Over 70% of the Zimbabwean population lives on less than US$2 a day. This translates into a maximum income of US$730 a year. The cost of irrigation development ranges from US$1000 to US$5000 per hectare depending on various factors. Borehole-supplied irrigation systems for 1 hectare in rural areas where most farmers live cost anything from US$5000 to, sometimes, even more than US$10 000 depending on the location of the farm and its distance from the borehole company.
US$730 is actually a lot, because when rains don’t come, farmers may be living on less than US$100 a year. How will they then survive, what will they eat? They will survive on food aid. The problem with food aid however, is that it does not give farmers incomes. So, what you then find lately in Zimbabwe is aid organizations giving cash transfers of say US$10 to people in the rural areas. This is very controversial.
If you give the same farmer irrigation, that same farmer who is surviving on food aid will immediately have a full-time job and will be able to earn income all seasons of the year.
So, how much can a farmer who has irrigation earn per hectare? Well, it depends what they are growing, but let us use maize which is the primary imported food aid.
In Zimbabwe the price of maize is controlled and set by the government. Farmers are not happy with the price that the government pays as well as the currency that the government uses to pay them, mostly Zimbabwean dollars. In 2021, the government was buying maize at the equivalent of US$380 per tonne. In 2022, the government buying price of maize was reduced to US$250, at a time when there was even a shortage of maize. Maize deliveries to government depots are just a trickle. The government is now giving a part of the buying price pegged at US$90 at the official government exchange rate. This is at a time when prices of maize have risen around the world because of the war in Ukraine. So, imports are the thing now, when the price of maize on international markets is very high. It’s a long story, maybe for another day.
For our calculations, let’s use a government buying price US$250 per tonne of maize, which for many years has been the price of maize on the international market. The national average yield for maize in Zimbabwe is less than 1 tonne per hectare. This is in a country where over 90% of farmers practice rain-fed agriculture. That effectively means most small-scale farmers on 1 hectare or less live on less than US$2 a year (US$250 divided by 365 days) from rain-fed farming.
With irrigation, however, maize yields can be anything from 5 tonnes per hectare to even more than 10 hectares per tonne, of course depending on things such as maize variety, environmental conditions, and other factors. Even 10 tonnes per hectare is achievable. What that means is that irrigation can increase farmer incomes by 5 to even more than 10 times, to US$1250 to even over US$2500 per hectare, from maize alone. Maize needs 90 days to 150 days to be ready to harvest. The remaining days of the year can be used to grow other crops that can fetch even better p[rices than maize.
Anyway, basically, not taking living expenses into account, an income of between US$1250 and US$2500 over 6 months from just one crop is enough to allow a farmer to payback an irrigation system for 1 hectare worth US$1250 to US$2500 per hectare in 1 season.
If a farmer needs US$10 000 irrigation system, then the farmer will need more seasons.
So, technically, the so-called poor farmers are not really poor and they can afford irrigation systems if they are willing to work. What these so-called poor farmers lack is access to irrigation, which is not affordable or accessible to them when they are living on less than US$2 a day, sometimes less than US$0.10 day, and they have no access to credit or collateral that matches the cost of the irrigation system.
The farmers lack access to bank loans and credit for commercial farming. They do not have collateral with which to secure loans. They also cannot afford the required down payment or deposit for a loan for an irrigation system. Bank branches and financial services are very far away from most of them, worse now with the closure of many bank branches in the name of a so-called strategy called branchless banking.
To help these farmers, most of whom live in rural areas, and any farmer to acquire their own irrigation systems, Prosper on Farms enrolls these farmers in contract farming and gives them the irrigation system to ensure that they are able to produce the crop that enables Prosper on Farms’ to be able to recover its investment on irrigation systems it puts on their farms.
At the end of the contract, if the farmer has been productive, Prosper on Farms will handover the irrigation system to the farmer free of charge to the farmer, and the farmer will qualify for an even bigger contract farming agreement and bigger irrigation system of up to 100 hectares at a time.
If the farmer is unproductive, Prosper on farms will give the irrigation system to a more productive farmer, like any shrewd investor would. Prosper on Farms is not a donor. The farmer therefore does not pay anything and does not even need to provide collateral or a deposit or make loan repayments. This is not a loan, but simply a farming agreement, backed by an irrigation system as an incentive and an enabler for successful farming.