HomeBusiness DigestCounting the cost of chaotic land reform

Counting the cost of chaotic land reform

ZIMBABWE’S chaotic land reform exercise which began in 2000 continues to haunt the economy — 16 years on. Commercial farmers and formal agricultural structures have been destroyed and resultantly land has been rendered unbankable.

By Taurai Mangudhla

Currently, only about 4% of agricultural funding is coming from banks
Currently, only about 4% of agricultural funding is coming from banks

Vast tracts of arable land have been left idle, reflecting a lack of resources, skill and capacity on the part of the settled farmers.

Only those close to the corridors of power have benefitted from free tractors and other farming implements as well as perennial input schemes that cost taxpayers hundreds of millions over the years.

Banks, both local and foreign, have remained reluctant to fund agriculture, citing lack of collateral to be securitised by the new farmers with 99-year old leases.

Various initiatives, including dialogue between banks and the government, have not yielded much.

As a result, farmers have had to rely on either their own resources or on contract farming. However, contract farming tends to favour cash crops, like tobacco, at the expense of food crops such as maize.

Currently, only about 4% of agricultural funding is coming from banks, according to farmers.

Zimbabwe Commercial Farmers’ Union president Wonder Chabikwa said agricultural finance remains a challenge as farmers are not accessing funds from the banking sector.

“For this season, we have not accessed much money from the banks. It’s just 4% of the funding that we received from the banks and 96% has been from contract farming and the command agriculture (programme),” Chabikwa said.

“The issue of 99-year leases has also not been finalised although there have been discussions.”

Independent economist John Robertson said Zimbabwe needs to conclude discussions for land tenure with banks in order to unlock funding and reach full potential in agriculture.

“For as long as banks remain isolated we will continue importing every year,” said Robertson.

He said contract farming is almost entirely in tobacco and leaves the country exposed to acute food shortages.

“This entire contract crop is tobacco because cotton has stopped. Tobacco is not food and we still have to import food,” said Robertson.

Zimbabwe’s balance of payments deficit has widened over the years and revenue collections have been dwindling with recurrent expenditure gobbling up about 97% of total income, leaving little room for social spending.

The Bankers’ Association of Zimbabwe has been negotiating with government to amend terms of the 99-year leases on land to become bankable. These negotiations were in early November completed but the new terms are yet to be made public. Meanwhile, the 2016 agricultural season has begun with farmers limited mostly to their meagre personal resources.

In August, Zimbabwe unveiled an ambitious US$500 million programme which aims to produce two million tonnes of maize. Under the scheme, 2 000 farmers will be given inputs, mechanical and irrigation equipment to produce maize on some 400 000 hectares of land. The funding, according to the government, will be borrowed from the financial services sector.

Zimbabwe’s controversial fast-track land reform programme heavily weighed down on the economy, costing the nation US$12 billion between 2000 and 2011, Commercial Farmers’ Union (CFU) past president Deon Theron said in 2011.

Theron said the US$12 billion figure was reached after considering farm production before and after the land grab as well as the projected production. Theron said the amount also factored in the cost of replacing vandalised property on farms.

He said the land reform had chased away productive farmers leading to economic collapse.

“We used to produce in excess of what we needed, allowing us to export, (but) we are no longer able to do this,” Theron said.

“Commercial agriculture was Zimbabwe’s largest employer (and) largest supplier of raw materials to the manufacturing sector,” he said, adding that farming was the largest revenue earner before the 2000 land invasions.

The CFU said Zimbabwe’s total agricultural output in 2000 stood at 4,3 million tonnes with a value of about US$3,5 billion, but has since declined by 73% .

According to the CFU, a majority of the 4 500 commercial farmers lost their land in 2000 to mainly Zanu PF party officials, resulting in the displacement of close to 250 000 people and their estimated 1,3 million dependents, according to Theron.

Latest figures show Zimbabwe, which used to be a net exporter of grain, is now depending on imports from neigbouring South Africa and Zambia as well as Brazil to feed its 14 million citizens. Zimbabwe requires about 1,5 million tonnes of maize per annum and is currently importing 700 000 tonnes which is almost half of its annual demand after the demise of the country’s agricultural system.

A plunge in agricultural output has also affected both vertical and horizontal integrations with other key sectors such as manufacturing.

The land reform programme dealt a huge blow to Zimbabwe’s image.

The country’s respect for property and human rights was blemished by the process, resulting in huge capital flight.
Government has over the years tried to salvage its image by compensating white farmers who were displaced, but has largely been unsuccessful due to funding challenges.

Hope for most white commercial farmers to ever get compensated by the government for the farms grabbed under the land reform programme is quickly fading amid indications the state is facing serious financial constraints after only paying for a measly 4% of the total land acquired as of April 2016.

Of the 6 214 large-scale commercial farms that were grabbed largely from white commercial farmers and subdivided into smaller A1 and A2 farms, government has been able to compensate for only 240 farms to date, Lands minister Douglas Mombeshora announced in April.

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