Smallholder Sugarcane Production Systems in Xinavane,

Mozambique - Report from the Field

Idsert Jelsma, Alex Bolding, Maja Slingerland

2010
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 Smallholder Sugarcane Production
Systems in Xinavane, Mozambique:
Report from the Field

Idsert Jelsma, Alex Bolding, Maja Slingerland

Plant Production Systems,

Plant Sciences Group,
Wageningen University, Wageningen
November 2010
Affiliations
Idsert Jelsma is a research fellow at Plant Production Systems, Wageningen University,
Droevendaalsesteeg 1, 6708 PB Wageningen, The Netherlands. Email [email protected], Tel. +31
(0)317 485818.
Alex Bolding is Assistant Professor in Irrigation and Water Governance in southern Africa at the
Irrigation and Water Engineering group, Wageningen University, Droevendaalsesteeg 3a, 6708 PB
Wageningen, the Netherlands. Email [email protected], tel. +31 (0)317 484196.
Maja Slingerland is Assistant Professor of Plant Production Systems, Wageningen University, PP,
Droevendaalsesteeg 1, 6708 PB Wageningen, The Netherlands. Email [email protected], Tel.
+31 (0)317 483512.

Acknowledgements
We thank the outgrowers management and outgrowers and their families that contributed to this
research for their time and willingness to share information. The amount of information shared was
very generous and is greatly appreciated. Especially the farmer associations which participated in our
survey, being Maguigane, Macuvulane, Facasize, Chihenisse and Colo, were very hospitable towards
the researcher.
Staff at AdX were kind enough to show Idsert Jelsma around the area and provided data on
sugarcane production, smallholder, company and government activities surrounding the smallholder
outgrower programs and introductions to the associations.
NGOs as ORAM and KULIMA are greatly appreciated for providing their insights on smallholder
developments in Xinavane and openness. Especially Gwevahne was very supporting in this research
and their assistance and insights are greatly appreciated.
Last but not least we thank CEPAGRI and Marc Schut for their support and arranging the
introductions and credentials for important stakeholders.

Wageningen UR

Address : Droevendaalsesteeg 1, 6708 PB Wageningen, The Netherlands

: P.O. Box 430, 6700 AK Wageningen, The Netherlands
Tel. : +31 317 482141
Fax : +31 317 484892
E-mail : [email protected]
Internet : www.pps.wur.nl

i
 Contents
1. Introduction ......................................................................................................... 1
2. Methodology and structure of report ......................................................... 2
2.1 Research techniques ................................................................................................................ 2
2.2 Structure of the report ............................................................................................................ 2
2.3 Scope and limitations .............................................................................................................. 3
3. Sugarcane developments in Mozambique ................................................. 4
3.1 Sugarcane in general................................................................................................................ 4
3.2 Smallholder sugarcane activities in Mozambique ........................................................ 5
3.3 Conclusion ................................................................................................................................... 6
4. Xinavane................................................................................................................ 7
4.1 Location ........................................................................................................................................ 7
4.2 Sugarcane developments in Xinavane .............................................................................. 7
4.3 Overview smallholder sugarcane associations in Xinavane..................................... 8
4.3.1 Three phases of development: scope and timing .............................................. 9
4.3.2 Size of smallholdings and projected income variations ................................ 9
4.3.3 Funding modalities: grants versus loans ...........................................................10
4.4 Summary ................................................................................................................................... 12
5. Actors involved ................................................................................................ 13
5.1 Companies ................................................................................................................................ 13
5.1.1 Açucareira de Xinavane ............................................................................................13
5.1.2 Agricane ...........................................................................................................................14
5.1.3 Unitrans ...........................................................................................................................15
5.2 NGOs............................................................................................................................................ 15
5.2.1 KULIMA ............................................................................................................................15
5.2.2 ORAM .................................................................................................................................16
5.2.3 Gwevahne ........................................................................................................................16
5.3 Government.............................................................................................................................. 17
5.3.1 CEPAGRI ...........................................................................................................................17
5.3.2 Local government ........................................................................................................17
5.4 Smallholders ............................................................................................................................ 18
5.4.1 Selection criteria and background of smallholders ......................................18
5.4.2 Motivations for smallholders ..................................................................................19
5.5 Concluding remarks .............................................................................................................. 19
6. Smallholders’ organization development .............................................. 21
6.1 Smallholder management selection procedures ....................................................... 21
6.2 Trainings for the establishment of functioning smallholder associations ...... 21
6.3 Creation of supra association/Joint Management Company: MHOVA .............. 24
6.4 Conclusion ................................................................................................................................ 25
7. Smallholder sugarcane outgrowers’ labour organization ................ 26
7.1 Major labour activities for smallholders ....................................................................... 26
7.1.1 Weeding ...........................................................................................................................26
7.1.2 Fertilizer application..................................................................................................26
7.1.3 Irrigation system activities ......................................................................................26

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 7.2 Individual plot labour versus labour teams ................................................................ 26
7.2.1 Individual plot labour ................................................................................................27
7.2.2 Labour teams .................................................................................................................28
7.3 Cultivation of other crops and competitiveness of sugarcane ............................. 29
7.4 Concluding remarks .............................................................................................................. 30
8. Financial arrangements ................................................................................ 31
8.1 Cane payment rules............................................................................................................... 31
8.2 Financial management ......................................................................................................... 34
8.2.1 AdX financial management related to smallholders ....................................34
8.2.2 Financial management of associations ..............................................................34
8.2.3 Clarity and transparency of payment system to smallholders .................35
8.3 Conclusion ................................................................................................................................ 36
9. Contracts between smallholder organizations and AdX ................... 37
9.1 Contracts and conflicts concerning land use rights .................................................. 37
9.2 Contracts concerning water rights .................................................................................. 39
9.3 Contracts concerning production .................................................................................... 39
9.4 Contracts concerning provision of social services .................................................... 40
9.5 Concluding remarks on contracts .................................................................................... 40
10. Conclusion ......................................................................................................... 42
11. Recommendations .......................................................................................... 46
12. List of references ............................................................................................. 49

iii
 List of Figures
Figure 1 Sugarcane production in Mozambique from 1961 till 2008 ..................................................4
Figure 2 Map of Xinavane plantation ...................................................................................................7
Figure 3 Distribution of origin cane ......................................................................................................6

List of Tables
Table 1 Overview of smallholder activities in the four currently active sugarcane estates as
reflected in Performance Assessment Framework (PAF) 2008..............................................6
Table 2 Overview of Xinavane smallholder associations and some characteristics ...........................8
Table 3 Overview of financing Xinavane third phase outgrowers ....................................................11
Table A Overview of costs associated with Nucleus estate Smallholder project in Indonesia .........23
Table B Phases in project and GTZ contribution ...............................................................................23
Table 4 Overview of costs as predicted for third phase smallholder outgrower scheme. ...............31
Table 5 Projected incomes and yields based on information provided by AdX ...............................32
Table 6 Overview of deductions in Macuvulane I association ..........................................................33

List of Boxes
Box 1 Sugarcane Export Market .......................................................................................................4
Box 2 Pivot vs. Dragline ....................................................................................................................9
Box 3 Successful setup of farmer organisation in a smallholder oilpalm project in Indonesia .....19
Box 4 Communication between smallholders and company.........................................................24
Box 5 Fine system for non performance ........................................................................................27
Box 6 Group vs. individual payment system ..................................................................................28
Box 7 1997 Land Law ......................................................................................................................33
Box 8 Cattle issues……………………………………………………………………………………………………………………..34
Box 9 Difficulties in expansion in Maholele..……………………………………………………………………………..34

iv
 List of Annexes

Annex 1 Questionnaire used in Xinavane

Annex 2 Cane payment rules
Annex 3 Original AdX small scale growers cane area and production summary
Annex 4 Overview of income of Macuvulane smallholders in 2009
Annex 5 ARA-SUL overview
Annex 6 Social services program of Tongaat Hulett concerning Xinavane
Annex 7 Pictures illustrating activities in Xinavane

List of abbreviations
AdX Acucareira de Xinavane
APAMO Associaçao dos Produtores de Açúcar de Mozambique
AMSP Accompanying Measures for Sugar Protocol
ARA-Sul Administração Regional das Águas, Regional Water Authority for southern
Mozambique
CEPAGRI Centro de Promoção da Agricultura
EBA Everything But Arms
EC European Commission
EIB European Investment Bank
EU European Union
GoM Government of Mozambique
GTZ Deutsche Gesellschaft für Technische Zusammenarbeit
JMC Joint Management Company
MTn Metical (Mozambican currency)
NGO Non Governmental Organisation
ORAM Organizaçao Rural de Ajuda Mutua
PARPA Plano de Acção para a Redução da Pobreza Absoluta
PAF Performance Assessment Framework
SDEA Serviços Distritais das Actividades Económicas (District Agricultural Office)
SSG Small Scale Growers
SSIP Small Scale Irrigation Project
TH Tongaat Hulett

v
1. Introduction
In the PROAGRI II strategy for agricultural development the Government of Mozambique (GoM)
identifies commercial agriculture as a frontrunner for rural development. The GoM therefore
stimulates foreign investments which have to provide the required knowledge and capital to develop a
modern, commercial agricultural sector that is capable of capitalizing on the vast agricultural potential
of the country. The GoM and donor organizations emphasize however that also smallholder
agriculture has its place in these developments. The reasoning is that local farmers obtain access to
modern technologies and capital via foreign investments and that these local farmers accumulate and
reinvest their profits in the local rural economy. This could trigger an endogenous process of transition
from a subsistence-oriented, low input-low output agriculture to a market-oriented more productive
one, which then reduces rural poverty (Marini 2001).
In Mozambique there has been considerable interest in the production of bio-fuel crops in the past
few years. The GoM supports these developments as there appears to be an attractive international
market for bio-fuels, whilst at the same time bio-fuel production could reduce the need for expensive
fuel imports. Also the favourable trade concessions with the EU under the Everything But Arms (EBA)
agreements, stimulates foreign investment in the agricultural sector in Mozambique as it provides
opportunities for agricultural produce to access the European market on favourable terms (LMC
International 2004; LMC International 2006; Zílio, Liddell et al. 2008; Açucareira de Xinavane SA 2010).
One of the crops which experiences a strong revival in Mozambique stimulated by these developments
is sugarcane, which according to the International Sugar Institute (ISO 2008, 4) has witnessed an
average production increase of 30% annually between 2000 and 2006. Besides the EBA agreements
the EU also reforms their sugar policy. In the new policy there are more opportunities offered to
Mozambique to export sugar to the EU for prices that are still above world market prices (LMC
International 2004; ISO 2008; ADE 2009). The EU Sugar Adaption Measures stimulate the provision of
opportunities for smallholder agricultural development, which are in line with the objectives of the
PARPA (poverty reduction strategy) of the GoM. Marini (2001) warned however for a lack of interest
for smallholder outgrowers in sugarcane production due to the abundance of land and preference of
the sugarcane industry for large scale outgrowers which come with fewer constraints as numerous
small scale outgrowers. (IFAD 2003; Danish Agricultural Advisory Service 2007; ISO 2008)
Although in the African context there are many kinds of smallholder sugarcane programs (see e.g.
IFAD, 2003; Danish Agricultural Advisory Service 2007; ISO, 2008), there appears little experience with
the inclusion of smallholder sugarcane production into modern, company lead sugarcane production in
Mozambique. The only cases reported on smallholder outgrowers appear to be in Xinavane, where in
1998 the first smallholder sugarcane pilot project commenced. The EU therefore even qualified
Xinavane as an example of smallholder activities in Mozambique. The sparse sources that report on
Xinavane provide a non-uniform overview of the feasibility of Xinavane as a model for other outgrower
activities. However, it is obvious that Xinavane has a lead in Mozambique concerning sugarcane
smallholder outgrowers (MINAG-CEPAGRI 2008) and during this research it was observed that
smallholder sugarcane production is rapidly expanding in Xinavane.
As there is such limited information available whilst investments in agriculture are increasing rapidly,
the objective of this study is to provide insights into current smallholder activities in sugarcane
production at the local level in Xinavane. This information will be used to analyze how policy is
translated into the local context, what its effects are and what lessons can be learned from this in
order to achieve the goals set by the GoM in the PARPA II policy framework. By analyzing what goes on
at ground level this study aims to provide insights and suggest possible (policy) interventions/
alternatives on current activities and thereby seek to contribute to the improvement of current and
future sugarcane production practices.

1
2. Methodology and structure of report

2.1 Research techniques

This study included two weeks of literature study in The Netherlands, three months of fieldwork in
Mozambique of which one month was spent in Maputo and two months in the Xinavane area, and six
weeks for data analysis and report writing. In order to obtain the desired information the following
research methods were applied:
Literature study
Interviews
Field observations
Survey
The literature study focussed on the retrieval of documentation on sugarcane developments in
Mozambique and Xinavane specifically. Most documentation was retrieved in Mozambique from
actors like the Açucareira de Xinavane (AdX), CEPAGRI, and the EU delegation in Mozambique.
Although there is some documentation on sugarcane development in Mozambique, literature
considering smallholder sugarcane development in Mozambique proved scarce, most likely as only
recently sugarcane production is expanding again.
The majority of fieldwork was carried out in the Xinavane area, consisting of the north western part of
Manhiça district and the South eastern part of Magude district, both in Maputo Province. In the
Xinavane area farmers, leaders of farmer associations, technical staff supporting the associations,
Açucareira de Xinavane management, NGO’s and government officials were interviewed. These
interviews consisted of group interviews as well as individual interviews depending on the preference
of the interviewees. Some respondents were interviewed several times. Information was also gathered
in Maputo city, where consultants, (semi)-governmental organisations and NGO’s were interviewed.
For this research 45 semi-structured interviews were conducted.
The survey consisted of 125 questionnaires (see Annex 1) that was conducted over a five day period by
eight locally recruited surveyors. As time and finances were constrained, only five associations were
surveyed. These associations were selected on the basis of their characteristics. In each of these
associations 25 members were randomly selected and asked to participate in the research.

2.2 Structure of the report

This report starts with a brief introduction of sugarcane developments in Mozambique (Chapter 3) in
order to set the context of (smallholder) sugarcane developments in Xinavane. Chapter 4 continues
with a description of the (smallholder) outgrower activities in the Xinavane area. This introduces the
location and provides a small introduction on the different phases of development. Chapter 5 then
continues with an overview of the most relevant actors involved and their roles in the Xinavane
smallholder sugarcane expansion. Chapter 6 delves into the smallholder organizations and
demonstrates what structures are in place to organize the smallholders, what the issues in these
organizations are and what needs to be improved. In Chapter 7 the actual labour arrangements are
presented and some information is provided on pros en cons of different labour arrangements. The
financial dealings between the smallholders and associations are dealt with in Chapter 8, where also
information is provided about incomes of smallholders. Chapter 9 then provides information relating
to different contractual agreements (or lack of contractual agreements) between the various partners.
Finally conclusions are provided in Chapter 9 and some recommendations for improvements in
Xinavane or future other smallholder sugarcane plantations are provided in Chapter 10.
Several boxes are inserted touching upon issues which are relevant for a better understanding of the
context of smallholder sugarcane developments in Xinavane. Also Annex 7 provides some photographs
illustrating developments in Xinavane.

2
2.3 Scope and limitations
From the start of this research there existed a very limited understanding and knowledge on what
(smallholder) sugarcane activities were present in the Xinavane area, or in Mozambique as a whole.
The objective of this research covered many aspects and therefore could only touch upon subjects,
whilst each subject touched upon would warrant its own four months of research. The research must
therefore be regarded as explorative rather than comprehensive, touching and identifying issues
rather than treating each issue in an exhaustive manner.
A major limitation was the local language, being Shangana, which the researcher was incapable of
speaking and understanding. Therefore thorough research into complex social relations, for which it is
necessary to build trust, understand subtleties and remain in the field for a prolonged period, was not
really possible. Also translations were performed by a non-professional translator.
A key advantage enjoyed in this research was the CEPAGRI support through the provision of
legitimacy, documentation, contacts and an introduction to AdX management. Their recommendation
letter proved a valuable credential which opened many doors, although some remained closed.

3
3. Sugarcane developments in Mozambique

3.1 Sugarcane in general

The commercial sugarcane sector in Mozambique commenced in 1908 with the establishment of
sugarcane estates and mills in the Zambezi and Buzi valleys, being followed by the establishment of
the Xinavane plantation on the Incomati River banks in 1914. Two more estates were established in
the 1920s (Marrameu and Luabo) and then in the late
1960s two new estates were created (Maragra and
Mafambise), explaining the large increase in Box 1: Sugarcane Export Market
production in Figure 1 (Marini 2001; Açucareira de According to the National Adaption
Xinavane SA 2010). In the early 1970s sugar was the Strategy the average production cost of
third largest export product in Mozambique, with an raw sugar in Mozambique was estimated
average production over 300,000 tons per year. All of at USD 260 (€ 210) per ton in 2005. This
the estates and mills were owned by foreign entities Strategy also forecasted production
and much of the produce was exported to Europe increases from 240,000 tons in 2007 to
(Marini 2001). 500,000 in 2010, which will lead to
Performance of the estates and mills dropped rapidly increased scale advantages and costs are
after 1973, due to an outflow of knowledge and skills expected to diminish to about USD 230
associated with the exodus of the (mainly) Portuguese per ton (about € 170). Fobbing, freight
management staff, due to uncertainty surrounding and insurance costs were estimated at
the Independence of Mozambique and the €90 per ton, bringing the total cost of
subsequent new socialist regime and economic Mozambican raw sugar delivered to the
program. Subsequently, the civil war from 1977 till European market to € 260, where sugar
1992 paralyzed rural Mozambique and had is bought for € 335 per ton. Therefore
detrimental effects on the sugar industry, taking most exporting sugar to the EU is and will
sugarcane mills out of production (Instituto Nacional remain a profitable business for the
do Açucar 2000; Marini 2001; Açucareira de Xinavane Mozambican sugar industry.
SA 2010). Only Xinavane and Mafambisse kept on Source: (ADE 2009) and (AdX 2010)
producing, albeit far below their potential (Instituto
Nacional do Açucar 2000).

Sugarcane production in Mozambique

from 1961 till 2008
3,500,000 Independence End civil war Start privatization
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
-
1985
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983

1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007

Figure 1 Sugarcane production in Mozambique from 1961 till 2008 (Source: FAOSTAT,
visited 10-07-2010)
When peace was signed in 1992, the Mozambican government aimed to rehabilitate the sugarcane
sector since its production in Mozambique bore comparative advantage. These comparative
advantages, according to INA (2000), include excellent agricultural conditions for cane growing, a
4
labour surplus in rural areas and sugarcane estates and mills which only needed to be revitalized.
Batidzirai (2006) confirms that the physical conditions in Mozambique are favourable for bio-fuel
production, of which sugarcane would be an important crop and Schut (2010) provides a more
detailed overview in which he combines the agro-ecological conditions with socio-economic conditions
in establishing where bio-fuel feedstocks are produced, indicating socio-economic conditions are
crucial for the actual development of bio-fuel production in Mozambique. It was clear to the
government however that the private sector was needed to develop this industry as well as access to
foreign technology and capital. Companies from nearby countries with well developed sugar industries
(South Africa and Mauritius) were invited to participate in the revitalization of the Mozambican sugar
industry. These companies were attracted by the potential of increased production for US and EU
markets which allows for sugar prices above world market prices, whilst expansion opportunities in
their own countries were limited (see Box 1) (Instituto Nacional do Açucar 2000).

3.2 Smallholder sugarcane activities in Mozambique

Marini (2001) notes that the strategy adopted by the government to revive the sugarcane sector
emphasized the need for more involvement of Mozambicans in the sugarcane industry. Marini
anticipated two scenarios for sugar production in Mozambique: sugarcane grown by mills with large
estates or mills hiring outgrowers on their estates. These mills and management were expected to be
run by experienced foreign companies with the outgrowers being Mozambicans. Advantages of
including Mozambicans would be that less profit is expatriated and more stays in Mozambique to
stimulate the national economy. Marini (2001) expected especially larger outgrower companies to
profit from the sugarcane expansion, whilst the number of small scale outgrowers, which could
stimulate the local rural economy, would be minimal. This assumption was based on the fact that land
availability for the estates would not form a problem, whilst millers then regarded risk externalization
and the need for capital as priorities. Marini also points out that the management of smallholders
would be more complicated than the management of a few larger outgrowers.
However, smallholder activities in sugarcane production are stimulated as they fit the development
goals of the GoM and EC, with the EC supporting the Ministry of Agriculture to the tune of 6,000,000
Euro for the Accompanying Measures for Sugar Protocol (AMSP) adaptations (interview CEPAGRI, 22-
03-2010) (Delegacâo 2006; LMC International 2006; ADE 2009). Engaging with smallholders is not
compulsory by law but it constitutes policy and as such is recommended practice for companies
operating in Mozambique’s sugar sector. The expansion of smallholder activities forms a prominent
part of the Sugar Adaptation Plan as adopted by the GoM and the Association of Sugar Producers of
Mozambique (APAMO), which is to guide the Mozambican sugar industry into the near future (see:
LMC International 2006).
Table 1 Overview of smallholder activities in the four currently active sugarcane estates as reflected in
Performance Assessment Framework (PAF) 2008 (*prediction in 2008)

Plantation Costs (€) of Social Training (€) Tons of cane produced by Tons of cane produced by
smallholder Services (€) smallholders in 2007 smallholders in 2010*
expansion plans
Marromeu 1,122,000 202,500 67,500 3,150 31,200
Mafambisse 1,442,970 202,500 67,500 - 31,500
Xinavane 11,261,482 638,198 1,777,059 31,886 180,500
Maragra 1,492,998 202,500 67,500 2,064 27,826
Total 15,319,450 1,245,698 1,979,559 37,100 271,025

According to the executive director of APAMO (interview 01-04-2010) and a representative at CEPAGRI
(interview, 22-03-2010), all sugar plantations apply their own sugarcane outgrower strategies and
projects and there is no national plan, strategy or guidelines on how to organize or implement
smallholder activities. The Performance Assessment Framework (PAF) monitors the adaptations in the
sugarcane sector in order to fulfil the requirements for AMSP funding. It does so through an
assessment that includes 35 (environmental and social) indicators. This assessment illustrates that the
smallholder plans and activities at Xinavane are considerably more ambitious than the activities and

5
plans handed in by the other sugarcane mills. The latter plans roughly correspond with a 25% share in
the 6,000,000 Euro budget made available by the EC (see Table 1).

3.3 Conclusion
In conclusion it can be observed that the sugar sector in Mozambique has witnessed a strong revival
since the start of the implementation of privatization policies, benefitting from the prevalent
favourable (growing) conditions. The sector is set to grow even further in response to a newly
emerging market for biofuels (ethanol). The Mozambican government would like to stimulate more
smallholder involvement in sugar production in order to foster rural development and pro-poor
economic growth. It does so through the facility of Accompanying Measures for the Sugar Protocol
(AMSP). So far Xinavane sugar estate has been the most responsive to policies fostering the
development of smallholder outgrower schemes. That is why the rest of this study is devoted to the
study of these developments in Xinavane.

6
4. Xinavane
This chapter provides a closer look Xinavane sugar estate by presenting its location (4.1), history (4.2)
and the phased development and scope of smallholder sugar outgrower schemes (4.3).

