stress tolerant and gives good management practices. The variety of choice is the Natal Common,
yields in marginal rainfall areas. SC Mwenje is a short season variety, which has been bastardised. The production of a hectare of
virus resistant, suitable for most value-adding market purposes, and groundnuts costs US$404.00 3 . The inputs include 80kg seed
can be used for peanut butter and most other confectionery needs. (US$144), 200kg Compound D (US$120), 200kg Gypsum (US$24)
and 69 labour days. However smallholders rarely apply fertilizers,
However, seed companies do not have short season varieties bulked
lime and other external inputs to their groundnuts crop. Family or
up in sufficient quantities to make an impact on production. Small
unpaid community labour is used. Generally a woman’s crop, land
scale and communal farmers grow a mixture of seed varieties not
and labour allocation is often sub-optimal for groundnuts. This
suitable for the confectionary trade or for export. The majority of
reduces prospects for boosting production and productivity as
smallholders use retained seed shunning certified seeds, which
smallholder households give priority to food and cash crops. In maize,
explains why seed houses argue that there is no effective demand for
tobacco and cotton producing areas, groundnuts are lower on the crop
certified groundnuts seed. A total of 2000t2 of seed is bulked across
packing order.
all seed houses. On their part farmers often cite the following reasons
for not using certified seeds; By virtue of the main producers being in the smallholder sector,
extension services are mainly provided by AGRITEX. Private sector
1. The certified seeds require management practices and equipment
related extension is available to contracted farmers under REAPERS,
that smallholder farmers are unused to.
Agriseeds and Willards Foods for instance. Extension services for the
subsector are currently weak, a function of both supply and demand

2 3
Written input from Seed Co, October 2012, Interview, Rob Kelly October 2012

5
constraints. Supply in terms of low numbers of experienced and Government estimates show an output surge from the 100 000t in the
adequately resourced staff and demand since producers grow the crop 2006/7 season to 230 475t in the 2010/11 season (GoZ 20124) with
under the notion that it is a simple non-cash crop and therefore estimates for the 2011/12 season expected to be nearly half at 120
allocate the least resources to its production. The consequence is that 001t (see also Graph 3 for production districts). As noted earlier
groundnuts production suffers from poor agronomic practices. production estimates5 suggest that outputs could be enough to meet
local commercial demand. However, three points should be made.
Currently there are no financial services targeting producers in the One is that varieties produced are more suited to peanut butter making
groundnut subsector even in smallholder irrigation schemes. The than confectionery and other uses, which results in some processors
absence of appropriate financial services also affects middlemen who having to import to meet their demand. The second is that not all
are critical in terms of bulking produce from resettlement and produced groundnuts are formally marketed if at all. When IRD
communal areas. Such a production-marketing context has acted to supported groundnuts production in Buhera they encountered
reinforce a subsistence production culture. Contract farming of the produce from at least two seasons that farmers kept in their granaries.
crop is not yet widespread. Available financial services are structured The third point is that depending on the timing of a crop assessment,
in relation to cash crops and even providers of financial services lack mid-season dry spells, pests and other production-related problems
adequate experience to structure groundnuts financing. may affect eventual output.
2.3 Production The area planted was on the increase during the last decade partly
The smallholder farmers in communal and resettlement areas produce because of the contract farming promotion of the crop by some actors
up to 75% of groundnuts in Zimbabwe under dry-land conditions. in the industry such as REAPERS and Agriseeds. This shows that
Very few commercial producers grow the crop. Those that do like with a ready market and supported production, smallholder farmers
REAPERS grow the crop under both irrigation as well as rain-fed can take up groundnut production to a semi-commercial level. Large
conditions with a general preference for long season varieties. Long scale commercial farmers are not necessarily active in groundnuts
season varieties of groundnuts have a higher yield potential than short production in Zimbabwe. One reasons given by some key informants
season varieties. is that the crop is labour intensive especially at harvesting. However,
experiences in other countries show growth in large scale commercial

4 5
Second round crop and livestock assessment, Particularly for crop assessments these figures are based on calculations using
land planted or cultivated and expected yield.

6
farmer activity e.g. in Ghana. This shows that large scale commercial
production can be explored in Zimbabwe at least for seed initially.

