‘Agric highest contributor to budget deficit’

GOVERNMENT is making strides to improve food security through irrigation development and investments and reducing the budget deficit in which agriculture is one of the major contributors, Treasury has said.

According to the 2019 Budget Strategy Paper (BSP), the country’s cumulative budget deficit for the period January to June 2018 stands at US$1.21 billion (4,7 percent of GDP), against a cumulative target to June of US$388.7 million with agriculture being one of the major drivers.

The BSP was presented by Finance and Economic Development Minister Professor Mthuli Ncube and approved by Cabinet last week.

“Expenditure on agriculture has been one of the major components driving the budget deficit recently. Expenditure on the sector reached US$1.1 billion as at August 2018, against an annual budget target of US$401 million.

“Of this, US$238 million went towards Command Agriculture, US$263 million towards the Vulnerable Input Support Scheme and US$505 million to grain procurement,” he said.

Prof Ncube said of the US$1,8 billion Treasury bills issued from January to July 2018, about US$361 million went towards agriculture funding.

“While on the face of it, the TBs issued towards Command Agriculture are a private debt, however, in view of the high default rate by farmers under Command Agriculture, it effectively means that it is Government expenditure.

“In view of the implications of the existing model of financing, there is a need to revisit the mechanism, with a view of lessening the fiscal burden which has a destabilising effect on the macro-economic environment,” he said.

Prof Ncube said Government is making strides to reduce food insecurity owing to erratic rainfall patterns and climate change by increasing irrigable land through irrigation rehabilitation and development.

“Under the auspices of the National Irrigation Development Master Plan, Government developed the National Accelerated Irrigation Rehabilitation and Development Programme, targeting irrigation development and rehabilitation of at least 200 ha per district to be implemented over the next 10 years.

“The 2018 National Budget made a provision of US$36.4 million to kick start the programme, with US$8.8 million having already been transferred to IDBZ, which is currently managing the programme on behalf of Government,” he said.

Prof Ncube said in addition, Government mobilised substantial resources to the tune of US$58 million through loan financing under the Command Agriculture Programme towards the rehabilitation and development of irrigation systems in the country.

“Of this, US$18 million has already been spent on procurement and installation of irrigation pumps and pipes, electric motors, transformers and other ancillary support services, among other essentials, targeting 8 849 hectares in all farming provinces,” he said.

Prof Ncube said Government is implementing a US$40 million facility targeting 16 000 hectares.

“Furthermore, from other private sector loan initiatives, works were completed on casting of centre pivots on 45 farms and mounting on 36 farms across provinces, while 12 centre pivots were already functional by September 2018. Going forward, Government will continue to mobilise additional resources towards the programme,” he said.

Prof Ncube said the marketing of agricultural products is essential for guaranteeing viable return for farmers and ensuring sustainability of farming activity through competitive pricing and a ready market.

He said access to markets has been a challenge, especially for small farmers who have often been forced to dispose livestock at give-away prices.

“Lack of market access also increases post-harvest losses, undermining farmers’ earnings, as absence of markets often leaves farm produce to either rot or disposed of at give-away prices.

“As a result, Government will facilitate access to markets by farmers through re-establishment of commodity exchange markets, which will also transform agriculture output into effective collateral for borrowing by farmers,” said Prof Ncube. — @AuxiliaK