4.1 Location
The Xinavane sugar estate (25° 11' 53 S; 32° 52' 3 E) is located in the districts of Magude and Manhica,
Maputo Province, Mozambique, with most of its plantation area on the southern banks of the Incomati
River. There are basically three production sites, comprising the Maholele Expansion Area (west of
Magude), the Western Expansion Area (east of Magude and close to Xinavane) and the Eastern
Expansion Area (further east of Xinavane). In all three areas smallholder activities are being developed
as well. Figure 2 illustrates the area of the plantation, which in total amounts to roughly 15,000 ha,
including planned expansion till 2011 (Tongaat Hulett 2009). The pink/gray areas demonstrate
smallholder expansion areas.

Figure 2 Location of Xinavane in Mozambique and map of Xinavane plantation (based

on Agricane map)

4.2 Sugarcane developments in Xinavane

In 1914 a British-owned company founded a sugarcane plantation and sugar mill at Xinavane. The
estate was taken over by a Portuguese company in the early 1950s and in 1975 the newly independent
Mozambican State took a 51% share in the estate. Although the Xinavane estate suffered from the
outflow of skilled personnel due to decolonisation and civil war, resulting in a serious drop in
production after 1975, the estate and mill kept functioning (Instituto Nacional do Açucar 2000;
Açucareira de Xinavane SA 2010).
The Açurareira de Xinavane (AdX) comprises the sugar mill and nucleus estate in which Tongaat Hulett
Sugar took a 49% share in 1998. In 2000 a rehabilitation program for the mill and estate commenced
after which the share of Tongaat Hulett increased to 88% (Vaz and P. van der Zaag 2003; Açucareira de
Xinavane SA 2010). Currently a new expansion program is being implemented in which the mill
capacity expands from 69,000 tons of raw sugar in 2007 to 208,000 tons in 2011. For efficient use of
the mill 1,680 million tons of cane are required, of which 594,000 tons will be provided by the existing

7
nucleus estate; 726,000 tons by expanding the nucleus estate; 198,000 tons by existing outgrowers
and 164,000 tons by new outgrowers (see Figure 3).
AdX intends to expand to 15,858 hectares in
2011, comprising 11,879 hectares of nucleus
estate and 3,979 hectares with outgrowers 12% Existing
(Tongaat Hulett 2009). There are two types of nucleus estate
outgrowers: a larger outgrower company as 10% 35% Expansion
described by Marini (2001) being Vamagogo nucleus estate
comprising ca. 1,400 ha) and smallholder
Expansion
outgrowers. The EC clearly indicates that its
outgrowers
Adaption Measures are a form of pro-poor
development aimed at increasing the share and 43% Existing
number of smallholder sugarcane producers, outgrowers
not at larger outgrowers like the Vamagogo
company who have no connection to Figure 3 Projected distribution of origin of cane
smallholder activities at all (interview EU production at Xinavane (Source: AdX, 2010)
attache, 29-03-2010) and (União Europeia
Delegação da comissão Europeia em Mozambique 2006).

4.3 Overview smallholder sugarcane associations in Xinavane

This section provides an overview of the smallholder sugarcane activities in Xinavane. The section is
primed on Table 2, which provides an overview of the associations and some of their characteristics.
There are 15 associations, most of which have only recently been established. Each smallholder
association has its own management which comprises at least a president, treasurer and secretary.
Associations are meant to safeguard the interests of smallholders and form an interface between
company and smallholders. More details on smallholder management arrangements are provided in
Chapter 6.
The data presented in Table 2 were mostly provided by AdX, which acknowledges that the actual
numbers of smallholders might differ from the indicated numbers, especially regarding newly
established associations. The latter associations still need to obtain their final shape after their recent
establishment (interview Sancho Cumbi, 21-05-2010 and own experiences).
In the remainder of this section we will briefly discuss their phased development; the size of the
irrigated plots; and the funding modalities underlying the associations established in different phases.

Table 2 Overview of Xinavane smallholder associations and some characteristics (based on AdX 2010)

Size No. of Ha/ Irrigation

Phase Year Association sugarcane Small- small- system Funding agency Loan or grant
area (ha) holders holder
GoM and
Southern African
I 1998 Maguigane 90 66 1.4 Dragline Grant
Development
Bank (DBSA)
2005 Macuvulane 185 180 1.03 Dragline GoM and African Grant
Development
II
2008 Chihenisse 200 40 5.0 Pivot Bank (AfDB or Grant
BAD)
2008 Macuvulane 2 73 89 0.8 Dragline AdX, with funding Loan
Maria de Luz sought at the
2009 263 200 1.3 Dragline European Loan
Guebuza
III Investment Bank
2009 Hoyo-Hoyo 189 150 1.3 Dragline (EIB) and other Loan
6 de Janeiro/ parties which are
2009 74 200 0.4 Dragline Loan
Colo interested to

8
 Maholele support these
2009 72 4 18 Dragline developments. Loan
Macamo
2009 Buna 218 110 2.0 Dragline Loan
Olhar de
2009 Esperança/ 107 250 0.4 Dragline Loan
Facasize
Maholele G
2009 266 6 44.3 Dragline Loan
1st Stage
2010 Chichuco 95 150 0.6 Dragline Loan
Maholele
2010 56 4 14.0 Dragline Loan
Mutombene
Tres de
2010 133 10 13.3 Dragline Loan
Fevereiro D
2010 Mucombo Est. 70 80 0.9 Pivot Loan

Total 2,091 1,539 1.4

4.3.1 Three phases of development: scope and timing

Xinavane was the first sugarcane estate in Mozambique to engage in smallholder sugarcane outgrower
activities through the establishment of the Maguigane Farmers Association in 1998, which was funded
by the Development Bank of Southern Africa. In a second phase Macuvulane and Chihenisse
smallholder associations were established in 2005 and 2008 respectively. This second phase was
initiated by the Small Scale Irrigation Project (SSIP), which was funded by the African Development
Bank. So far only Maguigane and Macuvulane associations experienced multiple harvests and
payments.
In 2007 the Xinavane Smallscale Grower Development Project was launched, which is currently being
implemented and represents by far the largest smallholder sugarcane expansion project till now. This
third phase includes the development of more than 1,600 ha of newly irrigated command area,
managed by 12 new associations and has over a 1,200 members. From the start there have been
negotiations between AdX and the European Investment Bank (EIB) concerning the financing of the
smallholder outgrower expansion. However, funding for this expansion is currently provided by
Tongaat Hulett itself, since it wanted to commence activities as soon as possible (see Table 3)
(interview Sancho Cumbi, 01-04-2010)(Açucareira de Xinavane SA 2010). The EIB might still engage in
the financing of the project and thereby relieve Tongaat Hulett of (part of) its investment (interview
Sancho Cumbi, 01-04-2010).
AdX indicated that their expansion program is dynamic and a process of ‘learning by doing’. This
implies that there is no detailed blueprint or example which the company copies from outgrower
activities undertaken elsewhere and also that problems are solved as they come along. Therefore the
establishment of the third phase represents a very dynamic process in which information which is
correct today may be outdated tomorrow (interview Sancho Cumbi, 21-05-2010). In the case of
Maguigane and Macuvulane I associations the development path has become clearer after running for
12 years and 5 years respectively. Although AdX learned from these associations, the sheer size and
different conditions faced in phase III calls for different approaches.

4.3.2 Size of smallholdings and projected income variations

Table 2 illustrates a considerable variation in sugarcane plot sizes per member, ranging from 0.4 ha per
member in association 6 de Janeiro to more than 44 ha per member on average in Maholele G. As
demonstrated in Table 5 this translates into considerable differences in projected incomes per
smallholder. AdX recognizes that smallholding plots need to attain a certain size to be economically
interesting for smallholders. The assistant manager of the outgrower expansion program regards 3
hectares a reasonable size for livelihood support in Xinavane, taking nearby future developments into
account (interview Sancho Cumbi, 01-04-2010). However, other sources advocate bigger plot sizes, the
Danish Agricultural Advice Service (2007) for example notes that although 2.5 to 3 ha is enough to

9
sustain a family if grants are provided but it takes 8 to 10 hectares to make smallholder sugarcane
production truly viable. The variation in economically viable plot sizes also depends on the local
conditions and more information on this will be obtained during further developments in Xinavane.
The 3 hectare plot size, regarded as sufficient by Mr. Cumbi, already exceeds what most associations
currently have per member (see Table 2). It will be interesting to assess at a later stage what size
smallholdings need to have for average association members to obtain a satisfactory income. Of
course this also depends on whether and how many other sources of income smallholders have.
AdX attempts to stimulate associations to bring down the number of members in associations like
Facasize or Maria de Luz Guebuza which presently have only small areas per member. A problem Mr.
Cumbi encounters is that within associations there exist many informal agreements. Some members
subdivide plots amongst their children while others attempt to have their children registered on the
members list. Meanwhile all income goes to the same person eventually. Mr. Cumbi has little insight in
these internal dynamics in associations but acknowledges that these practices can produce
undesirable consequences (interview 16-04-2010). In interviews with smallholders it proved
impossible to elicit any solid statements about these informal subdivisions. However, payment data
from Macuvulane association indicate that there are more people receiving income from the produced
sugarcane than the official number of members registered at the association.
Mr. Ussivane, the former SSIP project manager, who supervised the development of Macuvulane I and
Chihenisse associations, indicated that there is a conflict of interest between the development agency
and government on the one hand, who want as many people as possible to benefit, against the
associations on the other hand, who want to limit the number of participants to increase the income
per member (interview, 26-04-2010). Although Mr. Ussivane claims this is a key issue of contention
and the association leaders officially maintain the standpoint of aiming for limited numbers of
members, it is in contradiction with the observed practice of multiple members unofficially dividing
their plots, thus increasing the number of beneficiaries. Leaders of associations also indicated that
they have to deal with many people who want to join the association, claiming they have ceded land
for the outgrower scheme. More information on land issues and the membership of associations is
provided in Section 5.4 on smallholder outgrowers
Another variable that influences the income earned by individual association members is the irrigation
technology that is in use (see Box 2). Dragline systems prove to be more costly, and consequently less
remunerative, than systems that use Centre Pivots.

4.3.3 Funding modalities: grants versus loans

An important difference between the first and
second phase compared to the third phase of Box 2: Pivot versus Dragline
smallholder outgrower development is the Most associations operate a dragline
financing. Whereas in the first two phases grants irrigation system, with the exception of
paid for the costs associated with the Chihenisse and Mucombo associations that
establishment of sugarcane fields (land levelling operate Centre Pivot systems. The irrigation
and installation of the irrigation system) as well as technology produces different consequences
provision of the first inputs (e.g. land preparation, for the labour activities and costs associated
training, planting of sugarcane), the third phase is with irrigation. In drag hose systems
financed through a loan, meaning smallholder sprinklers need to be moved every 12 hours
associations have to repay all costs associated with while a pivot system only needs one central
the establishment of their sugarcane fields, operator for the whole command area and
including an initiation fee for AdX for organising runs fairly automatically. Also the electricity
the scheme (interview Sancho Cumbi 01-04-2010) costs associated with the pivot are lower than
(Açucareira de Xinavane SA 2010). with a sprinkler system (pivot costs about ¼
There are indications, for example in reports by of the costs of sprinkler), mainly due to the
ADE (2009), ISO (2008) and IFAD (2003), that lower pressure needed to irrigate.
smallholder sugarcane production is not feasible (Pers. comm. Collert Moyo, 18-07-2010).
when the capital development costs are not

10
covered by a grant. Smallholders incur high levels of debts with the initial investments, leaving
smallholders in some cases not interested in continued sugarcane production. Mr. Ussivane, project
leader of the SSIP project, indicated that a feasibility study was performed to see whether the
smallholders could repay the initial investment costs (7,000 US$/ha, according to Mr. Ussivane and
9,000 US$/ha according to AdX in (AdX, 2010)). As this was deemed infeasible it was decided by the
SSIP project to provide funding in the form of a grant (interview Mr. Ussivane, 26-04-2010).
AdX however provides cost projections which show an internal rate of return of 20.64% for the
smallholders who have to repay the capital investment costs (Açucareira de Xinavane SA 2010, 30). In
the same document AdX also claims that the loan will be repaid in 10 years, leaving smallholders with
an average annual income of 1,307 US$ per grower, assuming the grower has two ha of sugarcane at
his/her disposal. A possible explanation, which has to be looked into further, is that smallholders in
above mentioned studies which deemed smallholder outgrower sugarcane production non-viable
received prices for their cane which are below the prices used by AdX. AdX also assumes a sucrose
content of 14.2% in its calculations, which is far above the 11.7% sucrose content obtained in 2009
((Açucareira de Xinavane SA 2010) compared to data provided in pers. comm. with Mr. Ferronha (06-
07-2010)). The assumptions AdX makes in their feasibility study are clearly optimistic. More
information about the breakdown of payments to smallholders is provided in Chapter 8 on Finances.
Mr. Cumbi (interview, 16-04-2010) indicated that he is afraid that although smallholders were told that
they have to repay the loans, and the smallholder management clearly acknowledges this, the
association members might be disappointed by the final payments they receive as these will be lower
then what the grant funded, phase I and II, association members get. This fear appeared not
unfounded. Indeed the association leaders of Macuvulane II made this comparison, explaining that
they did not understand why AdX paid them the value they received (interview Macuvulane II, 14-6-
2010).
The first two phases of the smallholder expansion projects appear to reflect a development oriented
project mindset as they were gifts from the government to smallholders and the company with very
limited risks attached for either smallholders or company. In contrast, the third phase appears more
based on a business mindset with considerably more financial risks attached for the company. In
response, the company seeks to reduce this risk by inviting outside organisations to take over (part of)
the financing. Smallholder outgrowers ceded their land and face considerable costs that were made on
their behalf to develop the land and infrastructure. However, if the calculations of AdX are (more or
less) correct the business model will create a win-win situation in which both company and local
communities benefit.
AdX claims that the third phase expansion project will cost up to 15,765,490 US$ and Table 3 shows
the projected distribution of costs over different funders1. AdX is still looking for other funders in
addition to the ones mentioned in Table 3, but it is unclear how much of the costs they will cover.
rd
Table 3 Overview of distribution of investment costs to finance 3 phase outgrowers (Source AdX 2010, 30)
Actors involved Costs (US$) Share in total cost How is this financed
Smallholder debts 7,500,000 47.5% Pre-financed by AdX. To be repaid with a 10% cession of income
from sugarcane over 10 a year period + an interest rate of 6%
over income for 10 years, totaling repayments to tune of 16% of
projected income annually for 10 years for smallholders. EIB is
asked by AdX to cover this loan.
Grant from E.U. 3,780,000 24% As part of the E.U. Accompanying Measures Programme
(unclear whether this is actually delivered or agreed upon by
E.U.).
AdX equity into 4,485,490 28.5% AdX becomes shareholder in the smallholder project, and part
project of the profits therefore go to AdX.
Cost project 15,765,490 100%

1
It is unclear to what extend smallholder outgrowers are aware of this cost distribution.

11
Table 3 demonstrates that smallholders have to repay a considerable part of the development costs
for establishing sugarcane outgrower schemes. However, it also demonstrates that AdX takes a
considerable stake in the 3rd phase smallholder outgrower project by taking a 28.5% share for which it
will receive income if all goes well.
4.4 Summary
Smallholder activities are booming in Xinavane, where AdX is currently establishing 15 sugar cane
outgrower associations. Most of these associations have only been established in the past two years
and developments are dynamic, implying that information is quickly outdated. Although the older
associations have more or less taken a definite shape and modus operandi, the third phase
associations can still merge, split or grow. In this study not all associations could be investigated and
surveyed as the number of associations was too large.
A major difference between the associations in Xinavane is the financial basis. The projects in the first
two smallholder expansion phases were based on grants and included very limited financial risks for
smallholders whilst the third outgrower expansion phase is based on a loan which smallholders have
to repay. It appears that the associations in phase I and II were instigated more with a development
goal in mind, whilst the associations in phase III were set up to fulfil other motivations, like the
company’s interest in expanding production. The high investment cost associated with sugarcane
establishment has created high levels of debts for smallholders in other places in Africa. However,
according to AdX this is not a limitation in Xinavane. AdX itself also has a considerable equity in the
smallholder project and takes considerable financial risks itself, reflected by the fact that they are the
main funders of the project. Table 2 illustrated that smallholder associations differ in many respects,
like plot size per smallholder, irrigation system and financing of capital development costs. It will be
very interesting to see how smallholders are able to repay and whether the profits during this
repayment period will be sufficient to keep smallholders motivated.

12
5. Actors involved
Multiple actors are involved in the development of smallholder outgrower activities in Xinavane. This
chapter provides an overview of the most relevant actors, their motivations for participating in
smallholder activities and their roles and responsibilities. The actors that are treated comprise
companies (5.1), NGOs (5.2), government agencies (5.3), and finally the smallholder outgrowers
themselves (5.4).

5.1 Companies
There are three main companies active in the sugar production process at Xinavane. These companies
are AdX, Agricane and Unitrans. Local people often conflate these different companies as either AdX,
Tongaat Hulett, Incomati or just Empresa (Portuguese for company). A brief introduction highlights the
main functions of these companies.

5.1.1 Açucareira de Xinavane

The Açucareira de Xinavane (AdX) clearly dominates the area as it employs many people in its sugar
mill and nucleus estate. Many people walk around in AdX/Tongaat Hulett uniforms, or uniforms from
Unitrans (see next section). Not only is its presence manifested through company uniforms, but also
the ambulances, garbage tractor and police cars carry the logo of the AdX mother company, Tongaat
Hulett.
AdX participates in smallholder outgrower activities for two key reasons (interview Sancho Cumbi 01-
04-2010):
Expand sugarcane area and increase sugarcane production. Land is becoming scarce in the
Xinavane area. By involving local communities AdX can extend sugarcane production to areas
previously unavailable to them.
Involve the local community. By maintaining good relations with the local community and
contributing to the socio-economic development of the area, AdX hopes to avoid conflicts with
local communities, which could (and did) negatively affect the production of sugar.
Motivations ascribed to AdX by other actors include:
Externalize the management of the sugarcane procurement area. This involves a transfer of
responsibilities whereby smallholders organise their area and cane production themselves in a
proper fashion.
Externalize the risks of sugar production. If something happens with the cane production it is
the responsibility of the smallholders. Hence AdX reduces risks associated with production
failure.
Gain access to extra sugarcane production at reduced costs, since smallholders, development
agencies, and/or government cover part of the costs for the development of cane.
In the 3rd phase expansion it is the AdX department of agriculture which is responsible for the technical
aspects concerning smallholder outgrower production in the first three years. However, AdX has
contracted Agricane for the development of the outgrower schemes as is further explained in section
5.1.2. Of course the AdX financial department remains responsible for the transactions and some
legal/financial aspects. More information on this is provided in Chapter 8.
Key activities related to smallholders that AdX currently performs are:
Secure a market for the produce provided by smallholders. The milling capacity of AdX is more
than adequate to process, package and market all produce generated by smallholders;
Provision of fertilizers, herbicides, pesticides and other inputs which are procured in bulk,
thereby reducing the production costs for smallholders when compared with individual
procurement of these inputs by smallholder associations;

13
 Provision of technical assistance. Technicians trained by AdX work at the associations (mostly
one technician per one or two associations). They keep an eye on the sugarcane production
progress and inform the smallholder management what activities need to be performed. AdX
has the capacity to provide technical assistance and has the knowledge and networks to
perform, or at least organize, repairs. Mr. Ferronha, the financial manager of AdX, indicated
that for small repairs (e.g. sending an AdX employee for a 20 minute job) they do not charge
smallholders whilst for big ones (e.g. the restoration of a pivot in Chihenisse) they do
(Interview Ferronha, 18-05-2010).
Provision of credit. At the request of the leadership of smallholder associations AdX provides
credit which it recoups by imposing deductions from the final payments to smallholders (more
on this in Chapter 8). It is unclear however what the limits are for this and what criteria AdX
applies on providing or withholding credit. As contracts appear rather vague (see Chapter 9) it
is most likely that the responsible AdX manager (from the financial department) assesses each
request on a case by case basis, judging each request on its own merits.
Coordination of activities between different actors involved in the cane production process. AdX
is responsible for the coordination and procurement of inputs and the coordination and
contracts with the two service providing companies dealt with in sections 5.1.2 and 5.1.3.
On top of the above mentioned services, AdX also provides for social aid projects in which the
company indicates what activities it undertakes for community development (Tongaat Hulett
undated). Some of these social projects appear to have been implemented, such as arranging a tractor
and crew to pick up the garbage in Xinavane. It was not checked in this research however whether all
envisaged activities were implemented, what the costs were, to what extent these projects are
executed or who monitors these plans.

5.1.2 Agricane
Agricane is an agricultural engineering and development company, active in many countries in
southern and central Africa. In Xinavane AdX contracted Agricane to implement the third phase of
smallholder outgrower activities and organize the technical support for this, as the AdX agricultural
department is currently too occupied with their nucleus estate expansion (interview Ges Bester and
Michael Mapisane, 14-05-2010). In the Proposal for the provision of management service to small
growers supplying cane to the Mill by AdX (2009) it is proposed that Agricane also arranges for the
legalization of associations, recruitment of staff, training of smallholders and crafting of management
structures of the smallholder associations. Although considerable progress has been made in the
establishment of sugarcane fields and the provision of technical training on how to grow sugarcane,
the actual crafting of management structures and other administrative tasks appears to have received
scant attention from Agricane at the time of the study. Although Agricane focuses upon the activities
in the most recent smallholder expansion, they also maintain contacts with the older associations and
are actively involved in Chihenisse association.
Agricane hires field, section and area managers who organize and supervise the activities that need to
be performed in the fields. The section managers, also called technicians, personify the interface
between the company and the leadership of the smallholders (management). Section managers
(technicians) are the ones in the field communicating with the associations’ leaders and training
selected association members who then train the responsible persons in the associations. These
technicians are paid by AdX, who then recover the costs for this service through deductions in the pay-
outs to smallholder outgrowers (interview Russel Longhurst and Ges Bester, 28-04-2010). Agricane
indicated that they face a shortage in qualified manpower and material (possibly indicating lack of
finances but maybe also indicating a lack of qualified personnel in Mozambique/Xinavane area).
Therefore they are unable to provide all services required (interview Ges Bester and Michael
Mapisane, 14-05-2010). Agricane does not have any written manuals which clarify how smallholders
should be trained. Also there is very limited contact with the NGOs (see Section 5.2) involved in the
sugarcane expansion activities (interview Russel Longhurst and Ges Bester, 28-04-2010). These NGOs

14
are supposed to provide literacy courses and train the association members in socio-organizational
aspects. This should facilitate the technical knowledge transfer needed to efficiently grow sugarcane.
The focal point of Agricane is the leadership (management) of the smallholder associations, which is
approached when Agricane wants something implemented or needs labourers to perform certain
tasks. Agricane is able to propose ideas to smallholder associations and advise them on how to
organize their activities. Although theoretically Agricane might be able to compel smallholders to
execute certain activities as Agricane is responsible for the implementation of the smallholder
outgrower activities, in practice Agricane cannot force associations as this would severely damage the
relationship between Agricane and the smallholders (interview Ges Bester, 14-05-2010). Currently AdX
is trying to convince smallholders to adopt labour teams instead of mobilizing individual labour
provided by smallholders (see Section 7.2). It does so by pointing out the advantages of employing
teams rather than individual labourers.

