“In a good democracy, governance is by the majority willing to consider and, if necessary, act on all concerns, including the minority. In a poor or rather bad democracy, the minority rule while totally ignoring the wishes or concerns of the majority.” - Peter McSporran
Get Around the Table.
Recently, there has been an explosion of rhetoric on the CAG (Compensation Awareness Group) on Telegram, along with other group sites on social media that have the compensation for ex-Zimbabwean farmers as their primary subject matter. Unfortunately, Some of it is abusive, which deflects from much of the wisdom buried in the various conversations. This has been brought about by what I would call ignoring the mood of the majority. Sensible ideas or suggestions, even for the instigation of broader dialogue, are being ignored or buried in what would appear to be an example of poor democracy, the “I know better attitude,” by those claiming to represent us. In reality, the underlying factors are probably a lack of transparency, perceived or actual, and the fear of the majority being compromised by catering for the desperate minority and, therefore, setting a precedent in compensation under the GCD (Global Compensation Deed). These fears are further exacerbated by the suspicion that the GCD could be used to entrench this precedent, and the questions raised in regard to the clarity to date are unforthcoming. Indeed, if it is a separate agreement, it will be easy to produce the documentation that differentiates this clearly.
It is generally agreed that the bonds are unacceptable to the large majority of ex-farmers, known as Title Deed Holders (TDHs) in this foray. However, some are in dire need of funds to survive, and they seem happy to take any offer, perhaps hoping the interest payments will be honoured while putting little thought into the actual intrinsic value of the bonds in whatever currency on redemption.
“Being in our twilight years restricts our thoughts to the present, not to the future in regard to self. Unfortunately, this means self-preservation takes precedence over legacy.” - Peter McSporran
The frustration is further compounded by our so-called representatives when questioned on the legality of the enforcement of the deal and the deal itself, along with the diminished and diminishing value of our assets within the agreement; we get the retort, “Bring us a better deal.”
“In promoting a bad deal, it is disingenuous on rejection to retort to the benefitting party to find a better deal as defense of that deal. At best it is disrespectful of one's rights; at worst, a downright admission of failure by the promoting party.” - Peter McSporran
We do not want a deal in this respect; we want an agreement with common ground between the parties. Sure, we might have to compromise, but whatever is agreed is worthless unless it has undergone legal scrutiny with the means of its enforcement clearly identified. Unfortunately, the courts in Zimbabwe would be an unacceptable forum for enforcing any such deal; therefore, if it is not an up-front cash payment in full, there will have to be international safeguards. Do not ask me how, but anything else will not be worth the paper it is written on. I have had a look on the internet to find a definition of a good agreement, and this sums it up.
“There are seven essential elements an agreement must have to be considered a valid contract. The elements of a contract include identification, offer, acceptance, consideration, meeting of the minds, competency and capacity, and contract legality.” - UpCousel
I, for one, think the present deal on offer, even if exclusive to the needy, is unfair and untransparent with little of the above-required prerequisites. Some genuine transparency in the form of replies supported by independent legal opinion would help to diffuse and reduce the rhetoric and misgivings amongst the TDHs.
“If the CSC is guilty of creating false hope amongst the needy in our midst, they will share the guilt of the government in promoting the bond deal in the event of default.” - Peter McSporran.
The saddest thing about all this rhetoric is that it is all based on hypothetical scenarios in regard to compensation to white farmers, a major political hurdle even for a democratically elected African government. Further, I believe the present government has neither the money nor the means to source such funds, even if it is genuinely trying to address the matter, which I doubt. There has been no effort to return the country to democracy, a prerequisite in allowing the international world the confidence to invest in the country’s recovery in a holistic manner, let alone pay compensation to the few. A further thought: if it is found that the CSC and other parties are not legally representing us, does it make them open to legal litigation in the event of default? Especially if no independent legal scrutiny has been utilised to ensure the agreement’s legality and enforceability before promotion.
“Fraudulent misrepresentation is when a statement is made, and the person making it either knows it is not true does not believe it to be true, or has a reckless disregard for whether it is true or not’. - Girlings
In being critical of the CSC and the GCD, I should also say some of the abusive language on Telegram by TDHs is not helpful in obtaining consensus amongst ourselves, let alone with the other party, the government. Only unity can free us of this untenable position we now find ourselves in, and that can only be done by being transparent and inclusive, not abusive. I would think ZANU(PF), on reading our social media sites, are laughing hysterically at us, and no wonder it is just us to blame.
I advise all interested parties to get around the table and off social media.
Plantation Crops.
Last week, I mentioned I would talk about almonds, but instead, I prefer to give my thoughts on individual family farmers considering going into plantation fruit and nut crops. I have had a number of enquiries about farming in Portugal since reporting on my visit to the Alentejo last week. As many may well know, there is an ongoing massive expansion into plantation crops in the south of the country, especially in irrigated olives, almonds and avocados. I think in regard to almonds; specifically, the Hucks are the family to talk to as they have established a sizable almond plantation in the Alentejo, and it is always best to speak to those who have done it. They will certainly know much more than me.
I would rather talk on broader terms, not on agronomy but rather on the financial considerations for farmers considering any plantation crop, no matter where in the world. During my time in consulting and fund management, I looked at a number of plantation crops and was involved in the financing of a number of projects, which included macadamia, avocado, lychees and bananas.
