Command Agriculture: The Model Concept

AGRICULTURE is the backbone of the economic history of Zimbabwe and it has always been characterised by big commercial farmers and small commercial farmers to the betterment of the country. Production led to Zimbabwe being touted the food basket of the African continent. Of late due to numerous challenges chief among them lack of funding and off-taker prices not being handsome enough and coupled with cheaper imports, production hasn’t been what it was.

As a mitigating factor there has been a need to rejuvenate maize production under the import substitution model called “Command Agriculture” to curtail imports on the maize crop and its by products.

The idea is to increase production by bringing all stakeholders in a win-win model throughout the maize value chain and counter imports and save the hard currency leakages.

Ideal farmers 
The farmers you are looking at are those with 200 or more hectares with good water sources and should be willing to commit five tonnes per hectare towards repayment of advanced loans.

Any surplus above 1 000 tonnes harvested is for the farmer’s personal use as they see it fit. Chief infrastructural development is an excellent irrigation system that uses centre pivots, which is being manufactured locally.

Funding model, value chains 
Concessionary rates that cover the period from land preparation to harvest. Payment of the loans is from the off taker. The stakeholders provide their products and services and only get paid after harvesting and delivery to the off taker.

In terms of value chains we have fertiliser companies, inputs manufacturers, irrigation equipment makers, land providers, fuel training, chemicals, electricity and water as the initial outlay for the farmers that will utilise until harvest time.

The insurance component is the missing link, which is the onus of the farmer. All the above is advanced to the farmer to utilise until harvest time without forking any funds at all.

GMB role
GMB is the primary off-taker of the crop through an initial agreed (predetermined) buying price, that is, fixed and paid within reasonable time on the basis of the agreed quality of the crop.

The Government guarantees payment to the farmers. Of the crop delivered the off-taker pays off the service providers, financiers first then the excess funds paid to the farmer. GMB buys at $390 per tonne for a crop with the recommended moisture content.

TBs payment model 
The financiers, suppliers are paid using Government paper (TBs) that the creditors have to hold until maturity to earn their income. Tenure of paper is in an agreed basis with all stakeholders

Challenges
Quality of production including productivity per hectare is not yet at desired levels. Late payments by GMB lead to suppliers and farmers facing cash flow challenges leading to economic challenges.

GMB pricing could be a source of fiscal deficit. GMB’s under capacitation is a recipe for delays. Lack of insurance in the model as a hedge against risks like fire, theft and drought. Limited to A2 farmers means production quantity compromised.

Arbitrage opportunities through unscrupulous means of buying and selling maize outside the recommended procedures. TBs settling of debts still considered not the best route and terms and conditions on these TBs could affect cash flows of funders. Input costs still too high to lower costs of production for export (if need be) competitive pricing.

Command Agriculture is a concept that is ideal but still needs perfection for it to touch all areas of farming. The concept is a win-win for all stakeholders but needs tweaking to maximise on its implementation and effectiveness due to its strategic approach in ease of doing farming.

IF YOU LIVE IN BULAWAYO PLEASE CONSERVE WATER
IF YOU LIVE IN ZIMBABWE PLEASE USE ELECTRICITY SPARINGLY SWITCH OFF SWITCHES (SOS)
IF YOU LIVE ON PLANET EARTH PLEASE PRESERVE THE ENVIRONMENT

Morris Mpala is the managing director for MoB Capital Limited, a Bulawayo-headquartered micro-finance institution with footprint across the country.