Farming Preps Cause the Sinking Stomach Sensation

A DRIVE around the countryside brings a sickening feeling of despair. There is very little land preparation for the 2009-2010 farming season on the farms, particularly the large-scale farming areas. Normally by now, tilling of land would be underway.

When the Zimbabwe Independent, drove along the Harare-Shamva Road, an area with some of the best soils in the country, tilling of most farms had not even started, yet this area is considered to be one of the country’s prime farming areas.

 

So what exactly is the problem?

Government does not seem to learn from past mistakes. Once again, preparations for the next agricultural season are off the rails as the country faces serious financial problems for farming activities.

With poor planning, the country faces another poor harvest even if it receives good rains this season.

In what appears like deja vu, there are hazy preparations for the agricultural season which could lead to massive shortages.

Zimbabwe is targeting around 65 000 hectares of land under tobacco, 2,4 million tonnes of maize and about 150 000 hectares under cotton.

These figures appear modest when compared to what was achieved when the country’s agriculture sector was at its peak, and it is slowly becoming clear that efforts to revive the sector are a mirage.

Analysts in the agriculture sector said more than US$2,5 billion is needed to ensure a successful season, but what has been raised so far is an insignificant US$280 million.

Of the US$280 million available for the 2009-10 agriculture season, US$210 million is meant for commercial farmers and would be administered through banks while the other US$70 million was mobilised by non-governmental organisations for communal farmers.

Farmers’ organisations said preparations were still hazy.

They said chaotic preparations for the agriculture season are a threat to the country’s food security as well as efforts to revive industry which is stuttering at around 30% of capacity.

By now, preparations for the production of both food and cash crops should have been concluded but it appears set targets might not be met unless there is a sharp change in policy and coordination of efforts to revive industry.

Paul Zacharia, director of the Zimbabwe Farmers’ Union, said: “There is nothing clear yet and what we thought was going to the communal farmer has been diverted and is now available to the commercial farmers through the Grain Marketing Board. Commercial farmers should have gotten loans from banks.

“Communal farmers need up to US$800 million to meet their needs during the year yet we have had promises of US$70 million and this is far short of what is needed.”

Worsening an already dire situation is the fact that there is confusion over who should play what role to stimulate the sector which drives the entire economy.

It appears that policy makers have not learnt anything from the failure of the last season, which was largely due to poor preparations.

There is not much in terms of land preparations at most large scale farms as farmers who had enjoyed subsidies from government are still grappling with the reality that they now have to finance their farming activities.

While commercial farmers appear to have been catered for through the US$210 million loan facility, there are problems with accessing the finance.

Bankers said they have to follow a meticulous process of identifying farmers who would be able to repay.As such, there is need to have collateral which is a problem since farmers cannot borrow against their 99-year leases.

President of the Bankers Association of Zimbabwe John Mangudya said this is the month when land preparation should be completed and they were looking for the best way forward.

“The best way forward is that each farmer approaches the bank and an assessment to check if the farmer would be able to pay is done.

“Once the loan application has been approved by the bank, the farmer takes a bank cheque to the GMB for the purpose of payment of inputs,” said Mangudya.

Farmers are then expected to repay the loans after nine months.

While it would take farmers nine months to repay the loans, the banks are expected to have repaid the loans they have received through lines of credit by March next year, thus there is need for bridging finance.

It is therefore imperative that banks recover their loans after farmers have harvested. The banks also have a duty to ensure farmers deliver their crops to the GMB.

“We are expecting minimum security so that the farmers would be able to secure the loans and we are looking at asset-based lending where the farmers can borrow against the crop which was realised last year, or against their livestock,” said Mangudya.

“We are also lending against some of the equipment that the farmers received last year and it would be a pity if the farmers refused this. Farmers with first class properties may also be able to borrow against these.”

These loans are specifically for inputs, meaning farmers have to source finance for fuel, power, wages and other necessities.

This presents a problem as banks are not in a position to give much since they are also caught in a liquidity crunch and at the same time the farmers do not have the collateral that is needed.

Speaking at a media briefing that was called by the Reserve Bank of Zimbabwe and attended by several executives of banks, ZB Financial Holdings chief executive Elisha Mushayakarara said it was a pity that not much progress had been made.

“It is a pity that we are already in October but we are not agreed on where we are really going.

“It is not easy but the agricultural season is upon us, the rains will come and again they will be gone and next year we will sit here again with nothing to eat,” said Mushayakarara.

He urged the banking sector to work together for the success of the coming season.

A failure to produce enough food would see the country importing food once again and this would put pressure on the financial resources which the state is struggling to mobilise.

This would be made worse if the country fails to produce cash crops such as tobacco which contribute significantly towards Zimbabwe’s export receipts. In a good season, agriculture accounts for 18% of the country’s gross domestic product and 41% of Zimbabwe’s export receipts.

Zimbabwe’s agriculture industry also accounts for around 15% of formal employment.

Leonard Makombe