5.1.3 Unitrans
Unitrans is a South African company specialized in the transport of sugarcane, hired by AdX. Unitrans
provides transport and haulage services for many other sugar producers in southern Africa. On their
website it is indicated that Unitrans undertakes land preparation activities as well, though it is unclear
whether in Xinavane they are responsible for this. It is clear that in Xinavane, Unitrans is responsible
for:
Harvesting; Unitrans organizes crews and the transportation of these crews to the sugarcane
fields that are ready to be harvested. This is done manually in Xinavane, after the cane has
been burned. Part of the harvesting process is to put the cane (manually) in neat piles thereby
making it ready for loading.
Loading; this process is highly mechanized with some large machine picking up the cane and
putting it into a truck, or tractor with carts behind it.
Haulage; this comprises the process of transporting the cane from the fields to the mill.
The contract Unitrans has with AdX also covers all smallholder outgrower areas. Services of Unitrans
are bought in bulk by AdX, who give the associations deductions for this. It is unclear however whether
the deductions made to smallholders are based on distance to the mill or based on average haulage
distance for the whole plantation area. Unitrans was not interviewed for this research since they
basically work for AdX and are hardly interacting with smallholders. It was observed that smallholders
neatly check how many Unitrans trucks leave their fields at the time of harvest.

5.2 NGOs
There were three NGOs involved in the formation of smallholder associations. All three have a
different background and a slightly different focus. It is unclear whether or what NGO was involved in
the establishment of Maguigane association.

5.2.1 KULIMA
KULIMA is a Mozambican NGO, founded in 1984. In 2007 KULIMA was asked by the Small Scale
Irrigation Project (SSIP) to arrange the organization of Macuvulane association as KULIMA is known to
have considerable experience with setting up associations. Domenico Liuzzi, the director of KULIMA,
pointed out that KULIMA was invited two years after the association was set up, as the SSIP
management only then realized that the association needed more training in order to take on the
responsibilities ascribed to a smallholder association (interview, 13-04-2010). Their activities included
providing literacy courses as illiteracy was, and is, regarded as a major constraint in training association
members. Other courses included basic accountancy skills and the formulation of statutes and rules on
how the association should function (interview Mr. Ussivane, 26-04-2010). However, according to
KULIMA, the rules in the associations remained very informal (interview Dominico Liuzzi, 13-04-2010).
Mr. Liuzzi indicated that the trainings were successful in Macuvulane as a fairly well functioning
association was created. In Chihenisse however the period to train the people proved too short as the

15
pivots were only installed at the end of 2008 and KULIMA only provided trainings in Chihenisse for one
year, compared to three years in Macuvulane. In Chihenisse, KULIMA could only explain how an
association should be organized without being able to demonstrate this (interview Domenico Liuzzi,
13-04-2010). The smallholder management in Chihenisse confirmed that they enjoyed no training from
KULIMA. KULIMA concluded its activities for SSIP in 2009 and is no longer active in Xinavane.

5.2.2 ORAM
ORAM is an NGO founded in 1992 with much experience in addressing land right issues like the
delimitation and legalization of community land titles and associations. Other activities ORAM carries
responsibility for are: teaching all members about the statutes2 and financial management (for
treasurer, president and other relevant functions) in which they provide basic finance and
accountability training. ORAM has been involved in the Xinavane smallholder sugarcane activities since
2008 (interview Mr. Kalisto, 14-04-2010). Their involvement was recommended by the potential
European funders to AdX (interview Sancho Cumbi, 16-04-2010). ORAM works with four associations
of which two are situated in the Eastern expansion area (i.e. Hoyo Hoyo and Buna) and two are located
in the Western Expansion area (i.e. Macuvulane 2 and Maria de Luz Guebuza).
A difference between the associations is that many of the Western Expansion Area outgrowers worked
in the Xinavane cane plantation before, whilst for the people in Eastern Expansion Area the sugarcane
activities are new. The sugarcane smallholders in the Eastern Expansion Area have no experience yet in
sugarcane production. Mr. Kalisto, the ORAM officer in charge of the Xinavane activities, indicates that
a major difficulty for ORAM is the short term contracts they have with AdX, in which the results of their
activities are difficult to measure. The time needed to implement all the objectives properly is 1.5 year,
as proposed by ORAM. However, this was not agreed upon by AdX as it would cost too much and now
ORAM works with short term contracts that last for a few months only (interview Kalisto, 14-04-2010).
There is no ORAM office in the area and AdX indicated that ORAM still had some obligations to fulfil.
ORAM was observed to be active in Maria de Luz Guebuza, where there was internal disagreement
and a new leadership was elected into office. Other associations, like Macuvulane II, indicated that
ORAM provides them support but that activities like literacy courses have never been performed.
ORAM is also involved in setting up the MHOVA supra association, comprising an umbrella
organisation for all smallholder outgrowers associations (interview Kalisto, 24-05-2010). However,
some association leaders indicated that ORAM focuses too much on the umbrella organisation, whilst
not paying enough attention on creating strong outgrowers associations.

5.2.3 Gwevahne
Gwevahne is officially not an NGO but a Xinavane based association which was founded by community
members. These community members perceived several issues in their area required pressing
attention and therefore formed a true grassroots organization which can be regarded as an NGO. The
association basically relies on volunteers, who are mostly members of the local community and
includes teachers and AdX staff. This association works with an EU grant and states that they work
with local communities that were forced by government and the company to cede land for sugarcane
development (Gwevhane 2008). This created conflicts between local communities and the company,
mainly because many members of involved communities did not understand what was going on.
Therefore Gwevahne wrote a project proposal entitled "Positive and Sustainable change," whose
objective is to empower local communities by organizing them into well functioning associations which
are able to participate in negotiation processes between local communities and AdX. The activities
mentioned in the proposal include the training of communities about the benefits of associations,
provision of leadership courses, financial management strengthening and promotion of the freedom of
expression (one of the goals of the EU). Funding from the EU amounts to roughly 95,000 Euro spread

2
Statutes comprise rights and responsibilities. It basically is a standard document without too many written amendments by association
members, but in practice these might be dealt with differently.

16
over two years (interview Catela, 03-05-2010 and Gwevahne, 2008). However, Gwevahne also
generates funding from other sources, which might include AdX (interview Catela, 03-05-2010).
Gwevahne was originally only involved in those third phase associations where ORAM was not active.
However, over time they also started to work with associations like Macuvulane I and Macuvulane II.
Also during the survey, in which Gwevahne assisted considerably, Gwevahne actively promoted their
existence and activities in those associations which did not have previous experience with them. The
association runs an office in Xinanave and is fairly easily accessible, which might explain their
engagement with many smallholder sugarcane associations as well.
Gwevahne mediates negotiations between the company and local communities but also assists in
strengthening the smallholder associations. The role of mediating between company and smallholder
associations should be a temporary one, which passes once the associations are stronger and can voice
their complaints to AdX better, according to the assistant manager of AdX (talk with Sancho Cumbi, 20-
04-2010). Currently the intensity of the disputes between AdX and associations appears to have
diminished, whilst conflicts within associations themselves are becoming more frequent. Gwevahne
tries to refrain from meddling in the latter type of conflicts, leaving the resolution of those to
communities themselves.

5.3 Government
The role of the government is different in the first and second phase compared to the third phase of
smallholder sugarcane expansion. The obvious difference being the government’s involvement as a
funder and implementer of the smallholder activities in the first and second phase, whilst in the third
phase there is no governmental grant or other source of government financing involved. In interviews
the role of the government proved often to be fairly limited as extension work was/is mostly done by
AdX since AdX has more experience with sugarcane production than many government extension
workers.

5.3.1 CEPAGRI
CEPAGRI is the Agricultural Investment Centre, representing an organisational structure within the
national government, also tasked with monitoring the smallholder sugarcane outgrower activities.
CEPAGRI receives a budget from the EU to undertake this task (ADE 2009). As there is no national
strategy or guidelines on how to organise smallholder activities, all companies devise and implement
their own schemes and models with their own specifications. The CEPAGRI sugarcane expert indicated
that they do not have the time to go into the field for prolonged periods to check in detail what is
going on at a ground level. Therefore CEPAGRI largely depends on what is shown to them by the
companies during brief visits to their estates (interview Mrs. Nhaquila, 22-03-2010 and 28-06-2010).
There is no standard design on how to implement a farmers’ organisational set up, but CEPAGRI clearly
is interested in learning more about how smallholder sugarcane outgrowers are organised and how
their organisation could be improved so that they can adjust their policies and intervene if necessary.
Also CEPAGRI conducts studies into aspects where CEPAGRI suspects improvements are necessary, an
example being the payment system for smallholders (see Chapter 8).
A clear motivation for the national government to be involved in smallholder sugarcane activities is the
foreign currency that is brought in with the sugar exports and the cash incomes the rural populations
earn, both of which can contribute to poverty reduction, as stated in the PARPA.

5.3.2 Local government

A major responsibility of local government is assisting in the legalization of the associations and
resolution of land right related conflicts associated with associations and the establishment of
sugarcane outgrowers schemes. Unfortunately time constraints as well as limited access to provincial
authorities, precluded in-depth study of the formal involvement of different government agencies. The
survey amongst smallholder outgrowers Indicated low levels of government involvement in their

17
dealings. Yet, it is suggested to pay more attention to particularly the role of local government in
future studies.
The administrador (district administrator) of Magude district (interview 25-05-2010) and Mr.Cumbi
(interview 21-05-2010) indicated the main role of the local government is connecting communities
with AdX concerning the possibilities of commencing sugarcane activities and convincing the local
communities of the benefits of smallholder sugarcane cultivation. If the major role for the government
is to inform people about the plans of AdX, apparently AdX decides what the possibilities are and the
government is more or less just passing these on. Another role fulfilled by the district government is to
check whether the promises between the company and the communities are honoured. According to
the administrador, previously no monitoring was done causing the emergence of various conflicts.
However, the administrador claims that as agreements are written down now the situation improved
considerably (interview 25-05-2010). In a previous study on smallholder outgrowers in Massingir, it
was recommended to establish pro-deo legal advisory services at District level (Manjate et al. 2009),
This might be useful also in Xinavane to facilitate a dialogue about differences of interpretation of
agreements between the various actors involved in the sugarcane developments.
The Xinavane Administrative Post agricultural officer indicated that although he should be informed
about the activities concerning smallholders in Xinavane (not Magude), he was often left out of the
loop. The real decisions between AdX, association leadership of Chihenisse and the local government
were made in Manhiça at meetings to which he was not invited. Mr. Cumbi indicated that an office
they want to work more with in the future is the District Agricultural Office (SDEA), which could assist
in the provision of extension services and maintain a longer term commitment than the NGOs3.
A motivation for local government to stimulate sugarcane development is to attract economic activity
towards the area, in a bid to develop and fulfill the targets for poverty reduction. Cash income can be
earned, and taxes can be collected (fairly easily due to all registration of produce at AdX), broadening
the financial basis of the municipality and District Councils to undertake income-generating activities
for the inhabitants of the District.
During an interview with a Gwevahne member (interview 22-05-2010) it was pointed out that
although local government officials have good intentions they only have limited power compared to
the managers of AdX, who in general received more education and can rely on powerful networks.

5.4 Smallholders
This section presents the selection criteria, the background of smallholders, and the motivations of
smallholders to take part in sugarcane outgrowing. The activities of smallholder farmers in sugarcane
production vary per association and are dealt with in Chapter 7.

5.4.1 Selection criteria and background of smallholders

The selection criteria for joining a smallholder association appear to be the same in all associations.
The most important precondition for members to join an association was owning a piece of land in the
area where the sugarcane was to be planted. There were no requirements regarding age, occupation,
income, marital status or any other (interviews with various smallholder association leaders) as for
example in development schemes targeting certain populations (i.e. FELDA smallholder oilpalm
schemes in Malaysia).
Although there is the official precondition of landownership in the area, it is unclear whether in
practice this was the only way in which smallholders obtained membership to an association. In an
interview with some smallholders who had formed a sort of rebel management there was talk of
nepotism. For several associations it is still unclear how many members there are exactly, and
retrospectives on who owned what appear difficult because many previous plots have never been
properly registered whilst now the sugarcane is already there. Assessments on who is in an association

3
This study failed to provide a follow-up at SDEA because the right person to talk to, Mr. Chambu, was ill for a considerable time already and
there was no one in the SDEA office who could replace him.

18
and who is not, basically talking about the redistribution of land, are frequently a source of conflict,
and Xinavane is not different in this regard. More information is provided in Chapter 9 on contracts
and Annex I.
Cachomba (2007) claims that most of the members of Macuvulane association originally came from
the area and our survey confirms that only 6.5% of smallholders settled in the area after 1992. This
finding appears in line with the precondition for becoming a member, which is that members owned a
piece of land which was ceded for the production of sugarcane. It appears from the survey that most
sugarcane outgrowers were farmers before, with a considerable number of them also being cattle
owners, which fits with the regions reputation for being a cattle producing area. Other livelihood
activities undertaken by many smallholders are fishing, charcoal manufacturing/trading and
subsistence agriculture (survey results). The education level amongst smallholders appears low, with
44% of smallholders admitting they could not read or write, 49% indicating they had no schooling and
another 34% indicating having enjoyed only the first classes of primary school (survey results).
Education levels are lowest in Colo, where 80% of the respondents indicated they could not read or
write, considerably complicating their understanding of written contracts.

5.4.2 Motivations for smallholders

Table 2 shows there is some differentiation amongst smallholders. The smallholders in Maholele G for
example are a different kind of smallholders than in most other associations as their plots are
considerably larger (44.3 ha/member). These ‘smallholders’ can be seen as agricultural entrepreneurs
compared to the subsistence/small scale farmers. Their motivations for participating varied somewhat
from the motivations of these subsistence/ small scale farmers as well. Whereas the motivations of
small scale sugarcane outgrowers usually concern (expected high) cash income as their main
motivation, sometimes followed by certain market, less dependency on rainfall and, incidentally, nice
to get together in an association, larger smallholders would also indicate that AdX brought in the
capital which is required for the development of their land, the expected limited diseases in sugarcane
and the technical support that AdX can provide in case there is a pest outbreak or some other difficulty
(interview Maholele smallholders, 19-05-2010). An advantage not mentioned by smallholders is the
road construction between Moamba and Magude, partially financed by AdX. AdX needed this road to
be improved to facilitate cane transportation from their expansion areas in Maholele. This certainly
reduces the remoteness of people in the Maholele area.
There were not so many disadvantages mentioned by smallholder sugarcane farmers. The largest
disadvantage mentioned was that the contracts were unclear and payments were delayed (more on
this in Chapter 9). Only in Colo association there was a general negative attitude towards AdX. Colo
smallholders claim their land was taken from them by force and there is no more land accessible for
them to farm on (see Box 8, Chapter 9). The Maguigane association technician (interview, 15-04-2010)
as well as the leadership from Chihenisse (interview, 25-05-2010) also indicated that they participated
since they did not have to pay investment costs and therefore there was little risk involved for them.
For the new associations this is clearly different as roughly 9.000 US$ per ha (according to AdX, 2010)
has to be repaid.

5.5 Concluding remarks

The main actors in Xinavane are AdX and the smallholder outgrowers, whereby AdX acts as the
initiator of most activities and smallholder outgrowers respond. AdX consists of a mill and nucleus
estate whose majority of shares is held by Tongaat Hullet, a large South African sugar company.
Smallholder outgrowers comprise, in general, local populations with low levels of education.
The role of the government appears limited although it does play a role in the monitoring of
agreements between smallholders and AdX (including those pertaining to land issues and the land law;
see Box 7). Whereas in the first two phases of the Xinavane outgrower schemes the government had
quite some involvement, funding the development of these projects and provision of technical
support, in the third phase their direct involvement appears to be smaller.

19
There are NGOs involved in assisting and strengthening the smallholder outgrower organizations in
order to facilitate smallholder outgrower - AdX relations. These NGOs also assist smallholders in the
legalization procedures, including land (use) registration, and introduction of the concept of what an
association is and how it should function. However, the position of NGOs is weak as they do not get
sufficient funding or time to set up well functioning associations, and it is unclear whether they have
the professional skills to defend smallholder interests successfully or create the necessary counter-
vailing power amongst smallholders to defend their interests. Moreover, the NGOs with a possible
exception of Gwevahne, tend to suffer from upward accountability towards their funders rather than
downward accountability towards their smallholder outgrower clientele (‘you cannot bite the hand
that feeds you’).
These observations raise two fundamental questions with regard to the company-smallholder
partnership. Firstly, it may be asked who is monitoring the partnership when the outgrower
associations are still at the initial stage of getting organized whilst already important decisions
concerning representation of community and land use rights are taken. A related question is how such
monitoring can be organised. Secondly, it will be critical to establish what role the government can
play in securing the pro-poor effects of smallholder sugarcane outgrowing.
The emerging partnership in Xinavane produces a number of benefits for the parties involved. Major
benefits for the company are its extended access to land, externalization of production risks and cheap
expansion since it is external funders or the smallholder outgrowers themselves who ultimately pay for
the expansion (Section 5.1.1 and Table 3). The major benefits for smallholders, according to the
outgrowers themselves, are a secure market (provided by the company), anticipated cash income, and
reduction of their dependency on rainfall. Larger, entrepreneurial, smallholders also indicated that the
capital and skills provided by the company enabled them to cultivate land they previously could not
cultivate due to a lack of resources (Section 5.4.2). Besides the motivations provided by smallholders,
AdX also provides access to capital, inputs like fertilizers, technology and expert knowledge farmers
otherwise would not have access to. It is obvious however that land use rights play a key role in the
driving the development of smallholder outgrower schemes, be it the company that wants to increase
its access to suitable land or smallholder outgrowers who want to make more efficient use of it.
Therefore registration of land in the cadastre before engagement in outgrower activities appears
crucial in creating clarity for all actors involved, thus limiting possibilities for fraud or other
misunderstandings concerning access to land.
Although for the new associations it is still unclear how much smallholder outgrowers will earn, most
smallholders appear fairly happy with the sugarcane developments and expect good cash incomes.
That repayments need to be made is known to smallholders, but the magnitude of these repayments
or the height of their income is unknown to third phase outgrowers. More information on the
anticipated financial benefits and the type of contractual arrangements between the various parties
involved in the partnership is provided in Chapters 8 and 9 respectively.
So far AdX and associated companies perform most activities in sugarcane outgrower production,
including planting, provision of inputs, cutting, transporting and checking for diseases and need for
agrochemicals. The role of technicians is crucial in this as they provide the interface between the
company and the smallholder outgrower leadership, who then communicate to their members the
recommendations of AdX or Agricane. The nature of smallholder involvement in the sugarcane
production cycle has been limited so far. More information on the labour activities of smallholder
outgrowers is provided in Chapter 7.

20
6. Smallholders’ organization development
This chapter focuses on the smallholders organizations and deals with smallholder association
management, the current formation of associations and an envisaged supra association to streamline
the interests of the associations. The role of smallholder management is twofold. The smallholder
management serves to streamline activities within the association so that all individual smallholder
activities can be managed in a professional and efficient manner so that production is optimized and
costs are reduced. Also it functions as a central point and facilitates communication with third parties.
For participating in the smallholder sugarcane expansion, local communities had to organise in
associations in order to facilitate communication with AdX. These associations could be initiated by a
fairly simple procedure involving 10 autographs of community members (interview Gwevahne 20-04-
2010). When talking to the associations, AdX or the NGOs, it proved however that many of the
associations did not have their legal status as an association yet and also that having a bank account
proved difficult. These aspects lead AdX to delay payments to associations as Chihenisse and
Macuvulane II which should, according to the cane payment rules (see Chapter 8), have been paid
much earlier.

6.1 Smallholder management selection procedures

Smallholder management is chosen from and by the members of the associations. Several elections
took place during fieldwork period and also in other smallholder sugarcane associations there appear
to be elections. Although elections can increase smallholder engagement with their associations,
elections might also hinder continuity and undermine development of management skills in
associations as managements can frequently change. It was observed that in some associations it is
the traditional leaders that take the role of leaders in the associations as well (e.g. Chihenisse and
Olhar de Esperanca), whilst in other associations it is people who do not have any traditional leader
functions (e.g. Macuvulane I). The management usually consists of a president, a vice president, a
treasurer and a secretary. According to Mr. David, the technician of Maguigane association, these
functions have little meaning in many smallholder sugarcane associations as these associations are
completely dependent on AdX, the association leadership does not have any skills required for leading
an association and it is unclear to the management what they should actually be arranging (interview
03-05-2010).

6.2 Trainings for the establishment of functioning smallholder associations

It is unclear what the training for Maguigane association comprised of or what organizations were
involved in this. It appears however that AdX (or government) provided a technician for this who was
quite experienced in working in sugarcane and had considerable experience in sugarcane
development. Maguigane is a small association however, which was fairly easily to oversee with its 66
members. For Macuvulane the technical training was performed by AdX as well and for the creation of
a functioning smallholders organization KULIMA (see Section 5.2.1) was involved (interview Mr.
Ussivane, 26-04-2010). In Chihenisse the creation of a functioning association was not a success as
KULIMA and government agencies that should be involved in the training of the association, did not
have the time or capacity to guide this association. It appears however that Agricane assists this
association now and Agricane and Chihenisse management claim now that the organization of
activities is well under way (interview Joao, 18-05-2010; interview Ges Bester and Michael Mapisane,
14-05-2010).
For the third expansion phase there is a three year period in which AdX, really through Agricane, is
responsible for all labour activities and trains the smallholders so that they can in the future manage
their own association without the involvement of AdX. This training appears to take place at a limited
scale by ORAM and Gwevahne (see Sections 5.2). There are no trainings provided by outside research
institutes or experts, and Agricane (see Section 5.1.2) has difficulties in recruiting enough capable staff
to provide the trainings required. The smallholders in Maholele G were deeply disappointed in the

21
technician they received from Agricane, who according to them used to be a mechanic and did not
have any skills in sugarcane cultivation or training of their personnel (interview, 19-05-2010).
In order to establish well functioning associations trainings on the following issues should be provided:
Group dynamics: comprising of clear and understood agreements about the rights and
responsibilities of smallholders in their associations and procedures for decision making. In
Xinavane there have been some introductory courses for Gwevahne by the EU and some
NGO’s have participated in setting up statutes for associations, but extensive trainings in
building/forming smallholder groups have not been performed yet. As a Gwevahne member
and several technicians indicated, many people do not understand how an association
functions and what the benefits are which undermine the credibility of the same associations
(fieldtrip Chipene and Colo, 11-05-2010; interview Olivio Catela, 03-05-2010; interview Basiliu,
12-05-2010; etc.).
Technical training: comprising of upkeep of the plantation and possibly activities in which
smallholders are directly engaged with the production of sugarcane. Currently technical
training is performed by Agricane in the new expansion areas and Chihenisse. However
trainings of smallholders are limited, partially due to fear of smallholders of being charged for
the service. According to one of the technicians smallholders also appear worried about
following courses as they fear they will get more reductions for this (interview Manique, 29-
04-2010). Reductions are something smallholders clearly want to avoid as they want/need
direct incomes. Also when smallholders are old it might not be interesting for them to take
trainings anymore or for AdX to provide training to them. According to Agricane and
smallholder section managers the performance of duties by smallholders is sub-optimal as
many members appear not to have the discipline required for optimal cane production, an
example being moving the sprinklers every 12 hours (interview David, 01-04-2010; interview
Basiliu 12-05-2010; interview Manique, 29-04-2010). Solutions proposed by Agricane are
provided in Section 6.3 and 7.2.2.
Management skills: comprising of book keeping, administrative and other organisational skills
needed to manage the smallholder organisations. The association headquarters have no
electricity and there are no computers for bookkeeping. Bookkeeping appears to be an activity
in which AdX plays a major role (see Section 8.2.1). Basiliu, the section manager of Macuvulane
I and II, points out that the effects of the minimal trainings that were performed by NGO’s
regarding management skills were also lost when a new management is elected. In an
interview with Macuvulane I management it became obvious that it was difficult to retrieve
some documents as they did not know exactly where the previous management had left these.
A similar situation was encountered in Maria de Luz Guebuza association, where the former
president was said not to share his documentation with the new management. During the
surveys it became obvious that most association were very well able to mobilize the requested
members to participate in the survey, indicating good communication between smallholder
management and smallholders.
Sancho Cumbi (interview 21-05-2010) indicated that in Swaziland there have been programs to train
smallholder associations three years before the sugarcane was planted. According to him even these
trainings did not lead to fully functional associations and therefore AdX takes the approach of planting
immediately and training and strengthening of smallholder associations at the same time.
From the Ophir smallholder oilpalm plantation, which proved to be successful in training smallholders
and creating robust smallholder organisations, it is clear that costs associated with the set up of a
proper management infrastructure are considerable, amounting to 8% of the total costs of the project
(see box 3). Ofcourse an oilpalm plantation is different than a sugarcane plantation, and a direct costs
comparison would probably be false, it would be interesting to find out how much resources are
allocated for the strengthening of smallholder associations in Xinavane. Although the AdX (Açucareira
de Xinavane 2009) indicates what costs are for the services to smallholders, these costs merely include
capital items as buildings, machines and offices. There are no indications on budgets for group

22
dynamics trainings or management skills trainings within the associations. The PAF (2008) (see Table 1)
indicates that for training of smallholders 1.7 million Euro is set aside but it would be interesting to see
how this is spend. If 1.7 million Euro is spent on training this would roughly equal 8% of the total US$
16 million smallholder outgrower expansion project.

