The Brett Chulu Column
AGRICULTURE matters have been quite topical for a while now. The past two weeks have seen the shortage of milk persisting. The price of tomatoes has spiked to extremely high levels, with these anomalously high price levels persisting. Milk and tomatoes form part of the Zimbabwean household’s dietary needs.
Let us examine the drivers behind the milk shortage. There is one certain driver and two other drivers that are rather speculative. The first driver of the milk shortage is the unusually persistent wet spell. Dairy cows are very sensitive to environmental changes — some breeds are more resilient than others. Dairy cows need a hormone called oxytocin to aid them to release milk. When the cows are stressed the production of oxytocin is suppressed, resulting in the cow suppressing milk.
The muddy and wet conditions are contributing to stress for dairy cows. Dairy farmers that I know have confirmed that milk yields have plummeted, in some cases, milk yields have dropped by 50%, attributed to the persistent wet spell. The second possible factor has to do with the quality assurance matter where poor quality milk was released onto the market — indicating a process or machinery failure experienced by major processors. It could be that the fault is being fixed, with the downtime starving the retail market enough supplies.
The third matter could be related to milk exports. It is public knowledge that a country in the Sadc region is looking for reasonably priced milk imports to compete with milk imports from South Africa. The dairy farmers in that Sadc country are leaving the dairy industry due to high production costs occasioned by high feed imports.
It is possible that some of the milk from Zimbabwe has begun finding its way to the export market, further depressing an already constrained milk supply that has not recovered from the pre-Land Reform high levels.
We now examine the current price dynamics in the tomato market and what is driving them. At Mbare-Musika, the price per kilogramme of tomatoes has been in the range 73-86 US cents. That range reflects both weekly fluctuations as well as different grades of tomato. On a Zimbabwe tomato market historical basis, these are unusually high prices on a wholesale basis. What is new is that these high prices have persisted for days. Under past episodes of tomato price peaks such prices would be flash prices persisting for a day or so due to a sudden drop in tomato supply.
The persistence in the high wholesale tomato prices in Harare indicates an extremely acute shortage of tomatoes in the capital. In Bulawayo, wholesale tomato prices, at 50-60 US cents per kg, are high too, but significantly less than the prices currently prevailing in Harare.
Records from past seasons, peak wholesale tomato prices range between 40 and 50 US cents per kg. Current peak wholesale tomato prices are 83-115 % above historical peaks. The persistence of this premium is astounding. When tomato is in season, wholesale tomato prices range between 20-25 US cents per kg. This means that the current peak wholesale tomato prices are 265-330% above the in-season tomato price.
The question that demands our attention is: what is driving the tomato price to such record levels on a persistent basis?
There are four drivers. First, in general, during the rainy season tomato production decreases in Zimbabwe due to production substitution as many small-scale farmers switch to rain-fed crops, mainly maize. Most of the tomato production in Zimbabwe is done under open field conditions — the production of tomato under protected environments is very negligible. Tomato is an intensive crop that demands a lot of close attention. Under wet conditions even closer attention is needed.
Second, the rainy season makes tomatoes very difficult to maintain due to warm and humid weather conditions that increase the incidence of deadly diseases especially fungal-related infections. The risk of crop write-offs is very high during the Zimbabwean rainy season.
Third, the cost of maintaining tomatoes increases significantly during the rainy season as a result of high incidences of crop infections. Under a normal rain season, these three factors are powerful enough to force farmers, either to reduce production or abandon production. This leads us to the fourth factor.
Fourth, the current rainy season is above-average in terms of frequency and amount of rains. As referenced earlier, most tomato production in Zimbabwe is done under open field conditions. This means that the varieties of tomatoes that dominate Zimbabwean tomato production are the determinate types that have relatively low total yields and have a shorter harvesting period.
Within these open field short-lived tomato varieties, a significant number of tomato growers prefer the cheaper open-pollination varieties (OPVs) that tend to be less resilient to diseases and tend to give lower total yields — the more expensive hybrids tend to fare better in terms of disease resistance.
What has happened this time is that the fewer farmers who have the risk appetite to brave the agronomic down-risks associated with the wet season have seen even hybrid tomato varieties suffering under the persistent wet spell. This too has affected the largest growers of tomatoes in Zimbabwe. Those growing tomatoes in protected environments are faring better. The scale of production in protected environments is extremely low. This is what has birthed the current acute shortage of tomatoes. These four factors have combined to give rise to the persistent acute shortage, hence the persistent high wholesale prices.
The reason why the peak wholesale prices are higher in Harare than Bulawayo is most likely due to the higher population in Harare. It is a supplier market — the few suppliers of tomato have high bargaining power in the face of high demand.
The La Nina induced wet spell has brought to fore an issue that is often overlooked that we once highlighted in this column that an above-average wet season brings agronomic risks that national development planning should deliberately focus on compensating the risks, the same way a drought is looked at. Weather extremes bring challenges and opportunities as well.
Chulu is a management consultant. — email@example.com.