Statistics show that over 90 percent of the country’s agricultural land is de facto State land and because of that private investment remains minimal due to lack of clearly defined property rights.

DESPITE it being part of government’s mandate to ensure food security for its citizens, prospects for the 2015/2016 agricultural season are virtually doomed.
Government announced this month that US$1,7 billion was needed to fund crop and livestock production in the 2015/2016 farming season, up from US$1,2 billion spent on farms last year, an amount considered to be a drop in the ocean.
Finance and Economic Development Minister Patrick Chinamasa, unveiling his Mid-Term Fiscal Policy Review statement, said of the total budget, US$1,3 billion would be channelled to crop production with the remainder to be spent on livestock.
However, with the current economic situation, raising US$1,7 billion might just be an exercise in futility.
Recent events saw thousands of people losing their jobs, which made this year the saddest for the country’s labour force.
Because most communal farmers rely on input packages sent by working relatives in the city, the job carnage will negatively impact on agricultural financing.
As a result, in 2016, self financing of agricultural activities, especially in the communal areas, will not be the usual success story.
That government is broke and struggling with its astronomical civil service wage bill, and will only be able to finance five percent of the US$1,7 billion required to finance the 2016 crop, comes as no surprise.
Government has indicated that it will direct US$28 million towards 300 000 most vulnerable farmers while partners are expected to support the majority.
The partners expected to finance the 2016 crop are the bankers who still have strong reservation over the legal and technical issues regarding property rights for land and improvements as provided for under the 99-year leases.
Statistics show that over 90 percent of the country’s agricultural land is de facto State land and because of that private investment remains minimal due to lack of clearly defined property rights.
The absence of a land market prevents financial institutions from granting loans to farmers because there is little or no collateral to support them.
The Commercial Farmers Union says the local banking sector is largely crippled by a lack of liquidity and a legal framework in the agricultural sector that allows for the use of land and agricultural developments as collateral for loans or as equity.
This is because the land, and therefore the developments on that land, cannot be transferred onto the open market.
This position undermines the confidence of lending institutions to undertake longer-term investments in agriculture.
Bikita West legislator, Munyaradzi Kereke, debating on the Finance Bill: 2015 Mid-Term Fiscal Policy Review Statement in Parliament, recently argued that it was impossible for the bankers to finance the 2015/2016 agricultural season.
“Mr Speaker Sir, I move on to the adequacy of how we are prepared as a country to deal with the coming agricultural season. The honourable Minister indicated in the budget that we will need a total US$1,7 billion to finance our agriculture. It is prudent that as a nation, we ask how this money can be raised. First of all, will the private sector be able to meet this requirement when we look at the status of our banking sector?
“The budget indicated that total loans to the economy in the banking sector rose from US$3,8 billion in June 2014 to US$4 billion in June 2015, which is an increase of only US$200 million. So the total lending only rose by US$200 million in the year. It is therefore next to impossible to hope that within this season alone, the banking sector can solely raise the US$1,7 billion that we require for our agriculture,” Kereke said.
Even the Parliamentary Portfolio Committee on Finance and Economic Development noted with concern the impossibility for the nation to raise US$1,7 billion in less than two months as the 2016 cropping season is expected to start in two months.
“The lack of adequate mechanisms put in place by Treasury to address food security in the country is a direct contravention of the constitutional provisions as outlined under Chapter 4, Section 77(b),” committee chairman, David Chapfika said.
There is an acute under-utilisation of land and resources in the former commercial farming areas and it has become an open secret that the country’s agriculture is on its knees and desperate for new investment.
Successive droughts, poor investment in production, lack of cheaper lines of credit, lack of equipment and the high cost of inputs have taken a toll on Zimbabwe’s agricultural sector, which has failed to ensure food security and also feed the country’s agriculture-based industries.
Production of maize, cotton, soyabeans, dairy cows and horticulture has been hit hardest.
As it has declined, the agriculture sector has taken with it jobs. The sector directly employed more than 300 000 people in the early 1980s and millions of others in downstream industries.
Bulawayo South legislator, Eddie Cross, warned that the 2016 cropping season may be worse than the 2014/2015 season because no financial institution is willing to finance agriculture without collateral.
“The new farmers (both A1 and A2) do not have any security of tenure and there is no market for rural land. This stops any significant bank lending, either by local banks or the international banks. In the past, commercial farmers went to their bankers in March and planned their production and costs for the next season. They would be given bank overdraft financing and would draw this down as they purchased inputs and started the new season. The collateral for such borrowings was usually the land which has an estimated value of several billion dollars. If the farmer failed to pay the farm was put on the market and sold and the bank recovered its money. That is no longer possible,” Cross said.
Early this year, government announced that for years government has been spoon-feeding farmers by providing free inputs, free machinery under the mechanisation programme where farmers benefited from free tractors, combined harvesters, disc harrows and ploughs, fuel, irrigation pumps and pipes, including free yearly inputs yet there is nothing to show for government’s efforts to revive agriculture.
At the core of Zimbabwe’s agricultural sector is its land but without funding that asset is being wasted for political expediency, at the expense of economic progress. Tobacco, horticulture, cattle and cotton were the country’s pride and joy, today much of the arable land lies idle as farmers have failed to adequately invest on the land given to them through the land reform programme.
“In the past, international firms have supported cotton and tobacco production but this support has waned as a consequence of nonpayment of loans by farmers. This year, I doubt if there will be much financing for cotton growers, compounding their difficulties on top of the low prices of US$0,30 per kg paid this year. Tobacco is also a problem as a result of low prices for the lower grades and side marketing. Given the tight liquidity in the banking sector, there is not likely to be very much from this quarter. The outlook for this coming season is much worse than in 2014/15,” Cross added.
This situation is compounded by the fact that there are no organised markets for farmers. Maize producers this year, even though they have only produced a very small crop, have been unable to sell their maize except at very low prices. Prices as low as US$130 a tonne have been reported. Although the Grain Marketing Board offers a high price of US$390, the Board cannot pay for the maize.
For Zimbabwean farmers, access to land is not enough to achieve success; farmers must be empowered through the transfer of the collateral value of their land. Unfortunately for Zimbabwe, agricultural land is now dead capital because it cannot be used as security when applying for a loan. This has contributed to the collapse of the sector because there is no security for the farmer, investor or the bank.
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