Box 3: Successful setup of farmer organisation in a smallholder oilpalm project in Indonesia

The creation of successful farmer groups from people who have limited experience in working
together in an association is a time and resource consuming activity. Tables A and B illustrate an
example of costs and time spend on the creation of strong and functioning smallholder
organisation in the Ophir smallholder oilpalm project in Indonesia, in which 2400 smallholders
successfully run their 4800 ha section of the project.
Table A Overview of costs associated with Nucleus estate Smallholder project in Indonesia
-1
Components USD (Million) USD ha %
Infrastructure Mill, harbour, offices 16.4 2,036 42
Roads and houses Settler houses, roads 5.0 620 13
Plantation 8,056 ha plantation 10.8 1,341 28
Training Farmers organisation 7.0 869 18
Total 39.2 4,865 100

Table B Phases in project and GTZ contribution

Man months
Phase Years Activities
Sociologist Economist Agronomist Total
1 82-84 Building of farmer groups 21 21 - 42
2 84-86 Building primary cooperatives 33 29 - 62
3 87-90 Creation management structures 39 39 12 90
4 90-93 Building structures for sustainability 36 24 18 78
5 93-96 Post project support phase 18 18 12 48
Total 82-96 147 131 42 320

The results were independent smallholders who were able to arrange many activities by
themselves. Also yields were above the yields of the nucleus and credit repayments were finished
years before expected. Smallholders have had high incomes for more than 27 years and the
project functioned as an engine for rural development in the West Pasaman district, West
Sumatra, Indonesia (Jelsma, Fairhurst et al. 2009)

There are statutes which guide the rights and responsibilities in the association, but these are standard
documents, which were implemented by the NGOs but involved little negotiation with smallholders.
Although there are statutes in most associations now, it is doubtful whether all members know these
statutes and whether they agree with them.
The section managers that are assigned to the associations are in some cases more experienced than
others. When asked for the background of these section managers some indicated they worked in the
establishment of the cane or first or in the factory. AdX indicated that with the current expansion they
are having difficulties finding capable personnel, which was also indicated by the larger outgrowers at
Maholele G. Also the Maguigane technician indicated that many of the other technicians do not have
the skills to manage the creation of well functioning sugarcane producing associations, certainly as the
smallholders are analphabetic in many cases and it is difficult for these people to understand the
production of a commodity crop as sugarcane in an association.
When company, technicians, NGOs or government were asked about major problems in setting up the
smallholder associations all these organizations indicated the low level of education and
comprehension of the smallholders (e.g. interview Sancho Cumbi 01-04-2010, interview Benjamin 24-
04-2010; Mr. David, 01-04-2010). The low education level of the smallholders was confirmed in our
survey.

23
6.3 Creation of supra association/Joint Management Company: MHOVA
In order to increase the smallholder efficiency in their organizations AdX works on creating supra-
association, or Joint Management Company (JMC), called MHOVA. AdX will be 20% owner of MHOVA
by the investments it has done in the smallholder outgrower project and the other 80% will be owned
by the associations, relative to their hectarage of cane. This supra association is then to be the
speaking partner of AdX, so that no longer direct contact between AdX and all individual associations is
required (see Box 4) (Açucareira de Xinavane 2009; Açucareira de Xinavane SA 2010). According to
Ferronha (18-05-2010) MHOVA is especially intended for new associations and not to Maguigane and
Macuvulane. It is unclear whether Chihenisse will join as well. Maguigane association and Macuvulane
I association indicated that it might have benefits for them as well to function in MHOVA as
smallholders would increase their bargaining power when organized, but they also fear that they have
to pay for the debts of the other associations. Also concerning MHOVA there is still a lot of unclarity
amongst the associations. AdX/Tongaat
Hulett lawyers were working on the legal Box 4: Communication between smallholders and
aspects concerning MHOVA and this supra- company
association was not functional yet during this
In order to facilitate communication between
research. There is little input from
smallholders and AdX, associations were established. In
smallholders concerning the setup and these associations the leadership represents the
requirements of such an organization. smallholders as speaking partner of AdX.
MHOVA appears a company driven initiative
as well. The statutes of associations, which are (based on)
national blueprints, states that associations must hold
As further explained in Section 8.2.1 elections in which the leadership is chosen. It was
currently AdX still has two accounts for the observed that in most associations elections were held
smallholder associations, which include an and managements changed, leading in Macuvulane to a
account for credit to smallholders concerning situation that no management had ever finished its three
living expenses and other issues. All these year term.
activities will fall under the responsibility of It was also observed however that the technical advisor
MHOVA in the future. When MHOVA is is an important link between smallholders and company.
created the payment system (one payment This is however a non-democratic position which cannot
per year) might also change into a system be changed easily if smallholders or company are
which distributes income more evenly over discontent as capable personnel is scarce.
the year (interview Mr. Cumbi, 21-05-2010). There appear no written standard procedures which
smallholder leadership must follow when there is an
Mr. Cumbi (interview, 21-05-2010) indicated issue with AdX. Smallholder leaders do have contact with
that it is acknowledged by AdX, and observed the people at AdX however and frequently call Sancho
by EIB, that the smallholder associations are Cumbi, the assistant project manager expansion. Also
weak and that proper trainings need to be Rosario Cumbi, the general manager is known amongst
provided to the associations. This will also be smallholder management and is contacted by
a responsibility of MHOVA, where there smallholders when there is a problem. It was observed
should be a person who makes an inventory that smallholder association leaders also visited the AdX
on what courses are useful for smallholders office making their complaints known to AdX.
and has such knowledge that he can identify Smallholders complained however that often they were
told to go to another manager who was not there.
who can provide these courses and arrange
Smallholders however also appear not to understand
these courses to be provided to the that when they have a complaint there is not someone
smallholders. These costs will then be paid immediately available at that moment to solve the issue.
by MHOVA. It appears the MHOVA supra
association relieves AdX of many of their Depending on the kind of problem smallholders also go
to ORAM and Gwevahne, who then make reports of the
current activities as credit provision and
issue and present the issue to AdX. This kind of
dealing with all individual associations and communication is only temporarily till communication
their problems. It is also clearly a corporate structures and skills are improved. The MHOVA supra-
driven activity at this time and smallholder association should in the future streamline the
associations even indicate that they want to communication between company and smallholders.
focus on the associations first and then

24
discuss a secondary association. This appears somewhat a chicken and the egg situation, in which the
company states a supra-association is needed to create strong associations, whilst the associations
state strong associations are needed before a supra association can be established. It is clear however
that for AdX the quick creation of a supra-association would have its benefits and would be a clear
externalization of smallholder activities and costs.
MHOVA will take some responsibilities from the association management and needs to be provided
decision making power by the associations. This means associations have to give up some rights and
AdX establishes more control over the associations as they are clearly present in MHOVA. The
institutional distance between smallholders and decision makers is also increased, which might
decrease smallholder’s commitment and trust in the organization. A key question is to what extend
should smallholders be involved and feel commitment when they hardly fulfill any tasks anyway?
MHOVA however can also strengthen the associations as coordination between the associations will
be improved and bargaining power could be increased. Although still small compared to the nucleus,
there might be more opportunities for smallholder associations to negotiate better prices or
undertake activities themselves such as procurement of inputs or other activities now performed by
third parties as scale of individual smallholder associations are to limited.
The creation of MHOVA can in some regards be seen as strengthening of the smallholder’s position
whilst at the other side it could also increase control over associations by AdX as smallholders hand in
decision making power to MHOVA and thereby become more distant from the decision making
process. In an oilpalm smallholder project in Indonesia it was observed that secondary associations are
more prone to corruption, or at least suspected of it (Jelsma, Fairhurst et al. 2009).
There are signs however of growing smallholder independence as well. The Maguigane smallholder
association for example is growing its own cane for replanting now and also has its own tractor. With
their own cane and tractor they would now be able to arrange their own replanting. For the new
associations it is too early to talk about paths to independence as the associations have barely been
established and lack the skills for independent management.

6.4 Conclusion
The organization of smallholder associations appears largely company driven and aimed at facilitating
communication from company to smallholders. This is not surprising as associations are largely new
and smallholder management received limited trainings till now. Smallholder associations are
completely dependent on AdX for their finances and AdX also maintains responsibility for many of the
financial activities of the smallholders, thereby minimizing the financial risks of AdX.
A clear issue is that, although the smallholder organizations are democratically chosen and this could
increase commitment of smallholder, the smallholder managements in several associations appear to
have a short lifespan due to lack of trust. This creates a loss of management skills as former leaders
who received (very limited) trainings disappear and are replaced by people who have even less
professional management skills. The high turnover in management and loss of management skills
might be overcome by committed and prolonged guidance of a development organization which trains
management and gains the confidence of smallholders.
MHOVA is an initiative however by AdX to reduce their direct involvement in the smallholder
associations and simplify their relation with smallholders. MHOVA is a supra-association which is to
safeguard the interests of all smallholder associations. Hereby the smallholders are able to obtain scale
advantages and decide over required inputs more independently from AdX, which does have a 20%
share in MHOVA. Also at supra association level services can be obtained which are too difficult for
individual associations to organize efficiently. MHOVA will also simplify the contact between AdX and
smallholders, but also increase distance between smallholders and the management of activities. This
could lead to decreased commitment of smallholders and increased risks of corruption as smallholders
are unable to check what is going on. Although MHOVA is especially established for the third phase
associations it is unclear whether the older associations can or want to join. As it is an AdX initiative
there is much unclarity amongst smallholder associations what MHOVA will be and what the
advantages for them are.

25
7. Smallholder sugarcane outgrowers’ labour organization
The labour activities of the smallholder outgrowers appear to be fairly in line with smallholder
sugarcane activities in South Africa as described by Sartorius (2005). Sartorius observes that
smallholders manage the irrigation system and perform weeding, whilst the mill arranges all other
activities. There is some variation however between associations, with the associations from the latest
development phase having more activities arranged by AdX. This chapter will describe the labour
activities performed by smallholders and the differences amongst associations.

7.1 Major labour activities for smallholders

In the latest expansion phase AdX takes over the responsibility of the management and labour
activities in the first three years as experience with sugarcane farming amongst participants is very
limited. In these three years the association members and management are to be trained so that they
become competent sugarcane smallholders with functioning organisations. For this management AdX
charges a 9% of the gross income fee, which is reduced to 4% after the three year period. It is unclear
how this start-up phase went exactly in the other associations.

7.1.1 Weeding
Although weeding is not an activity unfamiliar to the smallholders, it is important and needs to be
performed well before the canopy is closed. Especially during the rainy season weeds grow fast and
there is a strong necessity to weed. This coincides with the weeding requirements in other fields
however and smallholders therefore do not always weed on the required moment. The members of
Maguigane and Macuvulane I associations receive some allowance from the associations to fulfil their
weeding obligations and hire labour if necessary.
In the new associations there are labour teams at work who are paid by AdX. It is unclear however
whether these teams shift their attention to AdX fields when there is peak demand in the nucleus
estate as well, or whether they keep on working for smallholder associations then.

7.1.2 Fertilizer application

In some associations, notably Maguigane and Macuvulane I fertilizers are also applied by smallholders.
The section manager/ technician orders these at AdX, receives it and distributes the fertilizers amongst
the association members, which apply the fertilizers. How to apply the fertilizers has been taught by
the technician who, with his team of inspectors (trained smallholders), checks whether the fertilizers
have been applied and if they are applied in the correct way.

7.1.3 Irrigation system activities

A major difference in irrigation systems is the pivot vs. sprinkler divide, with most associations having a
sprinkler system in place. More information on sprinkler system is provided in Box 2. In the pivot
system there is a team of operators which operates the system centrally. In the sprinkler system all
sprinklers need to be moved every 12 hours to irrigate another section of the field. This needs to be
done consequently as otherwise some areas are flooded whilst other dry out.
In some (sprinkler using) associations there are teams performing the required labour, whilst in other
(sprinkler using) associations it is individual smallholders performing tasks. Associations appear to have
some decision making power in establishing how some labour activities are performed on their land,
whilst Agricane promotes the use of machinery and equipment and the employment of labour teams.

7.2 Individual plot labour versus labour teams

A key issue in smallholder organisations is to decide whether smallholders should work as individuals
within the associations or with some kind of collective management. A feature and goal of efficient
crop management in commercial estates is the implementation of uniform standards of management

26
across large areas and, in well-run plantations, agreed standards of upkeep and field maintenance are
applied over large areas.

7.2.1 Individual plot labour

In Maguigane and Macuvulane I associations it
is the individuals who work a certain plot and Box 5: Fine system for non performance
carry responsibility for weeding, fertilizer Maguigane and Macuvulane I both have a fine
application and sprinkler movement. The system in place for smallholders who do not
technician/section manager checks whether the perform their activities up to standards. The
individuals have maintained their plot correctly. procedures for this vary slightly and appear
In the case of Macuvulane I association the not to be written down or standardized as
section manager informs the association several people provided different answers
management who then inform the smallholder when asked how high the fines were for
about the improvements that must be made. In certain non performance. It is the
Maguigane the section manager talks to the management, or assemblea of the association,
members themselves and informs the that decides how high the fine will be and
management. Smallholders and technicians what considerations are in place.
know very well what the borders of the plots
are.
Agricane and the section managers do not regard the system described above as efficient and try to
implement a more group or estate management style in the third phase expansion areas. Reasons for
this are:
(Old) smallholders are physically incapable to perform all activities;
Smallholders are not able to perform all activities at the needed moment (maybe due to lack
of discipline, other demands for labour or experienced non-direct returns from labour with its
single payment that can be very far apart from the moment labour is required)
Smallholders are unable/ unconvinced to learn new activities or adopt improvements
promoted by AdX or Agricane.
Smallholders do not hire labour as they do not want to share income;
Absenteeism, some members live in other cities and do not attend their fields.
It is too expensive and inefficient to provide all members with the equipment that could
facilitate the labour activities. An example is the equipment used by AdX staff for fertilizer
application, which makes AdX staff easily, quickly and precisely apply fertilizers. Another
example is the popular protective cloths worn by AdX staff.
A local (Mozambican) reality emphasized by the Maguigane technician is that there is no social security
system for the old people (pers. comm., May 2010). Old people are therefore unwilling to hand over
their land to a new generation or have others work their land as they fear losing income. Also it
appears that short term vision of having to spend cash for labour wins from the long term vision of
receiving higher income because of higher overall production. Not understanding the concept of
associations plays a role here as well, leading to the prevalence of the individual interest above the
group interest. It might be however that the fine system (see box 5) does not function properly and old
people are spared as they are regarded as their parents and need some understanding.
Agricane also highlights that although members work their plots individually, they do have a combined
association income, implying individuals are not stimulated to work their plots efficiently (interview
Ges Bester and Michael Mapisane, 14-05-2010). In this system members who perform their activities
well and have high yields are not rewarded for their good practices as their income is combined and
shared with the people that do not perform their activities that well and have lower yield.

27
7.2.2 Labour teams
In order to avoid the above mentioned issues, Agricane proposes two solutions being individual
payments or setting up labour teams.
Ges Bester (Agricane) suggested individual payments to individual smallholders, but this was deemed
impossible by Michael Mapisane (AdX) as cane testing cannot be done for all smallholders individually.
Organising labour in ca. 19 ha field units and arranging payments to these fields instead of the entire
association (see Box 6) might be feasible however. In these fields people can control each other better
and well performing subgroups earn higher salaries.
Agricane also promotes the creation of labour teams. This means that labour activities are no longer
arranged at individual plots but at the association level (and in the future maybe supra-association
level). The association (management) arranges that a certain group of people is provided for the
labour activities required in the field. This group of people will be capable and fit, receive a proper
training for the activities from AdX/ Agricane and receive, against deductions, the right equipment to
fulfil labour activities. These people could be association members, outsiders or a combination. This
option makes smallholders more or less land labourers on their own association’s land, which they
provided themselves to the association.
Agricane attempts to promote the team system as much as possible to the associations, especially the
third phase associations. However, smallholders near the older associations copy the activities which
are common in the older associations as this is what they see around them. It appears therefore that
there are hybrid labour systems there with for weeding teams being present, whilst for moving the
sprinklers the individual smallholders perform the activities. How this functions in practice has to be
investigated further as it is difficult for the researcher to understand how individual plot activities can
be undertaken when it is unclear still how many members there are in an association, therefore how it
is decided who manages what piece of land (as was the case in Maria de Luz Guebuza). In the
associations farther away from the old associations it appears as if the teams perform the labour
activities. Examples are the Tres Fevrero
(Eastern development) area, Chihenisse and Box 6: Group vs. individual payment system
Colo. Whereas in Chihenisse (interview Joao,
Although the group system can be criticised for
18-05-2010; interview Chihenisse
not providing initiative to individual farmers in a
management) and Tres Fevrero (interview Ges
smallholder oil palm plantation it proved to
Bester and Michael Mapisane, 14-05-2010;
function and have advantages as:
interview) these labour teams are claimed to
function very well and include people from the High incomes for smallholders
associations as well as other community Well maintained and uniform plantations
members, in Colo this appears more with yields above nucleus estate.
problematic, with a section manager not being Social security system for smallholders in
available and association members/ community case of illness
indicating they are not involved in labour
From this project key factors to contribute to the
activities at all (talks with Colo association, 22-
success of a group system appear:
06-2010 and Ges Bester and Michael Mapisane,
14-05-2010). Size of groups – people need to know
A disadvantage of the team system would be each other and not disappear
the selection criteria for the workers. The older anonymously in a group.
people would most likely not participate in Make smallholders feel involved in
these teams, giving them the impression that shaping their organisation thereby
they are left out of possibilities to gain income. creating commitment to it.
Smallholders indicate they can do many Proper and extensive trainings in
activities themselves but Agricane countered technical issues, management and group
this by stating that smallholders might say they dynamics.
want to do many activities themselves they Source: (Jelsma, 2009)
often lack the discipline to execute them.

28

A group system needs to be well explained to the

It is obvious that currently there are different models in the organisation of labour in place in
Xinavane. Agricane certainly has its preferences for organizing labour and might legally be able to
implement their wishes in the third phase expansion areas. However, in practice Agricane cannot force
associations to anything as this could sour the relations between Agricane and associations
considerably (interview, Ges Bester and Michael Mapisane, 14-05-2010). It is therefore in the
associations where it is decided how labour activities are organized and Agricane can see how it
supports such activities.
Agricane acknowledges that they have not investigated yet why some fields are not maintained well.
They know there are issues as absenteeism, with plot owners living in Maputo or other cities, but they
do not know on what scale this is happening. Also they do not know exactly what the reasons are for
members not performing their activities properly, except for old age of some members (interview Ges
Bester and Russell Longhurst, 28-04-2010).
Besides not having clear information on the social motivations for below average production, also
there has been little research so far in the different physical conditions within the plantation, including
the smallholder sections. Although there is some rough and inaccurate data on how high yields in
sugarcane blocks are, this needs to be improved in the future in order to implement micro-
management of smallholder blocks. For this closer cooperation and more communication between the
field managers, technicians/section managers and area managers are needed (pers. comm. Michael
Mapisane, May 2010).

7.3 Cultivation of other crops and competitiveness of sugarcane

With the establishment of sugarcane, AdX also provided irrigated fields for other crops in several
associations. This is regarded as providing the associations with more food security and provide them
with the opportunity to produce more food on less land (Açucareira de Xinavane SA 2010) (pers.
comm. Sancho Cumbi, May 2010), see Table 2. In some of the associations it was observed that these
irrigated fields were not efficiently used (e.g. in Macuvulane I, Chipene and Colo). Ges Bester indicated
that the yields from these fields were very poor. Whereas the reasons for the observed inefficient use
in Macuvulane I is unknown, in Colo and Chipene a land conflict between these associations is the
cause for underutilization. The amount of irrigated land in Macuvulane I is two hectares and in
Chihenisse this is unknown. AdX claims that in some associations they proposed to set aside some land
for other crops as well, but associations refused and wanted everything planted with cane (e.g.
Facasize).
From our survey it appears that many smallholders have access to other fields where they cultivate
crops. Only in Colo the claims by smallholders concerning the lack of land to cultivate crops were
extensive. Whether this land scarcity is real or only perceived could not be established during this
research. However, during a fieldtrip it became clear that the association did have 20 hectares of
irrigated land at its disposal for the cultivation of other crops. At the time of the field visit, this land
was not in use due to the above mentioned land conflict with Chipene association.
Another common practice which has been observed in Xinavane concerns smallholder outgrowers
cultivating crops at the side of the haulage and connector roads in the sugarcane plantation. Although
this appears a nice way of making additional use of the irrigation system that is used for the sugarcane
fields, this is an undesired practice as the crops are sprayed with chemicals intended for the sugarcane,
killing the side crops. Once this happens smallholder outgrowers complain to AdX and ask for
compensation. AdX is clearly not happy with this situation (interview Ges Bester and Michael
Mapisane, 14-05-2010).
In Cabo Delgado province a Swedish company explored options to involve smallholders in sweet
sorghum production. Farmers were only prepared to engage in this when it would outperform cotton
or sesame production, which yielded about 2,500-6,000 MTn per hectare and 3,000-28,000 MTn
respectively. As will be further substantiated in Chapter 8, these returns are below what smallholder
outgrowers in Macuvulane received for their hectare of sugarcane production for which they received
roughly 37,000 MTn (see Table 5). Based on the Cabo Delgado experience it appears sugarcane

29
production is quite a profitable cash crop compared to other cash crops. A clear note however is that
Xinavane is located close to Maputo and its harbour, whilst in Cabo Delgado it is more difficult to find
markets for commodity crops (pers. comm.. Maja Slingerland, August 2010).