“In plantation crops, I have learned the year of planting is closer to the third year, and the year of break-even yields is closer to the tenth year than the seventh.” - Peter McSporran
My thought process on plantation crops was awakened as I looked over the fence from the Pickards farm and saw a three-odd-year plantation of almonds being pulled out due to the wrong variety and disease challenges. When it comes to plantation crops, they are all expensive to establish, they have a long lead time to break even and in most countries, including Portugal, they have a large annual irrigation requirement. Over the years, many individuals have approached me to go into plantation crops and from experience, I have the following to say:
Do not consider it unless you have an alternate income or capital on your farm to sustain you and your farm's overheads until full break-even production. Do not be fooled by promoters that you can grow viable inter-row crops during establishment to offset costs. Overruns in cost and time are very common. These start-up costs could possibly be partly offset by grants or soft long-term loans. Unfortunately, the latter is difficult to access by the individual farmer as they generally require security equal to and likely more significant than the loan. Funders have little appetite for what they see as small, under $2 million loans due to the costs per dollar lent in administering them. ESG can be a large component of these costs. Corporates, on the other hand, can use shareholder money and generally have a much stronger capital base to allow access to more significant medium and long-term loans. I have read here that it is extremely hard in Portugal to obtain agricultural capital loans, as in Africa, assets are given more consideration than projected cash flows. Remember, other than bananas, which are not grown here on Portugal's mainland, plantations generally take some seven years to break even production, and this, coupled with a capital cost often in excess of twenty thousand dollars a hectare, makes it a much greater gamble than annual crops or livestock. You cannot duck out without sustaining a huge capital loss, even if you find a buyer. Buyers like to see income from day one.
A Brazilian company has just announced an investment of $50 million in a two thousand-hectare plantation of almonds here, which works out at $25 thousand per hectare to establish. They say they are going to grow to five thousand hectares. Are we going to see excess production in the future, like macadamia?
Annual crops have the inherent risks of weather, disease and price. Just compound these risks over a seven-year period. In annual crops, you can change the variety to suit the market, counter a specific disease with variety change or even not plant in the event of water resources being depleted. I remember so well how, in the 1991/92 drought in Zimbabwe, we prioritised plantation crops in the Mazowe Valley to ensure their survival. Most parts of the world would not consider doing this, legislatively or voluntarily.
Yes, annual crops fail, yet it is generally still the income for one year, while if plantation crops collapse due to disease, drought or price can mean the loss of a significant capital asset, not just a year's crop. Price risk is a major factor; when margins are good, corporates and individual farmers alike climb on the bandwagon. The extent and implications of these plantings are only known in the future, and yes, the small farmer with a niche market may survive, but those relying on world prices may well fail. I still have trouble with how some corporations are able to survive, but due to their size, they generally do by having other production in other countries, including different crops supported by in-house processing and marketing. From what I gather in almonds, you need yields in excess of two point five tonnes per hectare at prices in excess of $2/kilogram to make money. To date, the average grower has not hit those target yields.
I have heard the price since 2018 has dropped from $2.5 to $1.5 in 2023. This sounds like the macadamia story in Africa. Ten years ago, when I queried the effect of increased planting on the market, there was a standard answer. “No problem, the Chinese have an insatiable appetite for macadamia; it will never be in oversupply.” Not so, oversupply has hit, and it surely will for almonds at some point. Drought in California has helped, but as that eases coupled with increased plantings, it may not bode well in the long term. Almond milk is not the answer, as it requires one hundred and thirty pints of water for one pint, a very expensive product in water resources. At some time in the future, this sort of knowledge will impact on sales to the ‘Green Crusaders’.
When I looked at citrus in Mozambique, we used Peter Caminda to advise us, and while we found the water and soils, he cautioned us against it due to the economy of scale required to establish not only the packing facilities and logistical infrastructure for the fresh fruit but also that for juicing the rejected fruit. It is the same with most plantation crops relying on world prices sold outside a niche market where expensive processing costs can be absorbed. The world market does not generally offer such premiums. Even if the world price drops, the aggregator's processing marketing costs and transport costs will not.
I am not telling you not to grow plantation crops; instead, be cautious. Ensure you have capital reserves or access to very cheap long-term money, ensure you have the optimum climate for the crop, have excess water for the dry years and understand your market, premium or world prices. I am happy if some are keen to challenge my perceptions.
Of interest, much of Portugal’s olive oil is exported to Italy, from where it is re-exported under the Italian flag.
Pisscat of the Year.
By late 1991, I was now a regular at Borrowdale race track with my own racing colours, having taken up life membership at Mashonaland Turf Club. I struck up a solid and lasting friendship with Vernon Nicolle, Kevin O’Toole and Warwick Small, buying horses in syndicate together. Vernon was a farmer like myself, Kevin was finance director at Cohen Textiles and ran some other personal businesses, while Warwick was the majority shareholder of H.E. Jackson, mining suppliers and water engineers. A real mixed bunch, with our friendship extending from the racetrack to socialising in each other's homes, meals out sometimes more than once a week and finally in business. Kevin saw himself, being of Irish descent, the horse expert, and although, on occasion, he bought us a winner, never a champion. We never bought expensive horses, stuck to small bets, and then bet only on our own horses.
Our favourite lunch spots were, if in town on a Tuesday, Alexanders and on a Thursday, Harare Club. Unfortunately, I took to stopping off at the Red Lion at Harare Sports Club on the way home and was embarrassed to see my face on a poster at the end of 1991 as being voted the Club’s ‘Pisscat’ of the year. Things had to change, and in January 1992, I decided to lose weight, then one hundred and twenty kilograms, and in doing so, I attended the gym and cut out alcohol for a while. It must have worked as in August 1992, at some ninety kilograms, I was to find myself being asked to stand as the President of the CFU. That is for next week.
Disclaimer: Copyright Peter McSporran. The content in this blog represents my personal views and does not reflect corporate entities.
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