HomeBusiness DigestZim agric sector needs US$1,2 bn lifeline

Zim agric sector needs US$1,2 bn lifeline

Zimbabwe Independent

THE 2019-2020 agricultural season has been difficult for everyone due to the extreme weather and climatic conditions which scientists interpret as part of a climate emergency on a global scale.

In recent years, the country has been ravaged by cyclones, drought, flooding in some areas and frightening phenomena such as earth tremors and rockslides. As a sector that once contributed immensely to the food security of Southern Africa as well as foreign currency for the country before and after independence, the agricultural sector of present-day Zimbabwe has become a source of economic agony, heavily relying on imports rather than exports. Reviving the fortunes of the farming sector appears a herculean task.

Munyaradzi Mlambo (MM) interviewed the director of the Commercial Farmers’ Union, Ben Gilpin (BJ) who believes there is need for additional funding for the sector and the urgent importation of 1,7 million tonnes of grain to feed more than half the population facing starvation.

MM: How did the agricultural sector fare in the last season?

BJ: The agricultural sector did not perform so well in 2018/19 season. It contracted by 15,8% as a result of 2018/19 weather conditions, exacerbated by the occurrence of Cyclone Idai, which destroyed crops, livestock, agricultural and other critical infrastructure in some parts of the country.

Output for most crops was, therefore, depressed despite an increase in the planted area. Similarly, livestock production was subdued owing to disease outbreaks and drought-induced poor pastures across most of the country. Pricing was not fair for farmers, especially for controlled products like maize, wheat and soya.
MM: What is the outlook for the sector in 2020?

BJ: Poor rains mean a bad season. Production is likely to be low, although it is too early to project output in terms of tonnage. Rainfall is generally poor in terms of distribution in space and time, mid-season dry spells experiences between November and ea Dam levels are generally low, irrigation is also being affected by the current power outages and shortages of diesel on the market. Costs of inputs are generally high, which will result in low application of fertilisers and crop chemicals needed by crops to increase productivity.

MM: Is the support you are currently receiving from the government adequate to arrest the worsening situation?

BJ: Government should create an environment conducive for business. The funding available is too expensive and the process is complex. Usually there is delay in issuing of inputs under command (Agriculture). In farming, timing is very crucial.

Moreover, the ZW$1,9 billion allocated to agriculture in the 2020 budget is far lower than the sector requires. To revive the sector there is need for US$1,2 billion.

MM: How have power cuts affected the agricultural sector?

BJ: Increased costs of production, as well as:

l Fuel irrigation adds an extra 40% to irrigation costs;

l About 50% of the winter wheat crop for last season was a write off;

l Horticultural sector greatly affected and output low;

l The cold chain greatly affected in the dairy industry; and
l Increased vandalism and theft at the farms.

MM: Did the 2020 budget meet any of your expectations as a sector?

BJ: A small amount was put towards compensation but much more needs to be done.

MM: For the current cropping season, can you say major financial institutions have stepped on your side to lend the much needed support?

BJ: There are schemes at the banks but it is not viable to get loans at such high interest rates. Moreover collateral is needed in most cases to guarantee loans yet the land market is not functional. Using town houses to guarantee farm loans is great risk.

MM: Statutory instrument 142 of 2019 banned the use of the multi-currency regime. How has this impacted the agriculture sector?

BJ: With SI 142 security of investments is not guaranteed hence lack of confidence for external investors. Farmers input prices are usually quoted in US dollar, yet producer prices are now in Zimdollar which is not enough to cover costs incurred in US dollar hence result in losses which affect production.

Inputs providers have changed their prices to ZWL$ but they are overpriced to hedge against loss of value usually are pegged at the prevailing parallel market exchange rate. Most agricultural inputs are imported, for example, chemicals and equipment through importing agents who require payment in foreign currency.

Getting forex from RBZ is cumbersome and delays the whole process thereby making planning difficult. Banning of foreign currencies is pushing back the trade in foreign currencies into the black market at exorbitant prices. Lack of uniformity in the application of the law such that certain taxes are payable in foreign currency particularly customs duty and value added tax on imported luxury goods is of concern.

MM: How much imports of food you think the country needs this season?

BJ: The country requires 2.4 million tonnes of grain for human and livestock consumption annually, although too early for a forecast I think the country needs to import about 1,7 million tonnes of grain this year.

MM: Are the food imports affecting your operational costs as local farmers in the country?

BJ: There are gaps in the food importation scheme which open chances of arbitration which becomes unfair for local producers

MM: Is the current investment programme of capital equipment for the sector, dequately enough to solve the sector’s future needs?

BJ: There is reasonable investment in capital equipment which will definitely contribute to the success of the sector, however, it depends on who the beneficiaries are. The equipment should be targeted to real farmers and avoid distributing for personal gains

MM: What specific item do you require from our government this season in order to give incentives to the farmers generally?

BJ: Let market forces determine the price of commodities both from the input side and output side. Create a favourable policy environment for investment in agriculture there is need to stop corruption in the sector and need for consistency in terms of policies. There is need to finalise issues surrounding land tenure.

Munyaradzi Mlambo is a journalist and accounting intern. Henry Kapfumvute contributed to this article. Feedback munyamlambo13@gmail.com

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