7
Graph 2: Groundnuts production trends by land category

groundnut production

180,000

160,000

140,000

120,000
production(t)

100,000 resettlement
communal
commercial
80,000 national

60,000

40,000

20,000

-
1992 1994 1996 1998 2000 2002 2004 2006 2008
years

Source: SNV 20096

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A study of the Oilseeds subsector in Zimbabwe

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Table 3: Groundnuts production trends at smallholder level groundnuts production is not necessarily
Season 1980s 1990s 2005/06 2006/07 2007/08 2008/09 considered a commercial operation.
(avg) (avg)
Production 84 280 85 532 83 170 100 168 131 536 216 619 Low smallholder productivity is explained based on;
(MT)
Percentage 1.4 -4.07 15.5 51.7 149.8
Change • Use of retained seed; despite Zimbabwe having developed over
Area (ha) 197 174 176 196 224 318 299 252 354 636 11 varieties since 1950, which yield 80% more than local ones,
888 097 mostly smallholder farmers still use retained season9. The market
Percentage -12.0 103.2 15.3 53.8 82.3
Change for processed seed is not developed due to low demand.
Yield 423 487 472 447 440 610 • Non-use of other external inputs; farmers, mostly in communal
(kg/ha)
Percentage 15.1 -2.6 -7.7 -9.2 25.8
and resettlement areas, are unwilling to invest in fertilizer, lime,
Change chemicals and other technologies to boost productivity. Not
Source; World Bank 2009, much inter-farmer transfer of best practices e.g. through farmers’
organizations focuses on groundnuts, which like other small
Table 3 shows productivity levels of between 0.4 and 0.6t/hectare
grains do not have the ‘pride of place’ that crops like maize,
from the 1980s through the 2008/09 season compared to up to
cotton and tobacco for instance have.
4t/hectare under irrigation (FAO 1997 7 ). In the 2011/12 season,
• Poor agronomic practices; most producers do not allocate prime
productivity dropped to 0.36t/hectare (GoZ 2012) reflecting farmers’
land and labour during planting, weeding and harvesting leaving
inclination not to allocate prime land and other resources to
the crop to be grown under sub-optimal conditions.
groundnuts production. Waddington and Karigwindi (2001 8 )
corroborate this experience when they note that smallholders find it • Low priority. Considered a woman’s crop is given low priority
more beneficial to continuously grow maize with fertilizer than rotate among the crops that are grown by households in Zimbabwe
with groundnuts because of low yields, marginal to zero profitability • Home consumption. Groundnuts are not given priority because it
and high labour costs of groundnuts-maize rotations. This shows that is used mostly for home consumption.

7 9
Socio-economic impact of smallholder irrigation development in Zimbabwe, Two interrelated strategies can be used according to key informants to increase
www.fao.org/docrep (downloaded October 8th 2012), use and ready availability of high yielding seed varieties to smallholders. One is
8
Productivity and profitability of maize + groundnuts rotations compared with buying certified seed after every four years. The other is using a percentage of
continuous maize on smallholder farms in Zimbabwe, pp83-98 in Experimental certified seed every year on a proportion of land planted for own seed.
Agriculture, Vol. 37. Issue |1,

9
2.3.1 Private sector participation in subsector working with Concern, shared at the 30th October workshop show that
the main problems relate to;
The production of groundnuts in Zimbabwe has been facilitated
through contract farming between the smallholder farmers and the 1. Lack of market information (buyers, prices),
private sector players. The GMB has been contracting over six 2. Poor access to quality inputs,
thousand smallholder farmers in the areas around its silos. The highest 3. Lack of appropriate technology (e.g. for shelling),
number of contracted smallholder farmers being in the Buhera and 4. Lack of appropriate technical and extension services,
Rushinga districts. AGRISEEDS has established thirty-five (35) 5. Misconception of contract inputs as grants amongst growers, and
collection points in Gokwe and Rushinga districts for the contracted 6. Lack of direct access to financial services (high bank charges, lack
farmers. REAPERS, IRD and PRIME SEEDS are involved in of appropriate collateral).
contracting the smallholder farmers to produce groundnuts. The
contracting experiences differ between the companies. The general
complaint among the contracting companies is the issue of side Subsector opportunities include farmers’ willingness to engage, the
selling by the smallholder farmers, which results in the non- near collapse of cotton in Gokwe (and possibly other cash crops in
repayment of the inputs advanced. future) makes groundnuts an optional cash crop and the significant
export potential that exists.
Overall the production of groundnuts is constrained by production
and productivity challenges, issues around farmer organization and
knowledge transfer, low private sector appetite to support production
due to some negative experiences and weak marketing structures.

