HomeOpinionGovt restrictions on soya bean marketing ruinous: Analysts

Govt restrictions on soya bean marketing ruinous: Analysts

BY TAURAI MANGUDHLA

THE government recently added soya beans to controlled grains, restricting the marketing of the product to the Grain Marketing Board (GMB) except in instances where running contracts are in place, a move seen as detriment to agriculture.

The restrictions came into force through Statutory Instrument (SI) 97 of 2021. This is in stark contrast to the tenets of free market economics once touted by the President Emmerson Mnangagwa’s administration.

Soya bean is in short supply, forcing the country to spend tens of millions of dollars in foreign currency annually to import crude for cooking oil manufacturing.

Farmers and economists say the fresh government controls, under what is known as Grain Marketing (Control of Sale of Soya Beans) Regulations 2021, are destructive.

“No person, statutory body, company or entity shall buy or otherwise acquire any soya beans from a contract farmer without a prior contractual obligation to do so,” reads part of the SI.

The regulations forbid use or disposal of soya beans acquired through the GMB as seed except with written permission from the parastatal.

A contract farmer is permitted to keep or transport not more than two bags of soya beans of a capacity not exceeding 50 kg per bag from one area of the country to the other without any authorisation from the GMB.

Soya beans in excess of the small quantities can only be transported to the nearest GMB and no person, other than the state run firm, is authorised to export soya beans.

In terms of the regulations, any person, whether or not a party to a scheme contract who deals in or possess soya beans in contravention of these regulations; that is to say purchases, receives, stores, sells, obtains, possesses, exports, transports or otherwise disposes of such soya beans, in contravention of these regulations, shall in terms of section 40(2) of the Act be guilty of an offence and liable to a fine not exceeding three times the value of such controlled product, calculated on the current selling price of the GMB within Zimbabwe.

The SI comes after farmers slowly moved from maize production due to similar controls and GMB’s failure to pay farmers on time. As a result, producers preferred private buyers who paid cash on delivery or within 14 working days of delivery.

Currently, GMB owes farmers several billions in local currency for winter wheat deliveries. As a result of payment delays, some commercial farmers struggled to produce in the last summer cropping season due to lack of capital.

GMB has suffered operational challenges due to lack of funding from the central government where salaries and wages gobbled 98% of the budget.

Various schemes, including agro bills, put in place to facilitate grain buying put pressure on the fiscus.

While maize has been under restrictions, commercial farmers turned to tobacco, soya beans, sugar beans and potatoes.

Commercial Farmers Union (CFU) president Andy Pascoe said farmers were likely to quit soya bean production due to the control measures.

“That’s the reality and I know if you look back to mid-2000 when the government started controlling marketing of maize, people went out of maize to grow soya beans,” he said in a telephone interview on Tuesday.

GMB has tried to attract deliveries, pegging the producer prize at ZW$32 000 per tonne for the 2021 marketing season or about US$380 per tonne.

This is almost equal to what private buyers were paying for deliveries in February for the 2019-2020 deliveries.

Questions also remain whether or not the exchange rate will remain stable and GMB will be able to quickly catch up in the event it slides.

“As long as that (higher producer prices) is maintained, you find the farmers will be happy. But if the rate starts to run and the prices fall behind then that is a challenge. The market keeps up with the rates when they move, but the way the government works and moves is very slow and if the rate starts to run, then we end up losing value,” Pascoe said. “For example, the wheat crop last year, everyone delivered to GMB because the price was very high.”

However, the government is yet to fully pay for all the winter crop deliveries made in 2020.

“That is the challenge and that’s the big question; when you deliver to GMB, will they pay? If they do, how long will you have to wait for the payment? Those are the two negative factors, whereas the free market is such that you can sell to whoever you want,” Pascoe said.

Apart from the lack of confidence in GMB, Pascoe said, economic stability or lack thereof is also material to the success of GMB.

“I think we have to watch if the government and GMB perform and their prices match the market and or are actually better than what the market is offering and the payments are timeous. I think farmers will be happy,” he said.

“It really depends on stability of the economy, when instability comes in then they won’t be able to deal with the market. Besides farmers have no confidence in the GMB,” Pascoe said, adding that the new GMB executives and top officials in the ministry of Agriculture will improve the situation.

Economist Brains Muchemwa said restricting the marketing of soya beans was tantamount to decimating the agriculture sector.

“They are killing the sector, opening up to private players is the way to go,” he said.

He said GMB is unlikely to instill confidence among producers given its tainted past.

“GMB has a track record of destroying and bankrupting maize farmers through delayed payments that would only be paid after having been massively eroded by inflation. By extending its tentacles to controlling the marketing of soya beans by farmers, GMB is likely to bankrupt the many farmers that had run away from commercial maize farming if its track record is anything to go by.”

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