Govt to scale back on command agric funding

FINANCE minister Mthuli Ncube says government will scale back its participation in the specialised farmer support programme command agriculture and rope in the private sector to provide financing as Treasury seeks to cut back spending on costly subsidies.

By Business Editor

Under the programme, government has been providing seed, fuel, irrigation and mechanised equipment to mainly smallholder farmers, who, in turn, are supposed to repay government by delivering five tonnes of their produce to the Grain Marketing Board.

The programme, which was launched in the 2016/17 season, has, however, been prone to abuse by the ruling Zanu PF party, becoming the centre piece of President Emmerson Mnangagwa’s campaign in the recent elections.

Resultantly, it has become a feeding trough for senior government officials, politicians, military chiefs and a connected few.

According to Treasury data, expenditure on agriculture has been one of the major components driving the southern African country’s unsustainable budget deficit.

Expenditure on the sector reached $1,1 billion as at August 2018, against an annual budget target of $401 million.

Of this, $238 million went towards command agriculture, $263 million towards vulnerable input support scheme and $505 million to grain procurement.

Ncube, who has been vocal about the need to restructure the programme, told a Press briefing yesterday that government would limit its exposure and play a supporting role instead.

“There is no question that it (command agriculture) has improved the food security situation in Zimbabwe. It has been a success, but what we are saying is that there are players that have been missing in the financing of command agriculture. It is the private sector banks who should begin to fund command agriculture. They have said they want perfection of the 99-year leases and that is a legitimate request which is being attended to. In the interim, we stand ready to give credit guarantees, especially to State-owned banks, for them to extend credit to farmers,” Ncube said.

“The other leg of the private sector are the industrial corporates, who are users of the agriculture commodities. They must get into outgrower schemes. There is a model pout there to copy, so by crowding in the private sector and also ensuring that those that are exporting produce source lines of credit”.

In several country reports, the International Monetary Fund has questioned the design and financing of the command agriculture programme, particularly the commitment to buy large quantities of grain at above-market prices, which is not cost-efficient.

Government buys a tonne of maize at a fixed price of $390.

Politically connected businesses such as Sakunda Holdings, which are part of the scheme, have been accused of inflating the price of inputs they provide.