2.3.2 Farmers’ perspectives on subsector problems

Growing private sector interest in the crop has resulted in some

farmers in the main growing areas organizing themselves with NGO
support. This is the case in Buhera and Gokwe. Despite private sector
interest and farmer organization there are problems that farmers face.
The experiences of stakeholders, including a farmer from Gokwe

10
Graph 3: Leading groundnut producing areas (2011/12)

25000

Area Planted Production (T)

20000

15000

10000

5000

Source: AGRITEX records, August 2012

11
2.3.3 Groundnuts subsector map

Low income
End Market, Farm-gate Farmer High income Institutional
rural & urban
buyers, consumer consumers, consumers,
consumers,

Retailing,

Smallholder communal & resettlement

Supermarkets &

Farmer Organizations (ZFU, CFU, NFU), NGOs e.g. IRD, CARE, Concern, Government Extension,
CCZ, FNC, Ministry of Health, AMA (import-export regulation), Banks,, Research agencies etc,
smaller retail shops, Imports,
Wholesaling,
Wholesalers (e.g. Bhadella, Mahommed Mussa
farmers (75%), etc)

Chiwas, Karima etc,

Small-scale
processors e.g.

GMB,

REAPERS,

Lyons,

Agriseeds,

Agricom
Exports,

Processing,

Imports,

Produce
Consolidation & Rural Agro-Dealers, Mbare Traders, Inter-Grain, Predomin
Trading, Investments, Peak Holdings

Production, Commercial farmers, A2 and others e.g. REAPERS estates (25%),

Own-source (e.g. retained

Input Supply, Input Suppliers (e.g. for seed Agriseeds, Seedco, Pannar, Prime etc); inoculants, lime, fertilizer
seed),
etc,
12
 Malawi and Zambia. Some do toll-processing for informal sector
2.4 Buyers, Shellers and Processors actors.
Groundnuts are bought by a number of large and small-scale buyers. Large-scale processors with product brands particularly peanut butter
The main buyers in Zimbabwe include the GMB, REAPERS, in the market include REAPERS, Lyons Maid and Nutresco.
Agriseeds, INTERGRAIN, AGRICOM, Predomn Investments and REAPERS is the leading player among the processors with a capacity
Peak Holdings. There is also a host of small processors and informal to process 500 000 tonnes a year. The company gets the groundnuts
traders involved in the buying and resale of groundnuts. The from contracted smallholder farmers, its farms and imports.
middlemen sell to processors or to other traders at main markets like REAPERS’ peanut brand is Mama peanut butter.
Mbare in Harare.
Lyons Maid is the second largest processor currently operating below
Groundnuts are shelled either at household or factory level. At its installed capacity. It processes peanut butter and is currently
household, shelling is done either by hand or hand-operated shelling importing groundnuts for its operations paying up to US$1 100/t for
machines produced and distributed locally (e.g. Appropriate shelled groundnuts from Malawi and Zambia. In the late 1990s, the
Technology Africa, ATA). At industrial level GMB and REAPERS company tried contract farming in Muzarabani district, with farmers
have the largest shelling plants. The two have large shelling plants in operating in groups. Farmers would be paid in groups and it was up-
Harare and Rusape, which also is indicative of the producer to the group to sort what each member would get paid based on one’s
concentrations. Other processors have smaller in-house shelling contribution. This method did not work smoothly and the company
capacity or use toll shelling facilities provided by larger subsector stopped contracting.
players. Some of the main buyers and processors also promote seed
production to increase production for commercial use amongst Nutresco is the third leading processor in the country, and currently
smallholder farmers. For instance, REAPERS imported seed two imports 90% of its groundnuts requirements from Mozambique and
seasons ago from South Africa to boost own production and contract Malawi. The groundnuts are processed into Country Kitchen peanut
farming activities. butter. Nutresco pays US$900 per tonne for shelled groundnuts
delivered to its factory. The company is also involved in toll shelling
Leading small-scale processors include Chiwas and Karima and processing to use some of its underutilised capacity.
Investments, Bescom Enterprises and ROTVIC. These processors
purchase groundnuts from communal areas and also import from The other relatively large processors in the groundnuts subsector are
Cairns (Willards Foods), National Foods and CHARHONS. Willards

