Mthuli Ncube should prioritise agriculture issues

By Peter Gambara

LET me take this opportunity to welcome the Professor back to Zimbabwe and to congratulate him on his recent appointment as Minister of Finance and Economic Development. Since your appointment, the whole country has been excited, as it provides some hope that the economy will get back to firing on all cylinders again. 
In this article, I would like to appeal to you on agricultural issues. In our African tradition, a freshly married woman is given all the rules, does and don’ts while she is still new in the family. If you try to do it after a while, they say she will have “deepened” her roots. Besides, this also comes as you start your consultations in preparation of the 2019 Budget Statement.
Zimbabwe depends on maize as its staple food and hence, year in, year out, we need to ensure that we harvest enough maize to last us to the next season, at least. Previously, we have had to import from our northern neighbours, Zambia. That is itself embarrassing, especially when most of the whites we drove off the commercial farms resettled in that country. We therefore need policies that will promote agricultural production, but primarily, maize production.
In the 2016/17 summer season, government introduced Command Agriculture, a contract scheme, where farmers grow maize on contract and have an obligation to deliver it to the Grain Marketing Board (GMB). Farmers are expected to harvest at least five tonnes per hectare.
During that season, we achieved a bumper harvest of over 2,4 million tonnes and the GMB depots ran out of space to store the maize. Government has since extended the programme to other crops like wheat, soyabeans etc.
However, there are inherent problems with this arrangement. In his 2018 budget statement, then Finance Minister Patrick Chinamasa indicated that Command Agriculture would run only up to 2019, “leaving government financial support targeted at vulnerable households only”. He went further to say “government will continue with its facilitative role in the areas of extension services, disease and pest control, provision of bankable leases and security of tenure, development of irrigation, farm mechanisation and other infrastructure facilities.” These summarise what should be the role of government in commercial agriculture.
This is as it should be as providing loans to farmers is the baby of commercial banks. Private sector companies have the option to borrow from these banks to run contract schemes like the now popular local contract tobacco schemes. The Special Maize Scheme, commonly called “Command Agriculture” is an example of a contract scheme and as such, should be run by appropriate private sector companies like the grain millers (for grain), oil expressing companies (for oilseeds) or livestock produce benefiting companies (for livestock like poultry, fish etc.). All they need are conducive government policies, like putting in place legislation that ensures farmers do not side-market contracted produce.
I am sure you will soon realise that your purse is limited and therefore mobilising resources to fund schemes that could comfortably be handled by the private sector is not only unnecessary, but also not affordable with the resources at your disposable. Please convince your colleagues in Cabinet to, instead, create a conducive environment for running contract schemes.
The way Command Agriculture has been run has left many people wondering whether it is a government or a Sakunda programme. Sakunda has become so powerful in its implementation to the amusement of many. If indeed Sakunda has the resources to advance money to government, let it put its cards on the table and let Parliament approve such deals. Otherwise, that is where their involvement should end ― their slow decision-making last season cost many farmers dearly, as basal fertilisers were only released in January, well into the season. Many farmers ended up having to plant without adequate fertilisers, with dire consequences. Since, the initial target was at least five tonnes per hectare, this became a nightmare for most of them.

