Can linking small- and large-scale Farmers enhance adaptive Capacity? - Climate Change Adaptation and Development: Transforming Paradigms and Practices - page 148

Cooperative for Rural Development 2012; Mwaseba et al. 2007). KPL estate
sells the rice that it purchases from smallholder farmers onwards at domestic
(spot) market prices to buyers in Dar es Salaam, where it is marketed to
domestic rice consumers. Domestic rice prices in Tanzania vary widely within
and between years (Hella et al. 2011). The existence of a parallel local market
and the volatility of domestic rice prices make it difficult for KPL to 'get the
price right' in negotiating a price with OG farmers. The existence of a parallel
local rice market is clearly advantageous for smallholder farmers, as it gives
them greater bargaining power in relation to price negotiations with KPL.
The downside for KPL is that it faces the possibility of farmers reneging on
contracts and side-selling to the local market. This point is illustrated by the
fact that in the 2012/2013 season, OG farmers negotiated a contract price for
rice that was upward of what KPL had initially offered in farmers' favour, due
to the existence of the parallel local market for rice, where prices were higher
than those agreed previously in the contract. 4 However, households with
adequate resources may prefer to take part in, rather than avoid, the seasonal
price variations for rice, in order to increase their incomes. Participating in an
OG scheme that involves a fixed price for rice may be less attractive to these
households. Government efforts to discourage 'hoarding' of rice by lifting the
ban on imports of rice when consumer prices become too high - as occurred in
early 2013 - serve to heighten both the production and the marketing risks for
farmers who are net sellers rice and 'bank' on the prices rising. The effect is both
direct, in lowering producer prices, and indirect, in that it creates disincentives
for future investments in rice farming (see Hella et al. 2011). Interviews with
farmers and key informants at KPL indicated that rice imports in early 2013
had a distinctly negative impact on small- and large-scale rice producers, as
well as local rice traders, who responded by stockpiling rice, to avoid having to
sell at very low prices. Anecdotal evidence suggests that MSE also engages in
stockpiling during periods of sugar imports, to avoid selling when sugar prices
are low. The findings thus do not support the view that participation in OG
schemes lessens the marketing risks for smallholder farmers. Smallholders and
large estates alike face marketing risks that are to various extents connected to
macro-level policy decisions.
However, there is some evidence that growing the contracted crops reduces
smallholders' production risks in relation to the wider farming system. OG
farmers at MSE explained that sugarcane is more drought-tolerant than rice.
Drought and lack of sufficient moisture during the main growing season are
particular concerns in relation to rice and maize, both of which are key food crops
in Lungo. Growing sugarcane thus enables farmers to spread the production risks
associated with food crops. In Kilombero, farmers grow a local version of the
'short' rice variety that KPL is promoting, to mitigate the impacts of late rains and
seasonal flooding on their agricultural production. This variety was distributed
as relief seed by the government in 2011 in the wake of widespread flooding in
villages near KPL. When faced with flooding, rice farmers in Mkangawalo are