Sunday Opinion: Planning ahead crucial for grain imports

THERE have been calls for government to start importing 500 000 tonnes of grain as it is obvious that this season has been disastrous. The Minister of Agriculture, Mechanisation and Irrigation Development has acknowledged the grain shortage and has called for an import programme. Some have called for the importation of maize meal, even the GMO type.

It is good that planning for imports be done well in advance to avoid panic and actual food shortage when we get to a hand to mouth situation.

Yes, the rainfall has been a disaster; there was no top dressing fertilizer in time for those lucky enough to have had sufficient rainfall. There are, however, other factors that contribute to deficit maize production.

I generally like to go to the past to see how we handled certain situations: how much the handling may have affected farmers’ attitude in grain production.

In this regard, I would like to look at the system of payment to farmers in the past and compare that with the current payment system.

The Agricultural Marketing Authority (AMA), used to raise all the money for Grain Marketing Board (GMB), Cotton Marketing Board (CMB), Dairy Marketing Board (DMB) and the Cold Storage Commission (CSC).

The money was largely from the local money market and also from foreign sources. For example, during the 1991/2 drought, from April 1, 1992 to March 31, 1993, the GMB imported 2.7 million tonnes of food.

AMA raised the money in local currency for the GMB, who in turn bought foreign currency from Ministry of Industry and Commerce, to pay for the imports.

At the end of the year, the GMB produced Annual Accounts, which naturally had a huge deficit as the maize-meal was subsidised.

The government then settled the GMB deficit.

When the AMA was abolished in 1993, with the assistance of the Reserve Bank of Zimbabwe, the GMB successfully introduced grain bills.

In order for the GMB to raise money, armed with an initial crop forecast in January, it would enter into discussions with all the banks in the country, giving an indication of funds required to buy the grain between April and November.

As the size of crop became more certain, so would be the commitment by the banks.

The banks would always have certain conditions which government would then do in support of the GMB. Although the GMB had a strong balance sheet backed by assets in the form of silos and depots, while banks were satisfied by this they were aware of the illiquidity of those assets.

Since about 2000, the GMB and in fact, nearly all if not all parastatals, do not now produce annual accounts, even though the law requires that these be produced and tabled in Parliament within a specified period.

Without a balance sheet, no financial institution could lend money to the GMB. We know that over the past few years, the GMB has been operating as a government department, being given all the money for all its operations.

I wonder whether this is in the form of loans to the GMB or it is just normal departmental expenditure, meaning that after selling maize, with capital from the RBZ or government, it must surrender the sales revenue to
government.

The point I am trying to make by this history is that there used to be planning of where the money to buy the crop will come from.

Last year, the GMB producer price for maize was $265 a tonne.

We delivered maize but there was no money for the poor farmers – us. Towards the end of the year, the government re-launched Grain bills to pay the farmers. This was done after much suffering on the part of the farmers. Some of the farmers are still holding on to last year’s maize.

As for last year’s wheat, it was again not good for farmers at all. Government urged farmers to produce wheat.

A few farmers responded but many decided not to produce wheat due to payment problems the previous year.

The GMB had a producer price of $400 a tonne but had no money to pay the farmers; meanwhile millers had imported wheat and had their silos full. There was no buyer for wheat.

I know some farmers who still have last year’s wheat. In both maize and wheat, the GMB is the buyer of last resort.

By definition, a buyer of last resort is one who buys a commodity when sellers cannot find other buyers. The price of a buyer of last resort is supposed to be the lowest, hence sellers going there as a last resort.

However what happens in Zimbabwe is that the buyer of last resort actually offers the highest price.

This is caused by the fact that all buyers know that the GMB, as buyer of last resort, has no money, so they then always offer prices lower than that of the buyer of last resort. Farmers are forced to sell their produce at prices lower than the buyer of last resort, GMB.

The net effect of what I have said above is that farmers decide to grow other cash crops that completely avoid the GMB. Farmers in tobacco-growing areas of Mashonaland and Manicaland have moved to tobacco growing where there is more profit and are paid cash. Naturally, these areas are the prime maize producers.

The government must find money for the GMB to buy and pay promptly, the maize that will be harvested from April and also make plans for funds to pay for wheat in October.