13
Foods in 2009 operated at 50% (600t per annum against a peak of 6. Poor rural road networks which also pushes production costs,
1200t reached in 1999) based on importing up to 80% of requirements 7. Weak information systems,
from Malawi until recent operational problems within the group 8. High transaction costs per unit, and
seriously affected its viability. Willard previously contracted 9. Trust [& other ‘ubuntu’] deficits where farmers for instance insist
smallholder farmers. The company’s model integrated extension on cash payments forcing large scale buyers to use Cash in Transit
services for farmers through its agronomists. [CIT] services to reduce their exposure to risks. However, this
increases companies’ costs of participation in the subsector and
The key challenges identified by the processors include; reduces their competitiveness especially given the growing
1. Constrained local supply, which increases costs of mobilizing number of small scale processors active in the peanut butter value
produce (logistics of buying small quantities of groundnuts from chain.
individual farmers and transporting it to processing plants) and at
times creates an unproductive stampede amongst subsector actors The produce mobilization framework was better when the Grain
for the available produce, Marketing Board provided the link between farmers and the private
2. Farmers are not producing big nuts. As such, the big nuts sub- sector. However, GMB is not playing that role effectively any more
market needs to be fully understood as there is potential as it is also venturing into processing. This has created space for
considering this is the type of produce most large scale processors informal middlemen and formal commodity brokers who purchase
demand, groundnuts from farmers for onward selling to private companies in
3. The isolated nature and weak organization of farmers involved in the subsector. This leaves farmers without any support for their
groundnut production, production as these actors only come for buying. Discussions with the
4. Side marketing. Unlike tobacco and cotton for instance which end-users of groundnuts showed that such companies had more
cannot be processed on-farm, groundnuts are highly susceptible flexibility than what GMB used to offer, although the unmatched
to side marketing and on-farm processing, making it unattractive comparative advantage of GMB is that it has better infrastructure
for contract farming. This is a challenge that also affects sugar across the country.
beans,
5. High cost of production per unit & processing due to lack of a 2.5 Wholesaling and retailing
guaranteed supply of groundnuts throughout the year. As a result
some companies have had to close at times in the year e.g. GMB The wholesaling of the groundnuts-related products is through the
and REAPERS Shelling plants, Karima Investments etc, fast-moving consumer goods supply/distribution chain of wholesalers

14
and retailers (supermarkets, factory shops etc). Some peanut butter Institutional Buyer’s Market Channel. This channel is made up of
processors are finding challenges in their relations with wholesalers schools, hospitals, hotels and restaurants. These institutional buyers
around prices, which are currently subdued largely because of mostly purchase directly from the processors and few quantities from
informal peanut butter processors. wholesalers and retailers.

2.6 Marketing The first two channels are largely supplied through the informal
marketing channels not necessarily by the formal private sector-led
Groundnuts are a decontrolled crop although previously the Grain processing model. The informal marketing framework has remained
Marketing Board (GMB) operated the only approved shelling plants. flexible in terms of the business model and over the years expanded
The local supply of groundnuts does not meet the requirements of its reach especially with the growth in appropriate technology for
local processors throughout the year. Large local processors import shelling and peanut butter making. Actors in this market segments
roughly 90% of their requirements because local groundnuts supplies have become aggressive and also sophisticated with the result that
dry up or become uneconomic for bigger subsector players from formal processors have almost been pushed out. Some home-based
about August of each year till the next harvest period. processors of peanut butter have coalesced into clubs that export
peanut butter to neighbouring countries.
The groundnuts subsector’s market channels are;
The high income urban market channel is a specialized one where
On-farm market; In this channel groundnuts is consumed as a raw
consumers for products like peanut butter look for specific qualities
product or is processed into roasted peanuts or peanut butter. The
like consistency and smoothness. This is the segment facing serious
volumes entering this market are unaccounted for.
challenges in terms of accessing groundnuts from the local market for
Poor Urban Market Channel. This channel consumes groundnuts as processing into locally marketed products and exports. Actors
a raw product, roasted peanuts or peanut butter. This channel is supplying this segment like GMB noted significant unmet demand
serviced by retailers and supermarkets operating in the high density with orders of up to 200t/month not being supplied.
areas and through local small scale processors sourcing groundnuts
directly from smallholder farmers of Mbare Market. Like the on-farm 2.7 Projected Financial Returns in the Subsector
market, this is also unaccounted for or fully quantified. Table 4 below indicates financial returns from hectare of groundnuts,
assuming that the farmer’s yield is 900kg per hectare.
High Income Urban Market Channel. This market is supplied by
supermarkets and also consumes imported peanut butter.