7.4 Concluding remarks

The labour input of smallholder outgrowers is limited, with weeding, fertilizer application and
arranging irrigation as the main activities (at most). In the older outgrower schemes labour is
performed on individual plots that smallholders manage. AdX indicated however that labour
consuming activities in these old outgrower schemes are not always performed up to standards. There
are various reasons why labour is not availed as required and therefore AdX proposes a labour team
approach in the new associations. In this labour team approach smallholders do not work their
individual plots, but AdX, via the associations, arranges that labour teams perform all labour requiring
activities on the association fields. Although it is possible that the (strongest and most capable)
smallholders now perform most labour consuming activities most efficiently, the new approach
transforms smallholders into shareholders in the association without any (labour) involvement in the
association anymore. This also reduces the advantages that smallholder farming can have, viz. good
labour practices compared to labourers who have less interests in/commitment to optimal yields. This
labour system also more or less represents an extension of the normal AdX nucleus practices. The new
associations close to the old associations appear to have some hybrid arrangements with regard to the
labour system applied. It seems there is some decision-making power for smallholders in how they
want their labour to be organised. It will be interesting to see how the different smallholder
associations develop and whether their location might play an important role in their further
development.
Maybe there are also more activities smallholders could perform once their organisations have
professionalized. Examples are arranging the transport to the mill, arranging harvesting, and
procurement of inputs or the takeover of other activities presently still performed by AdX, or other
companies in the partnership. Andre Novo, an EMBRAPA researcher doing his PhD on cattle-sugarcane
integration in São Paulo, has observed that a common scenario in Brazil is that smallholders rent out
their land to sugarcane mills, who then take care of all activities and risks associated with sugarcane
production on behalf of the smallholders. He emphasizes however that the choice to participate in this
kind of sugarcane ‘smallholding’ is informed by many considerations like age of the smallholder
farmer, debt levels experienced by the farmers, availability of other land, etc.. In contrast, Andre Novo
indicates that there are also smallholders with one hectare of sugarcane, who intensively farm their
own plot, applying irrigation and fertilizer, thus achieving yields of more than 200 tons per ha (pers.
comm., 09-09-2010) and (Alencar, undated). If this could be (partially) achieved in Xinavane, projected
incomes (see table 4 and 5) could improve considerably.

30
8. Financial arrangements
This chapter provides an overview of the financial arrangements between the actors involved in the
sugarcane outgrowing partnership. It starts with the cane payment rules as provided by AdX and
examples indicating what kind of deductions and incomes are applied to smallholder outgrowers (8.1).
This is followed by a section on the financial management in which the financial roles and
responsibilities between AdX and the associations and the associations internally are explained (8.2).
The last section addresses the transparency of this system for the involved parties. The chapter ends
with a brief concluding section (8.3).

8.1 Cane payment rules

The cane payment rules are based on the gross proceeds from the sugar extracted from the sugarcane,
from which then all kinds of deductions are performed for services provided and costs incurred by
AdX. The deductions vary somewhat per association, because some associations decide to undertake
more activities themselves whilst others prefer to have more labour provided by Agricane/ AdX (see
Section 7.2 on Teams versus Individual labour arrangements). Table 4 and 5 illustrate that although the
gross income from sugarcane is considerable, the amount of deductions is considerable as well. This
implies that margins for smallholders are quite limited and that a change of costs or yields produce
large impacts on the final income smallholders receive.
AdX provided documentation about their payment system and claims that their system is a standard
system in the sugarcane industry, firmly based on the sugar extracted from the sugarcane only. For the
cane payment rules as provided by AdX, see Annex 2. However, AdX acknowledges that there are
going to be difficulties in the future when the mill will also start producing ethanol and electricity that
is to be exported to the grid (interview Sancho Cumbi, 01-04-2010). Already smallholders are
complaining they want payment for molasses as well (interview Fenias Antonio Nguenha, 22-04-2010;
interview Macuvulane 2, 04-05-2010). There is no solution yet on how the inclusion of these activities
will affect the payment system. CEPAGRI (see Section 5.3.1) is interested in an in-depth investigation
into the cane payment rules to establish how this system, along with the contracts (see Chapter 9), can
be improved (interview 28-06-2010).
Table 4 Overview of income (in US$) from one hectare as predicted for third phase smallholder outgrower
4
scheme in the three different periods , based on AdX 2010, Annex D (excluding tax).
During three year During 10 year After repayment
grace period repayment period period
Proceeds from 1 ha (=105 tons) in US$ 3675 3675 3675
Costs (US$)
Planting (per year in 7 ratoon system) 138 138 138
Ratoon cultivation 812 812 812
Irrigation 632 632 632
Harvesting + delivery 983 983 983
Road maintenance 44 44 44
Management fee (= X % of proceeds) 9% 331 4% 147 4% 147
Repayment (16% of proceeds) Not relevant 588 Not relevant
Sum of costs 2,941 3,345 2,757
Proceeds minus costs 734 330 918
Equity to AdX (28.55%) 209 94 261
Revenue for smallholder (US$) 525 236 657

4
The three different periods reflect the first three years, the consequent next ten and rest. The figures contain static variables to illustrate
the impacts of the repayment schedule on smallholder outgrower income. Assumptions are a production of 105 T ha -1, which is above the
2005 till 2009 average of 99 T/ha for Macuvulane I and Maguigane associations. The average sugarcane price assumed is USD 35 per ton, and
the applied exchange rate is 1 US$ = 28.5 MTn., as indicated by Mr. Ferronha (pers. comm. on 18-05-2010). A tax rate of 10% is not included.
This overview reflects a situation in which teams perform all labour activities and the individual smallholder has no labour activities to
perform at all. If smallholder outgrowers are involved in labour activities for AdX or associations, their incomes will rise.

31
Table 4 also illustrates that AdX’s claim that smallholders will have an annual income of US$ 1,307 per
year for a 2 ha plot over a 20 year period should be interpreted with care as income will, based merely
on repayment schedule and leaving aside changing market and natural conditions, vary considerably
over this 20 year period. The first three years render more than the following ten, which are followed
again by seven good years. However, smallholders cannot work with 20 year averages and need
decent incomes on shorter time spans. Therefore care should be given that sugarcane cultivation is
also an interesting activity in the 10 year repayment period. Smallholders must be aware of this
construction in order to avoid unmet expectations.
Table 5 Projected incomes and yields based on information provided by AdX (based on agricultural operating
costs (Annex D in (Açucareira de Xinavane SA 2010)), AdX Excel sheets provided by Mr. Cumbi (see
5
Annex 3) and Mr. Ferronha (pers. comm., 18-05-2010) .
Income per
Income per farmer after
farmer
Average deductions and tax
before
Sugar cane cane after AdX equity share
deductions
hectares is deducted (in US$ and
and tax
if relevant)
(US$)
Year No of Tons/ Ton/ per
Phase Name Ha
Est. farmers ha year farmer
Phase I Maguiguane 1998 66 90 85.0 7,650 1.4 4034 1055
Phase II Macuvulane 1 2005 180 185 120.0 22,200 1.0 4293 1571
Sub-Total 246 275 108.5 29,850 1.1 4224 1433 1433
After 3 During 3
year year
(grace) (grace)
period period
Phase II Chihenisse 2008 40 200 90.0 18,000 5.0 15,663 2,383 1,678

Macuvulane 2 2008 89 73 110.0 8,030 0.8 3,140 209 432

Maria de Luz
2009 200 263 110.0 28,930 1.3 5,035 335 692
Guebuza
Hoyo-Hoyo 2009 150 189 112.9 21,340 1.3 4,952 365 715
Buna 2009 110 218 111.0 24,200 2.0 7,658 529 1,071
Maholele
2009 4 72 94.7 6,820 18.0 59,346 1,334 5,537
Macamo
6 de Janeiro 2009 200 74 133.8 9,900 0.4 1,723 199 321
Olhar de
Phase III 2009 250 107 110.0 11,770 0.4 1,639 109 225
Esperança
Maholele G 1st
2009 6 266 112.5 29,920 44.3 173,571 12,606 24,901
Stage
Chichuco 2010 150 95 141.3 13,420 0.6 3,114 396 616
Maholele
2010 4 56 92.3 5,170 14.0 44,988 639 3,826
Mutombene
Tres de
2010 10 133 137.3 18,260 13.3 63,558 7,689 12,191
Fevereiro D
Mucombo Est 2010 80 70 120.0 8,400 0.9 3,655 327 586
Sub-total 1,253 1,616 115.2 186,160 1.3 5,171 408 775
Total for SSG 1,539 2,091 111.9 234,010 1.4 5,293 623 903

5
These numbers do not reflect actual payments but are indicative projections and do not address some uncertainties depreciation. Still the
figures demonstrate that payments to individual smallholders will vary considerably per association. It is known, also by AdX, that not all
figures provided by AdX reflect reality. For example, Macuvulane and Chihenisse association do have their own (irrigated) food crop fields
and the food crop field for 6 de Janeiro is only 20 ha. Also the number of registered members of associations may differ from those indicated
in this scheme, with Chihenisse for example having 58 members instead of 40 as indicated by AdX, while the exact number of members of
associations like Maria de Luz Guebuza and Olhar de Esperança still have to crystallize. It is unclear why AdX projects large differences in
tons/ha per association, which in general appear far above the average of a 7 ratoon average, inflating projected incomes. For 3rd phase
associations and Chihenisse a management fee of 9% was included in the 3 year start up phase because all labour activities there are
arranged for by AdX, meaning smallholders do not need to work on the land. For Maguigane and Macuvulane associations a 4% management
fee was applied and labour activities by smallholders have not been deducted from final incomes as smallholders there provide labour
themselves. After the startup phase Chihenisse is regarded the same as Maguigane and Macuvulane exempting them from making
repayments for infrastructure development. For the 3rd phase associations a repayment of 16% of the gross income is deducted to cover the
costs of the investment (10% per year) and interest (6% per year). A (re) planting fee of roughly US$ 115 per ha per year has been included in
the deduction list for all associations. The exchange rate applied is 1 USD = 28.5 MTn and the price per ton of sugarcane is set at US$ 35 as is
indicated in AdX figures provided by Mr. Ferronha concerning 2009 averages used (interview, 18-05-2010). For 3rd phase associations 71.55%
is paid to smallholders as AdX has a 28.45% share in this part of the smallholder expansion. A 10% tax was deducted of the net income.

32
Although Ges Bestern (Agricane) claims that an income of US$ 250 per hectare is a nice income for
which smallholders do not have to do anything, the initial three year period should also be used by
smallholders to develop the skills to manage their outgrower scheme. This training also consumes time
which could be used for other activities, representing an opportunity cost.
For Macuvulane I association (185 members and 200 ha of sugarcane) a simplified overview of
deductions is provided in Table 6 to illustrate what deductions are made and what the costs of these
deductions are. For a more detailed version see Annex 4.
6
Table 6 Overview of deductions applied for Macuvulane I association outgrowers (Source AdX 2010, Annex
D combined with actual figures obtained from Macuvulane I leadership).

2009 MTn US$

Gross Revenue Macuvulane I 31,197,550 1,094,651
Levies and surcharges 1,255,573 44,055
Net Revenue Macuvulane I 29,941,977 1,050,596
After division of proceeds (DOP), (60% for smallholders and 40% for miller) 17,965,186 630,357
Harvesting 718,238 25,201
Harvest and delivery to mill
Loading 1,308,458 45,911
(performed by Unitrans)
Haulage 2,014,762 70,693
Pump and system maintenance
487,432 17,103
(incl. theft and vandalism compensation)
Irrigation
Electricity 1,349,427 47,348
Bulk/ Water costs 395,530 13,878
Chemicals 634,550 22,265
Fertilizers 1,768,035 62,036
Ratoon cultivation Tractors 832,685 29,217
Ripeners 236,134 8,285
Road maintenance 234,266 8,220
Association management and other costs 1,216,589 42,687
Payments to smallholders by association 6,769,080 193,402
Payment per association member (average size 1.03 ha) 37,606 1,320

There are two payments by AdX to the smallholder associations. The first payment is 82.5% of the
value of the Economically Recoverable Crystals (ERC) (almost equal to sugar) and based on the actually
delivered sugarcane. 17.5% is initially withheld by AdX as the final sugar price for that year is still
unknown. The final sugar price depends on export market prices and domestic prices as well as the
total production of all sugar in Mozambique, which influences the export versus domestic usage ratios
and related prices. It appears that final campaign averages of all cane processed at the AdX are used to
calculate the final payment, instead of assessing the individual performance of associations. In the
cases of Macuvulane I and Maguigane this way of calculating pay-outs benefitted these associations as
it gave them a higher sugar content than these associations had actually achieved (based on payment
data provided by Ferronha, 16-06-2010). As the mill requires a continuous supply of cane during the
milling season not all cane is delivered when it has the highest ERC (this also depends on the sugarcane
variety). Therefore it may be the case that while the higher average ERC benefitted the smallholders, it
may compensate them for being harvested in a period which is not optimal regarding ERC. It is the
company who decides when which fields are cleared. It appears the yearly average ERC price has a

6
The figures are based on general estimates from (Açucareira de Xinavane SA 2010) combined with actual figures obtained from Macuvulane
I association and AdX management for the 2009 campaign. This table therefore must be regarded as indicative and not reflecting precise
payments. Also no savings for replanting are included which are assumed to amount to roughly 140 USD per year. The exchange rate used
is 1USD = 28.5 MTn. The actual average yield was 95t/ha.

33
leveling influence on the impacts that harvesting period and cane variety may have on the price
received by smallholders. Testing for ERC rates is done at the AdX laboratory and there is no
smallholder involvement in this.
The cane payment rules as implemented by AdX are not always clear to the leadership of the
smallholder outgrowers associations and therefore also unlikely to be clear for individual smallholder
outgrowers, certainly considering the prevalence of illiteracy amongst the members (various
interviews and survey). It was not possible to establish the exact magnitude of all costs and taxes,
hence the presented figures have to be treated with caution and are likely to include a margin of error.
Macuvulane I and Macuvulane II association leadership showed the researcher documentation from
AdX concerning payments and indicated they had no idea how these figures were arrived at. They
demanded an explanation from AdX.
For most new associations the cane payment system is not relevant as their fields have not been
harvested yet. Some of the categories in the payment system remain vague and provide AdX with
opportunities to charge what they like with limited control possibilities on the part of the smallholder
outgrowers (e.g. clause 3.5e in Cane Payment Rules). It is also unclear what the company charges for
smallholder management and how they spend this.

8.2 Financial management

The financial management related to payments to smallholders is performed at two levels. There is the
financial management performed by AdX and there is financial management performed by the
associations. First the financial management of AdX will be described, followed by the financial
management undertaken by the association.

8.2.1 AdX financial management related to smallholders

The procurement of fertilizers and other inputs is usually performed by AdX as are the payments to the
smallholder associations. The financial manager at AdX, Mr. Ferronha (interview, 18-05-2010),
indicated that AdX currently maintains two accounts per association:
Account 1; includes the large expenditures like haulage, cutting and the final payment to the
association’s management.
Account 2; is used for incidental credit provision to allow associations a way to carry forward
through the year, pay the electricity bills, pay for repairs on equipment, etc.. The cost incurred
on this account is then deducted from account no.1 before final payment to associations is
affected.
The financial manager indicated that they treat their financial business with the smallholder outgrower
associations somewhat different than their other outgrowers on the understanding that smallholders
are occasionally in need of finances which AdX then provides for them, and deducts later. However for
Vamagogo they never face such needs and would also not get engaged in such incidental transfers
(interview Mr. Ferronha, 18-05-2010).

8.2.2 Financial management of associations

The creation of bank accounts appears to be a problem in the new associations. Since not all
associations have been legalised yet, not all associations have been able to open a bank account. AdX
indicates that they have not paid some associations because the bank account is only in name of one
person, making it very easy to embezzle money (which already happened in Macuvulane I association
a few years ago).
It has remained largely unclear what the smallholder association leadership spends its money on. A
further complication is that Macuvulane I also has access to communal fields for other crops and
Maguigane runs a common chicken run. It is expected there are finances related to these activities as
well which are managed by the associations. The older associations (Maguigane and Macuvulane I)
both operate a tractor which they rent out. This creates extra income for the association, but brings
along with it extra costs as well. Smallholders claimed they got these tractors for free from some

34
(unknown) donor who said they were doing a fine job. No further information on the associations’
states of income and expenditures could be retrieved. The Maguigane technician indicated that the
association does not really make its own financial balance because AdX administers the expenditures
of the association. Also Macuvulane I was not able to present their financial balance. The other
associations had not received payments yet and did not have worked out balances either. It remains
unclear whether there are balances that were not shown, or whether such forms of financial
administration just do not exist. Although KULIMA indicated they recommended an independent
auditor to check the associations’ bookkeeping, it is unclear whether this is currently happening.
Furthermore association money was used to procure uniforms in Macuvulane I. It is unclear whether a
social fund exists and to what extent the association provides credit to its members. There were some
rumours that credit was availed to some whilst it was refused to others. The association however does
not have to provide credit to the members for the sugarcane activities as this is already arranged via
AdX.
Ges Bester (pers. comm. 18-05-2010) expressed his fear that smallholders are not reserving funds for
replanting. He suspects smallholders believe that AdX will replant their areas for free. The costs for
replanting are not included in Table 6 as it is unclear whether Macuvulane I is setting money aside for
this. From the Small scale grower development project (2010) document it appears that replanting in
Macuvulane I would cost roughly 25,500 US$, translating into a reduction of income of 140 US$ per
campaign per smallholder, producing an income of roughly 1,180 US$ per campaign per smallholder.

8.2.3 Clarity and transparency of payment system to smallholders

In the older associations it appears the payment system is clear to roughly half of the members. In the
new schemes, including Chihenisse, this understanding is much less common (survey). The researcher
finds it difficult to believe that smallholders completely understand the payment system since around
50% of the members is illiterate. Furthermore it was already difficult for the researcher to understand
the deductions made by AdX, raising questions as to how many smallholder outgrowers would be able
to make sense of them. This is confirmed by the leadership of in Macuvulane I and II associations, who
indicated that they had difficulties in understanding why they received the amounts of money they
did. In such instances the leadership of smallholder associations are likely to ask for explanations from
AdX. However, most smallholder outgrowers indicate that they believe the company cares about them
and their welfare, and slightly more than half of them indicate they trust the company in paying them
the correct value.
The larger, entrepreneurial, outgrowers in Maholele and the management of some associations
appear more critical about the payment system and the deductions they receive. Although there exists
a considerable level of trust between AdX and Maholele G outgrowers, indicated by the lack of written
agreements whilst cane is grown already, Maholele outgrowers are concerned about the
communication and control over the inputs by AdX. The outgrowers complain that AdX keeps accounts
for the costs it incurs, but it is unclear whether the accounted costs reflect the actual services received.
Two examples provided by the larger outgrowers concern the amount of labour AdX charges for and
the costs of fertilizers used. The amount of labourers charged for by AdX was 214, whilst Mr. Lumbela
counted only 50 people actually working in the fields. Also the amount of fertilizers charged for is not
transparent to them. When the section manager applies the fertilizer they receive a bill, but they
cannot assess whether the bill actually reflects the amount of fertilizers applied on the land (interview
Mr Lumbele, Mr.Cossa and Mr. Timane, 19-05-2010). Although the problem is one of transparency of
the costs of (non)delivered goods and bringing more transparency in the costs of the services and
goods, theft also represents a considerable problem in Xinavane according to Agricane (interview Ges
Bester and Russel Longhurst, 28-04-2010).
In Macuvulane I association it was observed that some payments are done via a bank account whilst
other members receive a cheque. This payment system also demonstrated that more people received
an income than the officially registered number of members. This also illustrates that although most
people earn roughly the same, there are considerable variations whereby one member was earning
nearly double the average and other members earned only a few thousand MTn. Whilst the official

35
policy is to allocate and register one hectare of sugarcane per member, it appears in practice there is
some variation in plot sizes amongst members.

8.3 Conclusion
The financial management is largely controlled by AdX as they control the deductions even before
smallholder outgrowers touch any money. This system provides the company the security that the
payment for services rendered is effectuated. This is not surprising as the inputs for the production of
sugarcane require a substantial amount of money, with smallholders receiving roughly 10% of the
value of the final product in case of 3rd phase outgrowers and Chihenise (where all labour input is
provided by AdX) compared to 25% to 35% of the value of the final product received by smallholder
outgrowers in Maguigane and Macuvulane I, where smallholders provide their own labour input.
There are however many instances of intransparency in the payment system, which smallholder
outgrowers are likely to scrutinize and demand clarity about. It appears there is no monitoring and
financial auditing done by an independent third party who is able to check the information provided by
AdX and garners the trust of the smallholder outgrowers. For the (financial) sustainability of the
present payment modalities it is deemed essential to identify suitable independent auditors who could
perform transparent audits for the cost accounting undertaken by both the company (AdX) and the
leadership of the smallholder outgrowers associations. Moreover there will be considerable variation
in payments to smallholder outgrowers due to differences in investment costs and repayment
schedules, achieved yields, labour input by outgrowers, management performance by the leadership
of associations and the success of income generating ventures managed by the association. It will
therefore be interesting to see whether the plot sizes, and achieved yields, will prove to be important
variables in achieving successful forms of smallholder outgrower sugarcane production.

36
9. Contracts between smallholder organizations and AdX
This chapter focuses on the contracts in place between the associations, AdX and government
pertaining to four issues which are dealt with in a separate section each. The subjects dealt with are:
land use rights, water rights, production and social services. This chapter is then concluded with some
general observations on features which appear in all forms of contracts in Xinavane. Contractual
arrangements within the smallholder associations, stipulating the rights and responsibilities of
smallholders and smallholder management are not dealt with in detail and remain there for further
research.