Secondly, laying the cards open in Parliament clears the air for everyone to see and removes suspicion that some clandestine deals are being cooked to enrich a few individuals. The allegations that Sakunda did not pay duty on the fuel it imported for the programme and yet proceeded to charge farmers $1.20 per litre, points to possible massive fraud, if true. In fact, input procurement should be the business of government through the State Procurement Board.
When government decided to introduce Command Agriculture, the country had failed to grow enough maize to feed the population for a number of years. Government therefore took the decision to pay farmers a producer price of $390 per tonne for maize, while at the same time selling the same maize to millers at just $250 per tonne. This amounts to a subsidy of $140 per tonne and a farmer who achieves five tonnes per hectare receives a subsidy of at least $700 per hectare. This defies logic and again, where does Treasury get the resources to fund such excesses? It is high time, the maize producer price and selling prices are synchronised.
A similar arrangement, where the producer price for wheat is pegged at $500 per tonne and yet grain millers can land the product from Europe at $370 per tonne is also baffling.
This anomaly has also discouraged private sector companies from contracting farmers. No farmer is willing to be paid anything less than $390 per tonne for maize or the $500 per tonne for wheat.
I am sure with your vast economic background; you will be able to convince your Cabinet colleagues that this is madness of the highest order. Government played its part in resuscitating maize production, it is now up to the farmers to increase yields to profitable levels under a more pragmatic producer price.
As highlighted above and acknowledged by your predecessor, it is not the duty of government to compete with the private sector to run contract schemes. This has been so because government took the decision to give A2 farmers 99-year leases instead of title deeds. Essentially, this means the land continues to belong to the State,.
Such land tenure arrangements have been used in some African countries successfully, but in Zimbabwe, our banks have continued to refuse to accept these 99-year leases as collateral for loans sought by the land beneficiaries. Banks have continued to demand collateral in the form of title deeds of properties in towns. Government has tried to react by rectifying the lease agreements so that they could be accepted by the banks. The last time they did this was in 2017.Presenting his Monetary Policy Statement in January, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya indicated that the central bank had agreed with banking institutions to accept the 99-year leases as collateral. Just check with the banks and see how many sincerely accept 99-year leases as collateral, and you will be surprised.
The major cause of disagreement with the banks has been the transferability of these 99-year leases in the event that the loan beneficiary defaults. Government has continued to insist that they would want to still control the transfer process from the defaulting farmer to the potential new farmer and banks have found this to be cumbersome and unattainable.
Some beneficiaries have therefore been sceptical about whether the land will pass to their families when they die. The level of investment on most farms has, therefore, remained low. This contrasts with the situation that prevailed on the farms before government acquired them. Commercial farmers regarded these farms as their permanent residencies, built beautiful houses and lived there. Today, most A2 farmers continue to live in towns and only visit the farms when necessary. The suggestion therefore is, can the issuance of title to land beneficiaries not change the investment attitudes on the farms.
Some have also argued that the issuance of title deeds to land beneficiaries can actually “kill two birds with one stone”. Firstly, it will encourage investment on the farms. Secondly, as the land beneficiaries pay the purchase prices, that money will be used to pay off the compensation that is still due to the former owners as explained below.
One reason, we cannot get enough Foreign Direct Investment while our brothers in the region like Mozambique are getting a lot, is partly because we have created a pariah state status for ourselves due to the way we handled the acquisition of farms. After embarking on the fast track land reform in 2000, government changed the law to make it the responsibility of the former coloniser, Britain, to pay compensation for land that would have been compulsorily acquired for resettlement purposes.

Government would only pay for improvements on the farm. However, since acquiring those farms, government has found it difficult to compensate the farmers as it does not have the resources to do so.
Tied to this is that government also compulsorily acquired farms that were protected under Bilateral Investment Protection Agreements (BIPA). According to these agreements, if government chose to acquire such properties, they were obliged to pay full compensation i.e. for both the land and improvements. The affected farmers would also be able to choose the currency in which they wanted to be paid. Zimbabwe had BIPA agreements with Belgium, Botswana, Germany, Netherlands, Italy and South Africa.
In 2009, a group of 40 Dutch farmers took the government to the Centre for the Settlement of Investment Disputes, which ruled in their favour and ordered the Zimbabwean government to pay 8,8 million euros compensation. That amount increases by 10 percent for each year that it remains unpaid and now stands at over 25 million euros. These farmers have previously blocked funds belonging to ZB Bank, and Agribank as government has substantial interests in these banks.
Such bad reputations are like an albatross on our neck. We need to find ways and means of compensating these former white commercial farmers. It does not matter, how much “sovereignty” we claim over our land, as long as we do not solve this matter, it will continue to haunt us. The latest example is how the rand of our neighbouring South Africa fell after President Ramaphosa repeated the “Trump, keep your America, we will keep our SA” mantra.
Other important issues relating to the agricultural sector relate to how, out of our madness, we decided to acquire even small greenhouses on former commercial farmers. The beneficiaries mistakenly believed they could harvest, “where they did not sow”, and continue to sell the flowers to Europe. They, however, got the shock of their lives when they sent their consignments there. They were asked to produce breeder rights that they obviously did not have, let alone understand what it meant. It makes sense Minister, to give back those small plots of greenhouses and support the farmers to produce flowers for Europe once more.
Mangudya has always argued that we need to increase exports as a way to ease our forex shortages, and I am sure that is one good way.
Our weather is also very conducive to the growing of citrus fruits, just like our brothers down south. However, again out of greed, some beneficiaries grabbed farms that were producing citrus trees and mangoes, but dismally failed to maintain the trees.
An example that is always cited by many is the case of the Chegutu orange trees that the new beneficiaries failed to maintain. Don’t you think, we should bring such farmers back to re-establish the citrus and mango trees and benefit the country? After all, some of those beneficiaries has proved that they simply cannot measure up to the task.
The agricultural support service institutions continue to receive inadequate funding from the fiscus. Agricultural extension officers and workers can no longer move from their offices to visit the farmer and offer technical advice. Not only do they lack the vehicles or motorcycles to do so, the situation deteriorated to an extent where no resources were set aside to cover their travelling and subsistence allowances. Surely, such a situation is unattainable. The Maputo Declaration encourages governments to set aside at least 10 percent of the national budget for agriculture, I am sure you will not let us down on that one. I rest my case here, Minister.
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