15
 Minimum producer price USD/kg 0.610 same time, it can underpin diversification out of cotton for some
farmers given challenges in this subsector. Subsector governance
Expected yield kg/ha 900 needs to be improved to underpin improved smallholder contributions
Producer costs USD/ha 404 and strategic participation of large scale commercial farmers. Private
sector players focusing on different aspects of the subsector (inputs,
Gross Return USD/ha 540
research, marketing, processing etc) exist although there is limited
Profit/(loss) USD/ha 136 subsector coordination around a shared framework. All considered
though, the subsector has potential for private sector supported
$ return: $ invested 1.34
smallholder productivity and production enhancement.
Break even yield kg/ha 673.33
3.2 Recommendations.
Return to family Labour USD/day 1.97 The study identified the following areas as critical for subsector
development;

1. Production and productivity improvement,

2. Developing marketing structures overall and smallholder
3.0 Conclusions and Recommendations participation i.e. producer-processor interaction, and
3. Improving the policy and business environment.
3.1 Conclusions
The groundnuts sub-sector faces challenges regarding production and Based on the subsector assessment, specific recommendations for
productivity (0.4t/ha against 1.2t/ha realized in Buhera under IRD SNV consideration targeting groundnuts producing districts should
support), which has impacted on raw material availability for the focus on support a process of shifting smallholder production from
peanut butter and other value chains dependent on the subsector. subsistence to commercial production. This is because the current
Subsequently there is low capacity utilisation. The crop however production orientation among the smallholder farmers is inadequate
constitutes an ideal vehicle for facilitating increase in rural incomes for current subdued demand (due to economic problems) and will not
for women who are the main producers, micro-processors and underpin any industrial expansion. Subsistence farmers mainly grow
marketers with scope for improving employment generation. At the the groundnuts for household consumption. There is therefore a

10
Price for groundnuts in-shell

16
compelling need to facilitate commercial production. This shift can
Basic inputs: improved seed, seed dressing and top
only happen through working with model farmers able to demonstrate dressing,
improved livelihoods from groundnut production and increasing the
Optional: basal fertilizer,
numbers of farmers taking up commercial groundnuts production in 3. Improving access to and uptake of appropriate technologies;
the main producer areas. The study therefore recommends the
Demonstration plots in production hubs (anchored by an
identification of model farmers who will be coached and mentored on increasing density of producers),
commercial groundnut production. These farmers would then be
Ongoing capacity development of individual farmers,
supported in terms of extension staff and other stakeholders,

Supporting provision of “disciplined 11 and resourced
1. Access to improved seed (variety/breed); extension” that integrates state and non-state extension to
reduce risks of mixed-messaging during production

Short-term: seed importation, which however may be
mentorship processes.
expensive and that imported seed may not always be , not
4. Better structuring and facilitation of marketing processes
always ‘true-to-type’ as well as issues of adaptation,
including improving subsector information and communication

Long-term: seed multiplication working with established
systems;
farmers either Small Scale Commercial Farmers (SSCF),

Instituting competitive buying framework (number and
A2 and remaining Large Scale Commercial Farmers
diversity of players,
(LSCF). This will create an easier to manage seed

Supporting improved governance of marketing processes,
production environment with smallholder level

Engaging stakeholders critical for the supply of secondary
interventions assuring demand for produced seed. Also the
services like roads, ICT and appropriate technology e.g.
proper selection of returned seed under proper
farm-level shellers and produce bulking facilities,
management (agronomic practices) would boost
5. Improving subsector coordination (i.e. actor engagement for
productivity and production,
mutual success);
2. Ensuring access to and usage of other inputs including fertilizer,
Creation anew or supporting emerging collaborative
framework for actors in subsector,

11
Supporting farmers at every stage of production through frequent (once a week)
monitoring and mentoring.

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Developing and securing funding for strategic subsector
initiatives (e.g. activities envisaged under
recommendations 1 to 4 above),
6. Strengthening subsector research and development to anchor
development and implementation of improved approaches,
answering subsector questions (e.g. the inner workings of the
informal subsector channels and role in a formal process of
subsector development/growth) and developing new products,
7. Improving funding of subsector actors tapping into existing
products (e.g. CREATE Fund and products of other banks like
Agribank), and
Business environment development through supporting policy
research, lobbying and advocacy within the framework of the
collaborative framework suggested in 5 above or through linkages
with research or policy centres interested in the subsector.

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References
1. FAO (1997) Socio-economic impact of smallholder irrigation
development in Zimbabwe, www.fao.org/docrep (downloaded
October 8th 2012),

2. Government of Zimbabwe (2012) Second Round of Crop

and Livestock Assessment
3. SNV-Zimbabwe (2009) A Study of the Oilseed Subsector in
Zimbabwe
4. Waddington and Karigwindi (2001) Productivity and profitability
of maize + groundnuts rotations compared with continuous maize
on smallholder farms in Zimbabwe, pp83-98 in Experimental
Agriculture, Vol. 37. Issue |1,

5. World Bank (2009) Zimbabwe Agricultural Sector Assessment

Report
6. USAID, 2010. Zimbabwe Agricultural Market Study

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