9.1 Contracts and conflicts concerning land use rights

The frequent assumption that land is plentiful in
Mozambique needs to be looked into carefully in Box 7: 1997 Land law (Law No. 19/97)
the case of Xinavane. Sancho Cumbi indicated
that land is becoming scarce (interview Sancho The government of Mozambique adopted a
Cumbi 01-04-2010) and one of the reasons for new land law on the 1st of October 1997. This
Xinavane to expand is to secure more access to new law provides more space for traditional
land. This might be one of the reasons why land use rights systems and states that
Marini’s (2001) expectation of smallholder traditional non written land use rights have just
outgrowers missing out on sugarcane as much legitimacy in court as written land
developments (see introduction) appears not to (use) rights (Soares 2009; Schut, Slingerland
become a reality in Xinavane. and Lock, 2010).
The provision of land for sugarcane production Soares (2009) notes however that although the
was a process in which in some cases AdX 1997 land law and its complementing
approached the local community whilst in other documents are an improvement of the
cases the local community approached the previous land laws regarding the interests of
company. Examples of the community the local communities, the interests of
approaching the company are Facasize and Maria communities are still threatened by the
Luz de Guebuza (see Figure 2 and Table 2). Cases assumed alignment of interests of State and
of communities being approached by company private sector, lack of knowledge in
are Colo and Mcombo (see Figure 2 and Table 2). communities of their rights, and internal
It is AdX however who decides whether it is difficulties in local communities concerning
feasible for a community to be included into the representation of community interests and
sugarcane outgrower scheme or not. good leadership. These issues are not unique
A good understanding of how negotiations for Mozambique however and are relevant in
between the communities and AdX should many areas where local communities meet
happen seems to be lacking. Although the private sector and government interests (e.g.
government has a role in this, it appears that, (Colchester, Jiwan et al. 2006; Wehrmann
certainly in the beginning, negotiations were 2008))
somewhat shady. Gwevahne describes these meetings as AdX organising a nice party and creating a
good atmosphere after which community members would sign papers they did not understand very
well. Also Gwevahne indicates meetings between AdX representatives and community leaders were
held, but without broader and proper community consultation. Community leaders were invited by
AdX to talk but these negotiations were not clearly written down or observed by third parties and
hence became subjected to suspicions of being corrupted (interview Catela, 04-05-2010). Community
leaders then poorly communicated to their communities what the agreements were, leading to
frustrations and misunderstandings when AdX actually implemented their plans.
In the opinion of Sancho Cumbi, AdX did not have to check whether the agreements made by
community leaders were really supported by all community members and sees it a responsibility of the
community leaders to (re)present the voice or consensus of the community (interview, 21-05-2010).
An example he provided is the agreements of community leaders to provide land which used to be
graveyards. Local community leaders ensured him it was no problem that these be converted to

37
sugarcane production area and that AdX was welcomed to help move the graves. AdX did not go and
investigate whether this was just the opinion of the leaders or of the whole community.
Sancho does recognize however that there are progressive people (risk takers) and more conservative
people and that these conservative people sometimes missed out on the sugarcane developments as
developments were already ongoing without their involvement (interview Sancho Cumbi, 16-04-2010).
This implies as well that AdX might have readily engaged with the risk takers quickly, taking the latter
as representative for the whole population, whilst in
reality these may have not been reflecting the opinion of Box 8: Cattle issues
the entire population.
The cattle raising in the nearby
It remains unclear how the land use rights are arranged communities appears a serious problem
exactly and this requires a more thorough investigation.
to AdX as cows are moving/ driven
It appears however land is transferred from ownership of
through the young sugarcane,
the community members, with DUATs or the local
destroying the crop. The routes for the
costumary tenure system, towards the ownership of land
cattle appear to go from the pastures
by associations (as indicated in interviews with Sancho
behind the cane fields through the cane
Cumbi, 16-04-2010; Chihenisse management, 25-05-
fields to the drinking areas near the
2010; administrador Magude, 28-05-2010). This means
river. There have been multiple
that community land rights, which acknowledge
meetings on this with the local
individual land use rights, are given up for a collective
communities but promises keep being
landownership arrangement and taking away land and
broken. Even placing fences did not
decision-making power from the individual smallholders
prove efficient as these got stolen and
and transferring it to leadership of this association, who
used for other purposes.
share decision making power with AdX in the MHOVA
supra-association. (Interview Cees Baars, section manager,
05-05-2010)
For the Maguigane and Macuvulane I associations it
appears the land already belonged to an association/ cooperation before sugarcane activities started.
Also Macuvulane II and Facasize appear, reading Gengenbach (1998), to have some church instigated
land registration/organisation in place even before smallholder sugarcane activities started. In
Chihenisse the land used for sugarcane cultivation used to belong to 40 people, but was later shared
with 18 more members (interview Chihenisse management, 25-05-2010). In Maholele G there are
larger landowners who claim to have documentation stating that they have the land use rights
(DUAT’s). These land use rights were a prerequisite on the part of AdX for them to join the outgrower
scheme (interviews, 19-05-2010).

Box 9: Difficulties in expansion in Maholele

In Maholele AdX got a concession from the government. Although barely populated, according to
AdX (Açucareira de Xinavane SA 2010), some locations were inhabited by communities and
expansion in the Maholole area proved to be more difficult than in other areas.
Also Colo community needed to be compensated for their assets and provided with equal or better
circumstances. These circumstances include access to water, soil fertility, compensation for
previous investments in land (i.e. compensation for fruit trees, etc.) for which there are rules set up
by the Ministry of Public Works and Housing (interview Sancho Cumbi, 21-05-2010). Although AdX
and Gwevahne indicated detailed assessments were performed, it is unclear what was
compensated exactly, for example whether the areas which were used to gather firewood or to
graze cattle were compensated properly or just the productive plots, or whether these
compensations were conducted according to the intention of the law. According to Sancho Cumbi it
is difficult to compensate exactly for their losses as there are nearly no areas with exactly the same
conditions.
Gwevahne claims that compensations paid to smallholders were extremely low and local
communities sometimes just signed papers in order to receive money on the short term, not
realizing the long-term effects (interview Catela, 03-05-2010). The Colo community was also invited
to participate in the sugarcane expansion scheme; giving up 650 ha of land and receiving back 120
ha of irrigated sugarcane fields, and the other 530 ha becoming part of the nucleus estate.
38However, Colo community did not really have a choice as otherwise all land would be taken from
 them as the government had provided AdX with a concession (Catela, 04-05-2010). Colo community
made claims however about high numbers of fruit trees, other valuables and people that needed to
be compensated for. These claims proved to be excessive and indicate a tendency for opportunism
(and plain cheating) by local communities in order to receive as much compensation as possible.
Therefore Gwevahne asked members again to make lists of members and government and
company checked what was in place in these areas (interview Sancho Cumbi, 21-05-2010).
Members indicated however that their land was taken from them by force and that AdX came to
the area with armed people firing into the air (survey results and talks surrounding the survey on
22-06-2010), a fact confirmed by Gwevahne (interview Catela; interview Felix Langa, 23-06-2010).
However, preceding this event Colo members had been setting up roadblocks and obstructing AdX
activities, which resulted in poorer planting practices in that area. The attitude of the Colo
community appeared very negative towards AdX and the local community demand explanations by
AdX about what is happening, how the payment system functions, when they will be employed and
how and when they will benefit from the sugarcane activities. Also Colo community representatives
threatened that if they do not get a satisfactory explanation by AdX they will block harvesting or
prevent AdX from entering the area again. They also threatened to pick up arms as they did in the
civil war when their community joined RENAMO (talks surrounding survey 22-06-2010; pers. comm.
Felix, 22-06-2010).
Colo is an extreme case however and in other consulted associations visited land conflicts do not
appear this tense. Usually land conflicts in associations are more about who is a member of the
association and who is not. The larger smallholders in Maholele D and G are not involved in these
kind of conflicts with AdX however. Their landrights were also better protected as they had
documents proving the land belongs to them.

9.2 Contracts concerning water rights

Currently all water rights are under AdX responsibility, with Maguigane and Macuvulane I paying for
the water bill already. It is unclear however whether they pay for the volume of water they actually
use or for their share in the whole plantation. ARA Sul, the water authority in Southern Mozambique,
provided a list of water consumers in the Incomati basin, which indicated that the Xinavane plantation
is regarded as a whole and that within AdX the water bill is specified to the associations. The names of
the associations were already on the list however, indicating that in the future it could be that these
associations will be charged individually by ARA SUL (See Annex 5). This is possible as each association
has its own pump system.

9.3 Contracts concerning production

Multiple actors indicated that written contracts concerning issues like duration of contracts, exact
conditions on delivery, provision of inputs and costs of inputs, payments for services by AdX, period for
repayment of credit (and provision of short term credits), and payments to smallholders are not in
place yet (i.e. interview Magude administrador, 28-05-2010; interview Sancho Cumbi, 21-05-2010;
interview Macuvulane I management 28-04-2010; interview Macuvulane II management, 04-05-2010;
interview Olivio Catela; 03-05-2010). Sancho Cumbi (interview 21-05-2010) and Ges Bester and
Michael Mapusane (interview, 14-05-2010) indicated however that these contracts are currently being
finalized. The unclarity about the exact content of the contract is one of the main sources of confusion
amongst smallholder associations and also creates uncertainty for AdX as, for example, it does not
guarantee AdX the duration of smallholder sugarcane production. Although the contracts are not clear
yet, the sugarcane is already planted and in some cases even harvested. Mr. Sancho Cumbi (interview
21-05-2010) indicated that the exact content of the contracts is also dependent on the final loan
condition they expect from the EIB. If the interest rate for that is set, AdX knows what to charge to the
associations.
For the older associations the contracts should be clearer however, but it is uncertain whether fully
binding contracts are in place (denied by Macuvulane I, interview 28-04-2010) or agreements are more

39
build upon a relation of trust, as the Maguigane management indicated (interview, 28-04-2010), or
based on the perceived role of the company as a patron (Benjamin, 27-04-2010).
The contracts concerning rights and responsibilities when cane is planted appear to be of an informal
nature. It is understood that AdX buys the cane, but even then it is not certain whether AdX is obliged
to buy the cane as AdX does not have an official policy on this in case of factory malfunction or
weather conditions which make it impossible for the factory to process cane (pers. comm. Ferronha,
16-06-2010).
This crafting of contracts is a one way process with the company having the skills and capacity to draw
up the contracts and smallholders only being able to agree. Basically there is already sugarcane on
their land and there are few alternative avenues if smallholders fail to agree with the company. Of
course there are alternative avenues of resistance at the disposal of smallholders/ local communities,
but without taking illegal actions their bargaining power will always remain limited as the share of an
individual association in the total AdX sugarcane production is negligible.

9.4 Contracts concerning provision of social services

AdX has a document stating its provision of social services to the involved communities. This document
was provided to CEPAGRI. This program is also in line with the requirements by the EC for the
promotion of rural development. The program is added as Annex 6 and includes commitments on
expenditures on HIV and Malaria prevention programs, garbage removal and road construction.
It was observed that indeed in Xinavane there was a garbage removal tractor at work and there were
ambulances which all had the Tongaat Hulett logo on them, appearing to be sponsored by AdX. Also
roads were improved, albeit it for the transportation of cane as well. Other social services may have
been provided by AdX but the time span of the social services program is unclear. There might be
more specified documentation on this in which it is also stated who performs the monitoring of the
social program. AdX also points out that the social uplifting of the community also largely occurs
through the extra jobs provided and economic activity created by the Açucareira (Açucareira de
Xinavane SA 2010).
A persistent problem appears to be the expectations and variety of interpretations that local
communities, and maybe even governments and donors, apply to sugarcane activities. It was observed
that communities quickly interpret something differently as intended and these erroneous
interpretations then feed unrealistic or misplace expectations. Certainly in the early phases of the
expansion this appears relevant as agreements between communities, leaders and AdX were often not
documented in such a way that all parties were aware of the agreements and had clearly understood
expectations towards each other. This also appears to be the case with ‘promises made by AdX’, for
which it is unclear whether they were actually promised or whether these represent
misinterpretations by local communities.

9.5 Concluding remarks on contracts

Contracts between actors in Xinavane relating to sugarcane developments appear to be largely
informal. These informal contracts have given rise to many conflicts on what was agreed or not, thus
creating a plethora of untransparent situations in which not all agreements are interpreted in the
same way by all actors. This leads to a ‘management of expectations’ problem that could prove
inhibitive in the medium to long term.
Despite the good intentions on the part of the Açucareira de Xinavane, the various smallholder
outgrower associations and the different government agencies involved, the observed lack of clarity
on land use rights, water rights, production arrangements and social service provision creates risks for
all parties involved. Clearly land use rights are at the heart of the deal between smallholders and AdX,
but agreements about land appear to have taken place with limited checks for the prior and informed
consent of the whole local population. Regarding the role of the government, local leadership and
company there certainly appears to be room for improvements in this process. Some improvements
were made during the expansion process as more agreements were observed and documented by a

40
third party, increasing the chance of compliance with the agreements as all parties accepted the
agreements as fair. There could be role for a to be established pro-deo legal advisory body, to be
established by the government, in observing the validity and fairness of such agreements.
Without legally binding agreements or contracts, the company can neither be sure of recuperating its
investment nor of securing the envisaged production quota for sugarcane; the various government
agencies cannot play their monitoring role, maximizing public benefits and guarding the public
interest; and the local community itself cannot be sure of getting their efforts rewarded, opening
space for debilitating opportunistic behaviour and free-riding on the part of some.

41
10. Conclusion
Xinavane can be regarded as a laboratory of smallholder sugarcane outgrowing developments in
Mozambique. It is clear developments have taken off as currently roughly 1.600 hectares is covered by
irrigated smallholder sugarcane activities. Smallholder sugarcane production in Xinavane started with
one small association in 1998, followed by a second expansion phase from 2005 to 2008 when two
more associations were established, and a third expansion phase starting in 2008, which led to a total
of 15 smallholder sugarcane outgrowing associations at the time of the study. Associations all have
their own characteristics like land size per smallholder, organization of labour, irrigation system and
financing (see Table 2). As most associations have been established only recently and most have not
harvested any sugarcane yet it is impossible at this stage to assess which characteristics make for
successful smallholder participation. This research however does generate insights on smallholder
sugarcane activities in Xinavane and highlights relevant issues in the establishment of smallholder
sugarcane outgrower projects elsewhere in Mozambique. By doing so, this study provides a basis for
further research, and provides some preliminary recommendations on how sugarcane smallholder
projects in Mozambique can be improved.
Whereas the first three associations were development projects sponsored by the government, the
most recent smallholder expansion has been initiated by the mill, AdX, itself. AdX, covering 10,000+ ha
itself after its own recent expansion, thereby clearly acknowledges the benefits of engaging in
smallholder sugarcane production. Benefits for AdX include access to land and labour, involvement of
local communities, risk externalization and lower expansion costs. The main motivations for most
smallholders to engage in sugarcane outgrowing appear to be access to cash income and a secured
market, expectations of wealth generation and, in one exceptional case (Colo, see Box 9), the use of
force. Larger smallholders, the agri-preneurs, also highlighted explicitly that the capital and
technological inputs provided by AdX offered them an opportunity to make more productive use of
their land, something implicitly acknowledged by smaller outgrowers as well. However, unclarity exists
amongst smallholders about their earnings from sugarcane, which might lead to unrealistic
expectations. Tables 3 and 4 illustrate that the income per smallholder is likely to vary considerably
amongst associations and, regarding the most recently established associations, phase of repayment
that they find themselves in. It appears however that smallholder outgrowers in (especially older)
associations will earn more from sugarcane cultivation than they would if they engaged in the
production of other cash crops (see Section 7.2). It will be interesting to see whether future
developments in Xinavane allow for drawing lessons on the appropriate size of smallholdings,
sustainable income portfolios (drawing incomes from multiple sources) and the development of
communities.
That AdX takes a leading role can be considered positive since the company has the capital, capacity
and technology to arrange for the expansion of sugarcane production. Participating smallholder
outgrowers, whose only criteria to join the project was to posses land in the earmarked area, lack the
capital and knowledge to commence sugarcane production on their own. However, it appears that the
interests of smallholders have been poorly represented in this mainly company-lead initiative.
Smallholders are organized in associations to facilitate the interaction with AdX, but education levels
of smallholders are low (see Section 5.4.1), and association members have little experience with
commodity crop production or working in associations.
Although NGOs assist the associations in their legalization process, legalizing their land use rights and
structuring their communication with AdX, very limited training has been provided on the managerial
skills, accountability and transparency procedures or group dynamics required for the establishment of
well functioning, empowered smallholder associations. Also the trainings offered on technical
production aspects appears weak in several associations. This has been partly caused by the sheer
scope and speed of the expansion, for which AdX and the contracted implementing company have
been unable to attract sufficiently qualified personnel. This lack of qualified personnel and the absence
of trainings on structural group dynamics and management skills might jeopardize smallholder
sugarcane production as it discourages smallholders from active participation, which is needed to
optimize sugarcane production. Therefore it appears crucial that a well qualified third party is

42
attracted. Most likely this would have to be a development organization, with experience in setting up
functioning smallholder organizations that is able to work on increasing both the awareness and
organizational skills of smallholders and assist in creating professional smallholder association
management arrangements for the smallholders for a prolonged period (years) and with sufficient
funding.
AdX promotes the emergence of a supra-association (MHOVA) as a necessary step to increase the self-
reliance of smallholders. The company claims this supra-association will be able to supply services
which are difficult or too expensive to arrange at individual association level. Examples of such services
are arranging for proper trainings or representing all smallholders to third parties. It appears however
that there is little participation of communities or associations in the creation of the MHOVA and it is
unclear to most smallholders and their managements what the exact function of this supra-association
will be. The limited involvement of smallholders in shaping this umbrella organization might appear
unavoidable at this moment since knowledge and education levels are very low concerning
commercial farming, working in associations, operating irrigation systems and the actual production of
the crop itself. Care should be given however not to lose the involvement of smallholders to the
project, as this could lead to a situation in which not the smallholders’ interests/concerns are served
but those of the project implementers, which in the long run can negatively affect the smallholders’
commitment.
Although an umbrella organisation like the MHOVA could improve the bargaining position of
smallholders, it also strengthens the control of AdX over smallholder producers, since the associations
are expected to cede decision making power to the MHOVA, for which AdX employs managers and
holds a 20% share. Hence a process of externalizing smallholder control over land is envisaged.
Whereas before the sugarcane developments people had full control over their land, with the creation
of associations they transferred their community customary land rights to collective ownership in the
smallholders associations, which with the establishment of MHOVA could be transformed into
collective ownership regulated by MHOVA. This process increases the distance between smallholders,
(control over) land and actual production and is accompanied by great uncertainty about what will
happen with associations and their land when individual smallholders, or worse associations, want to
quit sugarcane production. This uncertainty creates considerable risks for smallholders as well as for
AdX and clearly needs to be dealt with. In the case of the Maholele G larger smallholders these issues
appear slightly less problematic as land use rights have remained in possession of the individual
smallholders.
AdX is responsible for the logistics surrounding sugarcane production, dealing with harvesting, haulage
and transport, for which it subcontracts Unitrans. There is decision making power for smallholders in
the labour planning process however (certainly as they often are the source of labour that actually
work the land). This is reflected in the two different labour employment models applied in Xinavane
smallholder fields. In the older schemes individual smallholders work their individual plots, whilst in
the new associations which are located far from the old associations, labour teams are employed
which perform labour on association land like hired land labours. The costs for hiring labour are
recovered by the company through reductions in the income of smallholder outgrowers. The new
associations in the vicinity of the older ones tend to employ a mixture of these labour employment
systems. AdX promotes the use of labour teams for various reasons as avoiding perceived negligence
and lack of punctuality amongst smallholders, and employing a capable, knowledgeable and well
equipped work force (see Section 7.2.1). However, proper training for associations in technical
production aspects, management skills, group dynamics and accountability could reverse some
advantages of employing labour teams and capitalize on potential smallholder benefits as limited
monitoring and organisation costs by cutting out AdX activities and having smallholders perform their
tasks up to good standards by internal motivations. At the end of the day it is the smallholders through
their association leadership who decide how labour activities are arranged.
The different labour regimes illustrate a tendency of more smallholder involvement in the older
associations and less smallholder involvement, through the labour team approach and role of AdX, in
the newer associations. The choice for either of the applied labour management approaches is

43
informed by factors such as the availability of land for other activities, other occupations of
smallholders, age of smallholder outgrowers and their understanding of the advantages and
disadvantages of both systems. If smallholders are fully dependent on sugarcane production for their
livelihood and engage in no other labour consuming activities, it is more likely that they prefer to be
fully engaged in labour and management activities and earn as much income from these activities as
possible (i.e. outsourcing less activities). On the other hand, if members are occupied with other
livelihood activities, they might regard high company involvement and responsibility as a preferred
strategy. The second scenario bears similarities to smallholders renting out land for sugarcane
production, whilst carrying the risk in the production process.
An advantage of an increased involvement and responsibility of smallholders could be that
smallholders put more effort into production and maintain higher production standards than land
labourers, who have less interest in the actual production (since their wage is not influenced by
obtained production results). Also it is likely that more involvement of smallholder producers in
production leads to higher yields and more income remaining with the local communities. The group
income system, which is currently in place in all associations but being reassessed by some at company
level, could stimulate smallholders amongst themselves to maintain optimal yields as smallholders can
only receive higher incomes if others perform well. In order to achieve this however, the benefits of
working in an association and the advantages of shared income (and responsibility) must be clear: this
can only be achieved through training, which is currently not properly performed.
The labour involvement of smallholders in Xinavane appears to be fairly in line with those observed in
other smallholder sugarcane plantations in Africa. This labour input mainly includes weeding, moving
the sprinkler systems and applying fertilizers. The smallholder management also arranges operators
for the pumps for the irrigation system, for which smallholders are responsible as well. There is room
for increased smallholder engagement in the production process, such as tending to sugarcane
nurseries as is already done in the oldest association. Also there may be possibilities to engage in
transport activities and (progressively) taking over activities from (companies hired by) the nucleus.
Once the management of smallholder outgrower associations becomes more professional further
options of increased ownership and responsibility can be assessed better.
Although sugarcane cultivation is proceeding in all associations and some of the new associations have
harvested already, there exists great uncertainty about the exact content of the contracts (see Chapter
9). This uncertainty is partly caused by the oral/verbal nature of most contracts between
communities/associations and AdX and partly because the agreements are not very specific on issues
like timing, quantities and prices. There are regulations and documents for arranging payments, but
these are not always lived up to and/or clearly understood by smallholders and the leadership of their
associations. This creates confusion and gives rise to conflicting interpretations and expectations as
cultivation of sugarcane and intensive collaboration with a company is new to smallholders. Clear
regulations on rights and responsibilities of the involved actors are required in which unambiguous
agreements are made concerning land use rights, the production process, and the financing and
payments for inputs.
Also in Xinavane land use rights, the delineation of community land and representation of local
communities by local leaders appears difficult. This gives rise to conflicts as there is no clarity about
what has been agreed with whom, what the consequences of these deals are and whether the
agreements were endorsed by the whole community (see Chapter 9). It appears this lack of clarity
decreased as more agreements were written down and NGOs were involved as a (neutral) third party
when agreements were made. This has been a positive development but clearly the government
should increase its presence and visibility by taking responsibility for monitoring and supervising the
land registration and community consultation process. This task forms part of the government’s
responsibility to monitor whether laws and regulations are implemented and to impose sanctions in
case of non compliance, something NGOs are incapable of.
AdX is presently sourcing funds to finance the third phase expansion, with the European Investment
Bank (EIB) being a potential financer. According to AdX the interest rate that needs to be paid will
probably change when other (development) organizations bring in funding. Therefore the payments
44
that smallholders have to make are not clear yet, hence contracts have not been finalized. Also a clear
attitude prevails whereby AdX is regarded as the parent and smallholders as the children, who need to
be taken care of but clearly do not stand on an equal footing. In this context it is not paper contracts or
official documents that define the relation, but AdX managers deciding what is reasonable in their
opinion, based on their observations and the level of trust obtained for each individual case.
Developments are in full swing in Xinavane whereby the internal dynamics within associations are
difficult to monitor and guide currently, as is reflected in the multitude of different opinions and often
contradictory information provided by various stakeholders (see for example footnote at Table 4). As a
first step smallholders and their association management should benefit from organizational training
to clarify each participant’s role and responsibility in the partnership. Clear relations of accountability
and lines of communication should be established to professionalize the presently existing associations
and increase their capacity to act on behalf of their members. Only then transparency and
organizational efficacy might increase to levels that allow for collective decision making and effective
forms of bargaining. However, this will take time and requires considerable inputs from all actors
involved. In the next chapter we will outline an organizational development strategy that helps to
strengthen the company-outgrower partnership.
Smallholders are positive and hopeful about the sugarcane outgrowing activities and it appears there
certainly are possibilities that smallholder sugarcane developments will further benefit the local
population in the Xinavane area, and form an engine for regional growth. However, clearly more
efforts need to be made in strengthening smallholder capacities, and formalizing and clarifying
contracts, certainly with regard to land issues and the distribution of rights and responsibilities.

