Fuel price hikes threaten agric sector

agric.jpg

THE agricultural sector’s efforts to boost food security are severely hampered by the recent fuel price hike, which is threatening to reduce crop yields and erode farmers’ profits amidst an ongoing drought.

BY CHIPA GONDITII

According to the United Nations World Food Programme, 5,3 million Zimbabweans face food insecurity at the peak of the drought season.

The situation could get worse as farmers are acquiring diesel for machinery operations at triple the price since the announcement of the fuel price increase by President Emmerson Mnangagwa in January.

Zimbabwe Farmers’ Union (ZFU) executive director Paul Zakaria said the increase in fuel prices impacts negatively on the economy and affects farmers.

“Most farmers use fuel to power their generators, tractors and irrigation pumps, therefore any increase on fuel will have a direct impact on the production costs, as this forces the production cost to go high by the percentage at which fuel was increased, hence leading them to downsize their hectarages,” Zakaria said.

“This means that profit margins are getting eroded, the returns are reduced by the margins in which the fuel increased. Therefore, if markets are not going to respond in a favourable way whereby producer prices go up, then farmers will lose out.”
Zimbabwe National Farmers’ Union (ZNFU) chief executive Edward Dune said the increase in fuel price was making it difficult for farmers to achieve better yields.

“In agriculture we talk of pre-planting prices, so farmers enter into production after having planned and budgeted, but now there are distortions in farmers’ costs because of these fuel price increases. Apart from being expensive, it (fuel) is not easily available at the pumps. Therefore, either way farmers will be incurring losses when the product comes through,” he said.

Coupled with a deepening economic crisis, the fuel price increase is making life difficult for many farmers, casting a dark cloud over future investments. In a country where maize is the staple, diesel has now become the second most expensive input cost factor after fertilizers, which cost RTGS$42-44 for a 50kg bag of compound D.

Economist Tony Hawkins told the Zimbabwe Independent that the increase in fuel prices will have a domino effect on the productivity of the agricultural sector.

“The inflation rate is affecting businesses more than it is affecting consumers because of the much higher import content used by businesses like machinery and in the case of the agricultural sector it’s fuel. So the endgame is going to be a decrease of farming hectarage, erosion of profit margins, less investments in the sector and interest rates will go up sharply and that is going to be a huge burden on farmers who rely a lot on seasonal borrowing. You also got the added effect of the drought, therefore I see a difficult outlook for famers in 2019,” he said.

Ruramiso Mashumba, a Marondera commercial farmer, said she was suffering the brunt of the fuel increase as she now forks out more money to acquire the vital input.

“I am buying diesel at the pump like everyone else and since it tripled in price this has affected my production cost hence now profitability is now tricky considering that prices for products have not changed,” she said.

Contacted on how farmers are going to be cushioned from this effect, Minister of Lands, Agriculture, Water, Climate and Rural Settlement, Perrance Shiri, referred all questions to the Ministry of Finance.

“That is a function of Ministry of Finance because Ministry of agriculture does not have the resources we only deal with policy issues, capacity building, schemes development, and regulatory issues so it is up to the Ministry of Finance if they want to give them subsidies or help them financially,” said Shiri.

Zimbabwe has made a US$3,2 billion humanitarian assistance appeal to deal with food shortages and social services delivery problems.

Top