45
11. Recommendations
In this chapter we present some recommendations which on the one hand pertain to the situation in
Xinavane and are therefore directed towards key actors involved in the sugarcane outgrowing
partnership, whilst on the other hand we make some tentative suggestions for future research that
aims at drawing lessons for improving the smallholder outgrower partnerships with sugarcane
producers.
For activities that could be taken in sugarcane outgrower partnerships:
It is paramount that an NGO or development agency is involved in the company-smallholder
partnership, which is independent of the company. This third party (or fourth, if the government
is counted as well) can safeguard the interests of the smallholders, create space for strengthening
of smallholder associations and offer the necessary support in the form of training to smallholders
which enables the latter to better articulate and safeguard their own interests in the future. It is
recommended that this NGO/development organisation bears a long term commitment to the
programme and can rely on long term financing in order to provide services over a prolonged
period of time. It is critical that this development organisation is not dependent on the will of the
company as in some cases the interests of company and smallholders are clearly not the same.
NGOs which were and are present in Xinavane (KULIMA, ORAM and Gwevahne) might be able to
play a bigger role but require more funding and organisational strengthening to perform these
tasks accordingly. In addition their activities could benefit from external monitoring by a capable
development agency. An example of a suitable development agency with experience in setting up
farmer cooperatives and rural development is GTZ, which could monitor and steer developments,
form a partnership with the local NGOs and support capacity building in these local NGOs and
smallholder associations. Alternatively a Dutch development organisation, SNV, could play a role
here. It is essential that the enrolled development agency and partners NGOs should be locally
present and easily accessible for smallholders. Once the smallholder outgrower associations have
achieved a modicum of self reliance, it is envisaged that smallholders employ someone
themselves to safeguard their interests (possibly paid from levies exacted on cane production).
There might be a role in this for a certification body, which reports to the government, thereby
increasing the government’s monitoring capacity on smallholder sugarcane activities, providing
information independent from the sugarcane mill. Alternatively this certification body could
report to the buyers of sugar (or potential labelling organisation) about practices at production
level.
It is recommended to craft clear agreements (clear in time and activities) between the
government, the company and the local community. Certainly concerning the consultation
process in which local communities cede land to associations there needs to be clear monitoring
whether the community consultation has been fair and comprehensive and whether the
consequences are understood (prior and informed consent). Registration of community land in
the cadastre should take place before engaging in outgrower activities. In case this has not been
achieved, registration should become a matter of priority. Responsible government agencies
should take a more active role in monitoring these agreements, and establish a mechanism for
recourse in case of perceived mal-treatment. It may be necessary to enrol a fourth party in this
tripartite partnership, who represents the smallholders and has the capacity to understand
company rationale as well as the concerns of the local population. In Swaziland this intermediary
role has been taken up by SWADE (Swaziland Water & Agricultural Development Enterprise) a
para-statal organisation that mediates between sugar producers and smallholder outgrowers,
whilst it plays a key role in identifying and directing training needs of the latter (Lukhele, 2010).
This intermediary organisation requires the trust and mandate from both smallholder outgrowers
and the sugar company. One of the key roles for such an intermediary organisation is to check and
monitor whether all parties have the same understanding about what is being agreed. Making
clear agreements goes beyond a written contract (as many people cannot read), and might
include the use of other media besides the written word (e.g. use of video, local radio, and other

46
visual tools for monitoring agreements). For any agreement to work it is paramount that all
signatories appreciate the mutual benefits emanating from the agreement, thus strengthening
each participant’s commitment to the deal. Since any legally binding agreement ultimately needs
to be documented and signed in legal codes, the suggestion of Manjate et al. (2009) to support
pro-deo legal assistance at District level is a useful one, in addition to our plea for the enrolment
of a fourth party.
One of our findings regarding the existing smallholder outgrower partnerships established at
Xinavane, is that the government is virtually absent, precluding the implementation of its
monitoring role. Therefore we recommend that a local government agency becomes actively
involved in future partnerships. The first port of call to take up an active monitoring role in the
partnership is the local SDEA office. They maintain a permanent presence in the area and stand to
benefit from the partnership in terms of technical capacity development, despite the high turn-
over in staff experienced. Also the establishment of pro-deo legal assistance, as mentioned by
Manjate et al. (2009), could strengthen the negotiation process between the various parties
involved, and decrease differences in interpretations. Ideally such a service would operate in close
co-operation with the District Administrator’s office.
There is also a clear need to simplify and clarify the agreements and procedures included in the
signed contracts for all participants in the partnership to act upon. Here we refer to the need to
increase transparency and establish straightforward communication lines and accountability
relationships, avoiding undue disappointments on the part of the partners. In the future
smallholders should be capable of checking the prices given to them by AdX and make a decision
whether they want to continue drawing services from AdX or have some other company do it.
Transparency also requires a payment system which enables (even stimulates) smallholder
outgrowers to check the company and their own association management whether they received
the right amount of money and services, how much money was spend on what activities and how
these expenditures are justified.
Strengthen and increase transparency within smallholder associations, by establishing clear
relationships of accountability and lines of communication. This requires further training of both
the leadership of outgrower associations (possibly involving ‘look and learn’ field trips to fellow
sugarcane outgrowing associations in for example Swaziland, as Agricane is already planning) as
well as general training for smallholder outgrowers on the managerial, technical and group
dynamics aspects of sugarcane production in associations. This might entail lengthy discussions
amongst members and their leadership, but is needed to get all people to understand the
objectives and requirements for successful sugarcane cultivation which allows them to maximize
revenue generation and benefit from smallholder potential. Also by increasing transparency and
the level of self determination, smallholders understand what benefits they can derive from
compliance to their own rules. This might decrease internal bickering and conflicts that outsiders
have little control over.
It is advised to support the formation of MHOVA as an (independent) umbrella organisation in
which smallholder outgrowers are united and can benefit from economies of scale advantages.
Consideration should be given however whether the company should be part of this supra
association or not. Advantages of company representation would be access to management skills,
but a potential danger is the increase of company control over smallholders, whereby the MHOVA
would start to serve the company interests over and above those of the smallholders. It may be
advisable to lodge only common-interest responsibilities within this supra association, since
smallholders can exert less control over MHOVA leadership than over the leadership of their own
association. The increased distance between smallholders and MHOVA management makes the
later prone to increased possibilities for fraud and deterioration of trust of smallholders in
organisation structures.

47
 It is advised to promote the emergence of single purpose associations so that smallholders do not
jeopardize their sugarcane activities with the risks taken in other activities. This does not mean
smallholders should not develop alternative sources of income generation or develop other
activities, but that finances should be strictly kept separate.
Within the present set-up at Xinavane, it is recommended to establish and strengthen clear lines
of communication between the NGOs involved, the leadership of the various associations and
Agricane, which deals with the technical issues. By augmenting their mutual knowledge base and
understanding they can better identify what the main problems in the associations are and
undertake concerted action to address some of these problems.
In the near future, a close look should be taken at the selection criteria for smallholder
outgrowers; by not only considering those smallholders who had land within the land concession
given to the association, but by also including those smallholders who are motivated to
participate and likely to contribute to the success of the sugarcane production activities. The
dividend model of production might suit those smallholders who appear not motivated to actually
participate in sugarcane production, preferring to engage in other income generating activities.
Hence, alternatives should be provided for community members who have little interest in
actively participating in the sugarcane outgrowing partnership.

Research agenda:
This study is only exploratory and many of the subjects touched upon warrant further investigation.
Although the activities in Xinanave have been mapped to some extent, it is still a rough mapping and
more detailed and specific topic directed research is deemed necessary to learn from the path-
breaking developments taking place in Xinavane. Below we present some relevant research topics.
Establish a baseline to assess at a later stage to what extent smallholder sugarcane development
really contributed to poverty alleviation. In order to assess this it is necessary to set a baseline
soon as developments are already under way and it will be difficult to reconstruct the past
objectively after a few years. Through such a baseline study AdX could prove how their project
has contributed to regional development, which they claim as a key objective of their present
activities.
Within this context it is suggested to commission a study mapping the livelihood strategies of
rural populations in the Xinavane area, also to establish how sugarcane cultivation resonates with
the risk management strategies of local households. This study could cover many aspects, such as
land availability, labour availability (establishing how peak demand for weeding activities
interferes with migratory labour by men in South Africa), income from other labour activities, etc..
These aspects will inform questions about the amount of labour smallholders can potentially
perform themselves or whether it will be more interesting to have the company take care of as
many activities as possible and go for a land-rent activity.
Although some characteristics of individual smallholder associations could be identified, there still
is a lot of unclarity about the differences between associations, the internal organisation of
associations, the balances/bookkeeping practices and leadership accountability feed-back loops
within associations. Future research may address the need for more insight on prevailing
organisational and leadership practices as well as (gendered) accountability relations between
individual smallholder outgrowers, household members, association leaders, and the staff
employed by the various organisations involved in the partnership (e.g. staff from AdX, Agricane,
NGOs and government agencies). Such research should yield lessons on what works and what
does not with respect to organisational accountability and management relations.
We recommend further investigation into land tenure and user rights issues, establishing with
whom land use rights reside exactly (with individuals, associations or MHOVA, or the company). It
appears that land use rights are held within the association, but it might be that there are
differences amongst associations concerning this. Also the contribution to and divisions of land
within associations and the internal dynamics of associations have remained largely unclear.

48
12. List of references
Literature list
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supplying cane to the mill.
Açucareira de Xinavane SA (2010). Small Scale Development Project: a socio economic development
project in the Maputo province of Mozambique; feasibility study.
ADE (2009). Framework contract for Multi-country thematic and regional/country-level strategy
evaluation studies and synthesis in the area of external co-operation: Study of the European
Commission’s co-operation with Sugar Protocol countries: Assessment of the Accompanying
Measures for Sugar Protocol Countries (AMSP): 241.
Alencar, C. A. B. d. Pastagem e cana de acucar, irrigados por apersao de baixa presao, Universidade
Vale do Rio Doce, Centro de Ciências Agrárias: 233-241.
Batidzirai, B., A. P. C. Faaij, et al. (2006). "Biomass and bioenergy supply from Mozambique." Energy for
Sustainable Development 10(1): 54-81.
Cachomba, I. S. (2007). Estudo de Base Sócio-Económico do Regadio de Macubulane, Província de
Maputo. IIAM. Maputo: 52.
Colchester, M., N. Jiwan, et al. (2006). Palm Oil and Land Acquisition in Indonesia: Implications for
Local Communities and Indigenous Peoples. Moreton-in-Marsh and Bogor, Forest Peoples
Programme, Perkumpulan Sawit Watch, HuMa, World Agroforestry Centre.
Danish Agricultural Advisory Service (2007). Sugarcane outgrowers schemes study (Draft). Aarhus: 89.
Delegação da Comissão Europeia em Moçambique (2006). EC support strategy for Mozambique, in the
context of the accompanying measures for Sugar Protocol countries. Maputo, União Europeia:
Delegação da Comissão Europeia em Moçambique: 11.
Gengenbach, H. (1998). "‘I'll bury you in the border!’: women's land struggles in post-war facazisse
(Magude district), Mozambique." Journal of Southern African Studies 24(1): 7 - 36.
Gwevhane (2008). Projecto documento de sintese. Delegação da Comissão Europeia em Moçambique.
2008/126-710.
IFAD (2003). Agricultural Marketing Companies as Sources of Smallholder Credit in Eastern and
Southern Africa: Experiences, Insights and Potential Donor Role.
Instituto Nacional do Açucar (2000). The sugar sector in Mozambique: current and future prospects:
23.
ISO (2008). Sugarcane Smallholders in Sub-Saharan Africa: Status, Challenges and Strategies for
Development International Sugar Organization: 51.
Jelsma, I., T. Fairhurst, et al. (2009). Smallholder Oil Palm Production Systems in Indonesia: Lessons
from the NESP Ophir Project. Wageningen, Wageningen University and Research: 99.
LMC International (2004). Appraisal of the Impact of Sugar Pricing Policy and Investment in the Sugar
Industry of Mozambique, INA: 126.
LMC International (2006). An adaption strategy for the Mozambican Sugar Industry, GSPCA: 185.
Lukhele, M. (2010). Joint ventures and smallholder outgrower schemes in the sugar sector of
Swaziland. Paper presented at National Consultative Stakeholder Workshop on Joint Ventures
and Outgrower schemes. Lusaka, IWMI-FASAZ.

49
Manjate, C., E de Oliveira and O. Sibia, 2009, 'Water rights in informal economies: the case of ASAMA,
the Associação dos Agricultores de Marreguele', in: P. van der Zaag (ed.), What role of law in
promoting and protecting the productive uses of water by smallholder farmers in
Mozambique?, Challenge Programme 66, draft report, IWMI, Pretoria.
Marini, A. (2001). Partnership between local peasants and large commercial investors: the case of the
sugar sector in Mozambique. Land Reform, Land Settlement and Cooperatives, . R. D. Division.
Rome, FAO: 17.
MINAG-CEPAGRI (2008). Performance Assessment Framework.
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sugarcane production?" Management Accounting Research 16(1): 81-99.
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of policy, potential and reality." Energy Policy 38(9): 5151-5165.
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Communities in the Mozambican Bilene – Macia District. Law and Governance & Plant
Production Systems. Wageningen, Wageningen University and Research. MSc.: 107.
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Tongaat Hulett (undated). Projecto de apoio social a comunidades.
Vaz, Á. C. and P. van der Zaag (2003). Sharing the Incomati waters: Cooperation and Competition in the
Balance: 109.
Wehrmann, B. (2008). Landconflicts: a practical guide to dealing with land disputes. Eschborn,
Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ).
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Embassy of Italy: 511.

List of interviews
Person Organisation Function Date interview(s)/
personal
communication
01-04-2010
Assistant manager
16-04-2010
Mr. Sancho Cumbi AdX outgrower expansion
20-04-2010
program
21-05-2010
Mr. Ferronha AdX Financial manager 18-05-2010
Head of administrative office
Mr. Michael Mapisane AdX 14-05-2010
in Agricultural Department
Mr. Cees Baars AdX Section manager AdX 05-05-2010
Mr. Collert Moyo AdX Irrigation expert 18-07-2010
Technician for Chihenisse
Mr. Joao AdX 18-05-2010
association
Technician for Olhar de
Mr. Hercilio Manique AdX 29-04-2010
Esperanca and Facasize
Technician for Macuvulane I
Mr. Basiliu AdX 12-05-2010
and Macuvulane II
Agronomist at Agricultural
Mr. Michael Mapisane AdX 14-05-2010
Department of AdX

50
 Maguigane Technician Maguigane 01-04-2010
Mr. David
association association 03-05-2010
Mr. Russel Longhurst Agricane Manager Expansion 28-04-2010
Manager smallholder 28-04-2010
Mr. Ges Bester Agricane
expansion 14-05-2010
Chihenisse 25-05-2010
Mr. Agostino Cossa President
association 22-06-2010
Olhar de
Mr. Paolo Cossa Esperanca President 21-06-2010
association
Macuvulane I
Mrs. Sofia President 28-04-2010
association
Mrs. Rosa Colo association Leader 22-06-2010
Macuvulane II 04-05-2010
Mr. Efram President
association 14-06-2010
Mr. Lumela
Maholele
Mr. Timane Larger farmers 19-05-2010
expansion
Mr. Cossa
Maholele
Mr. Ismael and Abu Larger farmers 19-05-2010
expansion
Mr. Fenias Antonio Maria de Luz
(former) president 22-04-2010
Nguenha Guebuza
Mr. Salamao
Maguigane
Mr. Fenias Management 28-04-2010
association
Mr. Ruben
Mr. Giancarlo EU delegation
Attaché 29-03-2010
Monteforte Mozambique
Agricultural engineer
Mrs. Liria Sambo 22-03-2010
CEPAGRI concerned with sugar
Nhaquila 28-06-2010
activities
Mr. Ussivane SSIP Former project leader 26-04-2010
Magude
Mr. Zeferino Cavele Administrador 25-05-2010
government
Mr. Joao Jeque APAMO Executive director 01-04-2010
03-05-2010
Mr. Olivio Catela Gwevanhne President
04-05-2010
20-04-2010
Mr. Felix Mario Langa Gwevanhne Editor/ secretary
22-05-2010
Mr. Domenico Liuzi Kulima Director 13-04-2010
Responsible officer for 14-04-2010
Mr. Kalistu ORAM
Xinavane activities 24-05-2010
Besides the above mentioned interviews, which are all directly used in the text above, there have also
been many conversations and interviews which were not directly used in this document but certainly
did influence the writing of the report. Examples include smallholders, government officials and NGO
representatives.

51
 Annex 1: Questionnaire used in Xinavane

Date survey:
Name Surveyor:

Questionnaire
Background of the research Sex interviewee M F
The surveyor will explain:
Objectives of the research
How and why the respondent is chosen
How the information will be used
That the information will be analyzed without the name of the respondent and will not be used
outside the survey
The survey will take approximately 30 minutes

1. Background of the Farmer

a. Of which sugarcane producers association(s) you are a member
Maguigane Maguvalane Chinesse Other..............................................

b. How many hectares do you have in this/ these association(s)?

Ha
Ha

c. Age
year

d. Can you read and write?

Yes No
e. What is your level of formal education?
None Primary Secondary Tertiary
f. Since when do you live in this area?
year

g. Since when are you a member of the association?

year

h. How did you earn an income before you joined the smallholder sugarcane association?
Occupation amount of land/ cattle (if relevant)
Peasant growing crops
Peasent raising cattle
Civil servant
Trader
Employee of sugarcane estate
Other_______________________________

52
 2. The current income of the smallholder family
a. What are your household’s four major sources of income? Include, for example, remittances
from family members who live in South Africa or pension from former employment. Rank what
is most important to you.

a. Source of income a. If relevant amount of b. Ranking of time

cattle or size of land occupied with activity.
1.

2.

3.

4.

b. Rank which of your sources of income consumes most of your time.

3. The services provided by stakeholders
What are the responsibilities of actors concerning the following activities: Please indicate if
you are satisfied with these services provided.
smallholders Association AdX/ NGO Govern Other….. Satisfied
Uni- ment with perfor-
trans mance

Fertilizer Y N
application
weeding Y N
Irrigation Y N
system
maintenance
Financial Y N
issues
Road Y N
maintenance
Pest and Y N
desease
control
Harvesting Y N
Training on Y N
technical
issues
Organisational Y N
trainings

53
 4. Motivations and expectations in starting sugarcane production
a. Who approached you about the possibility to join the association?
Government Other members Community leaders Company .......................................

b. What did you contribute to become a member of the association? (can choose more)
Land Labour Money Other, namely ................ Nothing
....................
If relevant, can you indicate how much of each?
Land Labour Money other

c. What were/ are the 3 most important benefits for you in growing sugarcane and
joining the association?
1.

2.

3.

d. What are the 3 most unpleasant aspects of producing sugarcane in the association?
1.

2.

3.

e. Do you hire labour? Why, or why not?

No, I do all No, the AdX No, other Yes, Yes, have Yes, other…...........
activities or the reasons...... too another
myself association old activity to
management attend to.
arranges all
labour.

f. Sugarcane production has increased the quality of my live.

True False

54
 5. Contracts
Please indicate about the following statements whether in your opinion they are true or false.

a. It is clear to me how the payment system functions. T F

b. It is clear to me how much deductions I get and what the deductions are for. T F

c. The management has explained me clearly what contract we have with AdX. T F

d. It is the association management which is responsible that the work on my

piece of land gets done.
e. My rights and responsibilities in the association were clearly explained to me. T F
f. When I have a question about my rights and responsibilities in the association, there T F
are people in the management who will explain it to me.
g. I can show there is a written contract between me and the association explaining T F
what I have to do and what responsibilities the association has.
h. If the company does not live up to its agreements, there is nothing we can do about T F
it.
i. The obligations of the association towards AdX are clear to me. T F
j. If the association decide we want to grow another crop we can stop to grow T F
sugarcane.
k. I am responsible only for the irrigation system and weeding on my plot of land gets T F
done.
l. The statutos is the only agreement between me and the association. T F
m. The association management is responsible for the labour that needs to be done on T F
my piece of land.
n. The AdX is responsible for all the work that gets done on my piece of land. T F
o. When I want to leave the association I can sell my plot to anybody I like. T F
p. The agreements between AdX and the smallholders are clear to me T F

q. When I have a problem concerning sugarcane production I go directly to the T F

company.
r. The rules for disciplining members who do not perform their duties correctly T F
functions well.
s. Can you roughly indicate about how many members in this association do not perform
their tasks well?
4-7 8-12 12>
1-3

55
 6. TRUST
Please indicate about the following statements whether in your opinion they are true or false.
a. Working in an association brings me more advantages then working individually. T F
T F
b. The management of the association safeguards my interests well.
T F
c. When the payments take place I can check whether I received the right
amount of payment.
T F
d. The company cares about the wellbeing of the outgrowers.
e. The members of the association have influence on the decisions made by the T F
management.
T F
f. There are plenty of opportunities for the smallholders to indicate towards
the management what the problems are.
T F
g. The company does what it says it will do (keeps its promises)
T F
h. I trust the association and company to give me the correct payment.
T F
i. The company helps us to achieve high sugarcane yields.
T F
j. I receive government support to grow sugarcane.
k. The government helps us when we have a dispute with the company T F
T F
l. The management communicates clearly its agreements with AdX and
Government with its members.
T F
m. NGO’s have supported us well in setting up and strengthening the
association.
T F
n. The technicians of the AdX are capable and teach us well how to grow
sugarcane.
T F
o. We had proper training in understanding how an association should
function.
T F
p. Almost all members do their best to make the association function well
T F
q. A problem in the association is that many members are not doing their
work for the association properly.
T F
r. Because I work in the association I receive inputs for other crops as well.
T F
s. The management of the association has the skills and capacity to lead the
association professionally.
T F
t. When we have a concern about the functioning of the association, the
management of the association takes our concerns seriously.
T F
u. The association provides credit to its members.
v. The association provides us with the opportunity to join interesting trainings. T F

w. The NGO’s provide us with trainings that are use full to us. T F
T F
x. Our association really needs more training to function properly
T F
y. The company provides us with trainings that are use full to us

56
 Annex 2: AdX Cane Payment Rules

1. Interpretation
1.1 In this agreement the following expressions shall have the meanings set out below:
(a) "MGB" means the Mill Group Board made up of representatives of the GROWERS and the
COMPANY, and having as its principal object the provision of services aimed at facilitating the
transport and reception of cane delivered to the MILL in the interests of both the GROWERS
and the COMPANY.
(b) "COMPANY" means Aqucareira de Xinavane SA.
(c) "MILL" means the sugar mill owned by the COMPANY.
(d) "MILLING SEASON" means the period in each year during which the MILL is operating for the
purpose of crushing cane.
(e) "GROWERS' means all persons supplying cane to the MILL, including MCAI, THA and the
COMPANY as a miller-cum-planter.
(f) "APPEAL COMMITTEE' means a committee consisting of a Chairman and two other members
who are accountants practicing in Mozambique whose function is to resolve disputes falling
within its jurisdiction.
(g) "YEAR" means a calendar year ending on 31 March.
(h) " THA" means Tongaat Hulett Aqucar, Limitada in its capacity as a GROWER.
(i) "MCAI" means Mhova, Canavieiros Associado de Incomati, Limitada
(j) "ERC" means estimated recoverable crystal, being the mass of sucrose in crystalline form that
by means of laboratory testing is estimated to be recoverable from any consignment of cane
delivered to the MLL for crushing.
(k) "RAW SUGAR" means unrefined brown sugar for sale on the domestic and export markets in
bulk or packed in bags containing not less than 25 kgs of sugar.
(I) "PARTIES" means the COMPANY and MCAI.

1.2 If the last day of a period of time falls on a day which is a Saturday or a Sunday or a public holiday,
references to "that day" shall be read as referring to the first business day following a after that
day.

1.3 Unless the context clearly indicates a contrary intention, words importing the singular number
shall include the plural and vice versa, words importing any gender shall include the other genders
and words importing persons shall include corporate bodies and vice versa.

2. Cane Weighing and Testing

2.1 All cane weighing and testing shall be the responsibility of the MILL.
2.2 Cane delivered to the MILL will be weighed, sampled and subjected to laboratory tests to
determine the estimated recoverable crystal in accordance with procedures laid down by the Mill
from time to time.
2.3 The MILL will inform MCAI on a weekly basis in writing of the estimated recoverable crystal in the
cane delivered by it to the MILL during the preceding week.

57
3. Determination of Cane Price
3.1 The payment to GROWERS for cane sold to the MILL shall be calculated in metical on a relative ERC
basis.
3.2 The gross revenue generated by the sale of sugar manufactured by the MILL in each MILLING
SEASON will be determined by multiplying the tons of RAW SUGAR produced by the MILL by the
average price per ton of RAW SUGAR realized through sales of sugar produced by the MILL on the
local and export markets.
3.3 The marketing policy of the COMPANY will be to obtain the best prices available for the RAW
SUGAR produced by the MILL subject to any need that may exist to ensure that the local market is
adequately supplied before sugar is exported.
3.4 For the avoidance of doubt, the marketing, selling and distribution of RAW SUGAR is the sole
responsibility of the COMPANY.
3.5 The net revenue will be arrived at by deducting from the gross revenue:
(a) Selling and distribution expenses incurred by the COMPANY, including:
(i) All packing and packaging material in 25 kilogram or larger packs, domestic and
export marketing and selling costs, including agents fees and commissions and the
cost of hedging on international markets.
(ii) Storage costs and any other carrying costs incurred in connection with sugar stocks,
both at the MILL and in transit to final destination.
(iii) Transport and loading costs and forwarding agents fees incurred in connection
with the sale of sugar.
(iv) Insurance, including relating to sugar stocks.
(b) The cost of testing cane delivered to the MILL.
(c) The expenses of the MGB which are not recoverable in terms of clause 4.
(d) The expenses of the APPEAL COMMITTEE.
(e) Any other costs which the MGB decides should be deducted from gross revenue including,
but not limited to, any levies which may become payable to APAMO and any other such
industry association.
3.6 60% of the net revenue arrived at after deducting from the gross revenues the costs referred to in
clause 3.5 will be allocated to the GROWERS and is hereafter referred to as "the GROWERS'
allocation". The remaining 40% of net revenues will be retained by the COMPANY as the
consideration due to it for milling.

4. The GROWERS' Allocation

4.1 Each GROWERS' share (including that of MCAT) of the GROWERS' allocation referred to in clause
3.6 shall be calculated using the tons of estimated recoverable crystal delivered by each GROWER
as determined in the manner set out in clause 2;
4.2 There shall be deducted from the amount allocated to MCAI:
(a) The actual cost incurred by THA and / or the COMPANY in harvesting, loading and
transporting MCAI's cane.
(b) Any other amounts owed by MCAI to the MGA, THA and/or to the COMPANY, in terms of
any other agreement.
(c) It is recorded that the harvesting, loading and transporting of MCAI's cane in each season
will be undertaken by THA and/or the COMPANY for MCAI's account on terms no less
favourable than applicable to THA.

58
5. Payment to GROWERS
5.1 At the end of the first month of each MILLING SEASON the COMPANY will give MCAI:
(a) An estimate of the price per kilogram which it will receive for RAW SUGAR produced during
that MILLING SEASON.
(b) An estimate of the expenses referred to in clauses 3.5 and 4.2,
5.2 The estimates made in terms of clause 5.1 will be updated by the COMPANY on a monthly basis.
5.3 The COMPANY will estimate the amount which will become payable to MCAI in accordance with:
(a) The estimated recoverable crystal delivered by the MCAI determined in the manner set out
in clauses 2 and 3;
(b) The estimated mass of RAW SUGAR to be produced by the MILL in the season concerned;
(c) An estimate of the expenses to be deducted from the revenue attributable to the cane
delivered by MCAI to the MILL so as to arrive at an estimate of the payment to which MCAI
will become entitled.
5.4 The estimates made in terms of clause 5.3 will be updated by the COMPANY on a monthly basis.
5.5 MCAI will be paid 30 days after the end of each month during which it delivered cane to the MILL
70% of its estimated entitlement for the season-to date deliveries of cane, less all prior payments
credited to it for cane delivered to the MILL during that MILLING SEASON.
5.6 On the last day of the second month following upon the end of the MILLING SEASON, and on the
last day of each of the next four consecutive months, MCAI will be paid an additional 3% of its
estimated entitlement calculated as at the last day of the immediately preceding month.
5.7 When all of the sugar produced during a MILLING SEASON has been sold and the actual amount
payable to MCAI has been determined, MCAI will be paid the balance of the amount due to it for
cane delivered to the MLLL during that MLLLING SEASON.

6. Adding Value to RAW SUGAR by the COMPANY

6.1 RAW SUGAR produced by the MILL for its own use or in any way is used by the MILL to add further
value to RAW SUGAR, and which would have been sold by the MILL on:
6.1.1 The Mozambique domestic market: then it shall deem a transfer price for that RAW
SUGAR calculated using the price of RAW SUGAR packed in 25 kilogram bags ruling in the
local market at that time.
6.1.2 The Export market: then it shall deem a transfer price for that RAW SUGAR calculated
using the price of RAW SUGAR on the export market (defined as the market to which the
sugar in question would otherwise have been exported) .

7. Byproducts
For the avoidance of doubt it is recorded that the value of by products such as bagasse and molasses
will not be brought to account in the calculation of gross revenue in terms of clause 3.2.

8. Disputes
Any disputes which may arise concerning payments made or to be made to MCAI for cane delivered to
the MILL which cannot be resolved by the PARTLES shall be referred by the PARTIES to the APPEAL
COMMITTEE whose decision shall be final and shall not be subject to appeal.

59
9. The APPEAL COMMITTEE
9.1 The PARTIES shall, by the beginning of each YEAR, establish an APPEAL COMMITTEE consisting of
a Chairman and two ordinary members.
9.2 The two ordinary members shall be chartered accountants practicing as such in Mozambique.
9.3 One of the ordinary members shall be appointed by the COMPANY and the other ordinary
member shall be appointed by MCAI.
9.4 The ordinary members shall appoint the Chairman who shall be an independent person
experienced in the sugar industry.
9.5 The members of the APPEAL COMMITTEE shall hold office for a period of three years at the end of
which time they will be eligible for re-appointment.
9.6 If either the COMPANY or MCAI fails to appoint a member of the APPEAL COMMITTEE, or if there
is a temporary vacancy, the remaining members may continue to act provided that their number
does not fall below two, the quorum in such circumstances being two members.
9.7 The members of the APPEAL COMMITTEE shall be remunerated for their services at such rate as
may be agreed from time to time between the members of the Committee and the PARTIES.
9.8 The quorum for a meeting of the APPEAL COMMITTEE shall be three. If a quorum is not present at
a meeting, that meeting shall stand adjourned until the same time one week hence. If, at a re-
convened meeting, the three members are not present, the meeting may proceed with a quorum
of two.
9.9 Each member of the APPEAL COMMITTEE shall have one vote. If an issue is put to the vote the
decision of the majority shall be the decision of the Committee.
9.10 A person appointed to fill a casual vacancy occurring on the APPEAL COMMITTEE shall hold office
for that period of time that the member whom he replaced remains absent.
9.11 The function of the APPPEAL COMMITTEE is to adjudicate and resolve disputes referred to it by
the PARTIES in accordance with these rules that the APPEAL COMMITTEE will have no power to
alter.
9.12 The APPEAL COMMITTEE shall have the discretion to award costs and to decide upon the amount
of such costs or, alternatively to give directions as to how the amount of such costs is to be
calculated and finally determined.
9.13 The awards of the APPEAL COMMITTEE shall:
(a) Be given in writing to the parties to the dispute and to the PARTIES.
(b) Be final and binding.

10. Amendments
10.1 These rules shall be reviewed by the COMPANY and MCAI at intervals of not more than XX years
with a view to proposing amendments made necessary by changed or otherwise unforeseen
circumstances.
10.2 No amendment shall come into effect until it has been signed on behalf of the COMPANY and on
behalf of MCAI.

60
 Annex 3: Original AdX small scale growers cane area and production summary

Food Cane
Sugar cane Sugar crops hectares
Year No of Tonnes Tonnes
Scheme Name Estabd farmers Hectares p.a. p.a. Hectares per farmer

Macuvulane 2005 180 185.0 22,200 2,741 0 1.03

Maguiguane 1998 66 90.0 7,650 944 0 1.4

Old
Chianhisse 2008 40 200.0 18,000 2,222 0 5.0

Total 286 475.0 47,850 5,907 0 1.7

Macuvulane 2 2008 89 73.0 8,030 991 4 0.8

Maria de Luz
Guebuza 2009 200 263.0 28,930 3,572 0 1.3

Hoyo-Hoyo 2009 150 189.0 21,340 2,635 14 1.3

Buna 2009 110 218.0 24,200 2,988 28 2.0

Maholele
Macamo 2009 4 72.0 6,820 842 0 18.0

New
6 de janeiro 2009 200 74.0 9,900 1,222 37 0.4
Olhar de
Esperança 2009 250 107.0 11,770 1,453 0 0.4
Maholele G 1st
Stage 2009 6 266.0 29,920 3,694 0 44.3

Chichuco 2010 150 95.0 13,420 1,657 39 0.6

Maholele
Mutombene 2010 4 56.0 5,170 638 9 14.0
Tres de
Fevereiro D 2010 10 133.0 18,260 2,254 34 13.3

Mucombo Est 2010 80 70.0 8,400 1,024 30 0.9

Total 1,253.0 1,616.0 186,160 22,970 195 1.3

Total for
SSG 1,539 2,091.0 234,010 28,877 195 1.4

61
 Annex 4: Overview of income of Macuvulane I smallholders in 2009.
Overview of income of Macuvulane smallholders in 2009. 1US$ = 28.5 Mtc.
Primarily figures from Macuvulane I were used, only if not available general data from Xinavane SSG feasibility study was used.
Total Total MTn./ ton MTn./
amounts in amounts cane ton cane
Mtc. in US$ according according
to own to AdX
calculation sources
with figures
from
Macuvulane
association
Basic info Macuvulane I Amount of cane
harvested (tons) 17504

Amount of ha 185
No. of members 180
Average tons/ ha 95
General Info (for 2009) Average sugar price
Mozambique (Mtc.) 15354.66

Actual ERC %
10.57%
Macuvulane
Adjusted AdX ERC 11.61%
Adjusted Tons Cane
ERC in Macuvulane 2031.8

Gross Revenue Macuvulane 31,197,550 1,094,651

Levies and surcharges Selling and distribution cost
Costs of testing cane
Expenses of the AdX
Expenses of the AppealCommittee
APAMO Levies
Other costs as identified by AdX
Total 1,255,573 44,055 72 2.7
Net Revenue 29,941,977 1,050,596 1,710.54
Division of proceeds (DOP 60/40), 60% of revenue for Macuvulane assocation 17,965,186 630,357 1,026
Grower's allocation Final Revenue from cane 17,965,186 630,357 1026 992
Deductions Harvest and delivery Harvesting
to mill (performed by
718,238 25,201 41 52
Unitrans)

Loading 1,308,458 45,911 75 52.2

Haulage 2,014,762 70,693 115 162.7
Irrigation Pump and system
maintenance (incl.
487,432 17,103 - 2,635
theft and vandalism
compensation)
Electricity 1,349,427 47,348 - 77.1
Bulk (=Water) costs 395,530 13,878 - 22.6
Ratoon cultivation: Chemicals 634,550 22,265 - 3430
Fertilizers 1,768,035 62,036 101 69.0
Tractors 832,685 29,217 - 4501
Ripeners 236,134 8,285 - 1276.4
Road maintenance: 234,266 8,220 - 13.4
Association
management and 1,216,589 42,687 70 71
other costs
Total income for
smallholders,
without deduction 7,985,669 280,199 456
management

62
Actual payments to
smallholders by
6,769,080 237,512 387
association

Average income per smallholder 37,606 1,320

Not included is charge for replanting funds 726,387 25,487 41.5
Replanting per farmer 4,035 142
Average income per smallholder incl. replanting fund (1.03 ha) 33,571 1,178

63
 Annex 5: Overview wateruse in Incomati area (Source ARA-Sul)

Area (ha) Volume Culturas

Nº Ord Nome do utente Distrito Fonte/Rio
Local Potencial Irrigada (m3)/mês Praticadas

1 Assoc. dos Agric. de Gavaza Gavaza Moamba Sabie 16.00 Diversas

2 Aron M. Mulhovo Gavaza Moamba Sabie 42.34 Diversas
3 Abilio Antonio Pilica Gavaza Moamba Sabie 60.00 Diversas
4 Alson Cossa Ligongolo Moamba Sabie 34.43 Diversas
5 Associação dos Agropécuaria Ligongolo Moamba Sabie 20.28 Diversas
6 Johane Mufandasse Mulhovo Chavana Moamba Sabie 86.00
7 Samuel Mfokwa Zita Chavana Moamba Sabie 15.08
8 Tomas Fredericos Mandlate Chavana Moamba Sabie 100.00 Diversas
9 Elias Mungone Ncavo Chavana Moamba Sabie Diversas
10 Jose Elias Ncavo Chavana Moamba Sabie Diversas
11 Abdul Rachid Samat Bemate Chavana Moamba Sabie 76.30 Diversas
12 Julio Macamo Chavana Moamba Sabie 22.35 Diversas
13 Alfredo Jeque Tivana Chavana Moamba Sabie 31.39 Diversas
14 Isac Tivana Chavana Moamba Sabie Diversas
15 Paulo Mundlovo Chavana Moamba Sabie Diversas
16 David Mucavele Chavana Moamba Sabie Diversas
17 Juliasse Ntui Chavana Moamba Sabie 6.50 Diversas
18 Jeremias Ern. Malandzele Missão Moamba Sabie 14.40 Diversas
19 Alfredo Macumbule Missão Moamba Sabie Diversas
20 Julio Mandlate Missão Moamba Sabie 4.00 Diversas
21 As. dos Agric.Graça Machel Missão Moamba Sabie 52.00 Diversas
22 Valdim M. Ibraimo. Mula Chiquizela Moamba Sabie 14.49 Diversas
23 Assoc. dos Agric. 7 de Abril Chiquizela Moamba Sabie Diversas
24 Artur Francisco Ngovene Chiquizela Moamba Sabie 22.00 Diversas
25 Xarifo M. Ibraimo Mula Chiquizela Moamba Sabie 18.80 Diversas
26 Agri sul Limitada Chiquizela Moamba Sabie 120.00 105.00 126,540 Bananeiras
27 Filipe F. Dimande Machava Sabie bloco 5 Moamba Sabie Diversas
28 Gregorio Mandlate Sabie bloco 5 Moamba Sabie Diversas
29 Alberto Manuel Cossa Sabie bloco 5 Moamba Sabie Diversas
30 Filipe Ant'onio Uamusse Sabie bloco 5 Moamba Sabie Diversas
31 Filimone Ubisse Sabie bloco 5 Moamba Sabie Diversas
32 Fenias Abel Bila Sabie bloco 5 Moamba Sabie Diversas
33 Francisco J. Dimande Sabie bloco 5 Moamba Sabie Diversas
34 Capitine Mpunze Sabie bloco 5 Moamba Sabie Diversas
35 Roberto Jossias Cumbe Sabie bloco 5 Moamba Sabie Diversas
Daimane
36 Hortencia Bento Boaventura Moamba Sabie 40.00 Diversas
Ponte
37 Antonio Luis Muconto Daimane Moamba Sabie 20.00 Diversas
38 Gabriel Pedro Manjate Sipembane Moamba Sabie 240.00 Diversas
39 Assoc.dos Camp.Regantes Daimane Moamba Sabie Diversas
40 DEULCO MJ 3 Lagoa Daimane Moamba Sabie 250.00 60.00 Soja
Sabie bloco
41 Alina Luis Ubisse Moamba Sabie Diversas
50
Sabie bloco
42 Francisco J. M. Tivane Moamba Sabie Diversas
50
Sabie bloco
43 Sergio U. João Ol.Fretas Moamba Sabie Diversas
50
44 Daniel Ananias Matusse Sabie bloco Moamba Sabie 100.00 5.00 4,167 Diversas

64
 50
Sabie bloco
45 Geraldo Lucas Fulane Moamba Sabie 106.8 2.50 2,083 Diversas
50
Sabie bloco
46 Alcido Muchanga Moamba Sabie Diversas
50
Sabie bloco
47 Dinis R. Zunguza Moamba Sabie Diversas
50
Sabie bloco
48 Henriques S. Mahuco Moamba Sabie Diversas
50
49 Henriques Augusto Bila Valha Moamba Incomati Diversas
50 Irmãos Hortas Borges Moç. Ld. Valha Moamba Incomati 200.00 9.50 7,917 Diversas
51 Jose R. Lazaro Samuel Valha Moamba Incomati Diversas
52 Andre Ogenio Machava Rainha Magude Incomati
53 Jacinto Manuel Chivure Valha Moamba Sabie Diversas
54 Rachid Fazelour Bemate Chiquizela Moamba Sabie Diversas
55 Arbay Day Malengane Moamba Incomati 105.00 Diversas
56 Jaime Samuel Zita Malengane Moamba Incomati 30.00
57 Elmone Tchangule Malengane Moamba Incomati
58 Fernando Nwamba Malengane Moamba Incomati
59 Carlos Jorge Machava Malengane Moamba Incomati 75.00 Diversas
60 Penina Ripinga Mabuza Malengane Moamba Incomati 70.00 Diversas
61 Tomas Chic. Ripinga Mabuza Malengane Moamba Incomati 50.00 Diversas
62 Mussique Matsolo Malengane Moamba Incomati 50.00 Diversas
63 Leonardo Orland. Chirindzane Malengane Moamba Incomati Diversas
64 Orlando Chirindzane Malengane Moamba Incomati Diversas
65 Domingos Antonio Magaia Malengane Moamba Incomati 47.00 Diversas
66 Vicente Augusto Bila Malengane Moamba Incomati 200.00 Diversas
67 Titos Cossa Muculo Malengane Moamba Incomati 73.00 Diversas
68 Celiasse Muculo Malengane Moamba Incomati 40.00
69 Jaime Sulemane Nguenha Malengane Moamba Incomati Diversas
70 Armando Mungone Chauque Malengane Moamba Incomati Diversas
71 Assoc. Agric. De Malengane Malengane Moamba Incomati 705.00 205.00 170,833 Cana/Açucar
72 As. dos Agric. Chivonanhelety Malengane Moamba Incomati Diversas
73 Rafael Siquel Malengane Moamba Incomati Diversas
74 Zeferino A. A. Cavele Malengane Moamba Incomati Diversas
75 Joaquim Bocoda Malengane Moamba Incomati Diversas
76 Pacheco Ismael Day Malengane Moamba Incomati Diversas
77 Afonso Tembissa Malengane Moamba Incomati Diversas
78 Açucareira de Xinavane Xinavane Manhiça Incomati 13,064.80 13,064.80 10,887,290 Cana/Açucar
79 Assoc.Agricultores Maguiguana Magude Magude Incomati 90.00 Cana/Açucar
80 As.Agricultores Macuvulane 1 Magude Magude Incomati 185.00 Cana/Açucar
81 As..Agricultores Macuvulane 2 Magude Magude Incomati 77.00 Cana/Açucar
82 As.Ag.Maria da Luz Guebuza Magude Magude Incomati 263.00 Cana/Açucar
83 Assoc.Agricultores Hoyo Hoyo Manhiça Manhiça Incomati 220.00 Cana/Açucar
84 Assoc.Agricultores Chianhiço Manhiça Manhiça Incomati 200.00 Cana/Açucar
85 Assoc.Ag.Olhar de Esperança Magude Magude Incomati 107.00 Cana/Açucar
86 Assoc. Agricultores Macamo Magude Magude Incomati 62.00 Cana/Açucar
87 Assoc.Agricultores Buna Manhiça Manhiça Incomati 194.00 Cana/Açucar
88 Assoc. Agricultores Gito Magude Magude Incomati 266.00 Cana/Açucar
89 Açucareira de Maragra Maragra Manhiça Incomati 6,440.00 4,051,855 Cana/Açucar
Moamb bloc.
90 Assoc.Agric.da Moamba b.1 Moamba Incomati Diversas
1
Moamb bloc.
91 Assoc.Agric.da Moamba b.2 Moamba Incomati Diversas
2
92 Central Hidroelectrica Bar.Corumana Moamba Sabie prod. energia
Total: 15,896 1,939 15,250,684

65
 Annex 6: Social services program of Tongaat Hulett concerning Xinavane

66
67
 Annex 7 Photos as illustrative material

Photo 1. Unitrans is the company which is hired

by AdX to execute the harvesting, loading and
transportation of the cane to the sugarmill. The
loading of the cane is completely mechanised and
arranged with large machinery. Cutting, loading
and transporting of cane is a considerable cost for
smallholders, consuming roughly 1/5 of the gross
value of the sugarcane for smallholders.
Smallholders check how many trucks with cane
leave the association fields.

Photo 2. Sugarcane harvesting, after it has

been burned, is performed by hand. It is AdX
which determines when a field is harvested and it
is Unitrans who arrange the cutting, loading and
haulage of the sugarcane to the mill. In the
cutting process there are no smallholders
involved either.

Photo 3. The pumping system (pumping water

from the Incomati river) is managed by
smallholders. Smallholders carry responsibility for
monitoring the equipment and are instructed by
the AdX technician for their association when to
turn on the pump. The pumpattendents receive
some training from AdX and sometimes worked as
pump attendend at AdX before. When something
breaks it is AdX who arranges the repair, which is
then paid for by smallholders via deductions on
their income.

Photo 4. The expansion program is in full swing,

creating 1616 ha of smallholder sugarcane area
and an even larger nucleus expansion. This
picture is taken in the Maholele area where AdX
nucleus is expanding but also larger smallholders
are located. These larger smallholders have plots
ranging from roughly 40 to 100 ha. The landrights
of these smallholders and their decission on
providing land for sugarcane production is least
disputed.

68
 Photo 5. This ambulance illustrates that many services in
Xinavane carry the AdX logo (left door) and are most likely
paid for by AdX. Besides ambulances there is also a garbage
tractor and police cars carrying the AdX logo, and many
people in the area wear cloths from AdX or Unitrans. It is
clear the whole village is dependant on the sugarmill. AdX
also has a social help project for the communities in their
sugarcane production area. It also states however that their
contribution to poverty reduction is through the economic
impuls their activities generates in the area.

Photo 6. Airplanes are used to apply

herbicides, pesticides and ripening
agents. These planes also spray the
smallholder fields. Before the spraying
takes place the smallholder
management is informed by AdX that
spraying will take place at the agreed
moment. The management then
communicates this to the smallholders,
who take care that they are not in the
fields during the spraying.

Photo 7. This smallholder in Macuvulane I association

poses next to his plot. Some maize is seen in the
foreground. Smallholders use the space between the road
and sugarcane for the cultivation of other crops as maize.
Although this appears an efficient use of space, it also
creates difficulties sometimes as areal spraying destroys the
crops of farmers, who hence demand compensation. There
should be clear communication between company and
smallholders about landuse and compensations.

Photo 8. Although most smallholder plots are

irrigated by a dragline sprinkler system, there are
also smallholders participating with a pivot
system (notably Chihenisse). These pivot system
operators are hired by AdX to operate the
system and received AdX clothing and training to
do so. Unfortunatly the explanation on the
operating panel is in English, whilst the operators
only speak Shangana. The operators in this
picture are from Chihenisse community but are
not members of the smallholder sugarcane
outgrower association.

69