September 19, 2013 in Business, Multimedia

THE question of food security, insecurity of property rights and unequal access to land represents a chink in the armour of Zimbabwe, which is widely portrayed as one of the economic and political standouts in Africa.

REPORT BY WISDOM MDZUNGAIRI

With weak institutions, endemic corruption, disputes over repossessed farms and violent land grabs, the land question is one of the biggest single threats to food security in the country.

From breadbasket of Africa to the continent’s basket case — that’s Zimbabwe!

A country rooted in agriculture that now must import thousands of tonnes of maize and wheat. The World Food Programme (WFP) estimates that at least 2,2 million people will need food assistance countrywide this year.

This, because Zimbabwe will suffer a one million tonne maize deficit due to drought and other factors, after nearly half of the national crop was written off.

President Robert Mugabe says agriculture should restore its status as key to the economy.

“The sector contributes 15-18% of gross dopmestic product (GDP), over 40% of national export earnings, and 60% of raw materials to agro-based industries,” Mugabe told the Zimbabwe Agricultural Show Society in Harare.

“In addition, over 70% of our population derives its livelihood from agriculture with agriculture-related employment comprising a third of the formal labour force.”

He, however, added that the 2012/13 agricultural season experienced mixed fortunes characterised by late rains and prolonged mid-season dry spells owing to the negative effects of climate change.

Agriculture minister Joseph Made recently said: “Forty five percent of maize that was planted last season is a write-off.”

Year-in-year out the problem is the same for the last 12 years.

Made said Zimbabwe has 400 000 tonnes of maize stocks, which must be complemented by imports to prevent hunger in the country. The country needs 2,2 million tonnes of the staple grain, maize, to feed itself annually.

In the 1990s, Zimbabwe was a net exporter of maize before the fast-track land reform programme in which thousands of people were resettled on farms formerly owned by about 4 000 white commercial farmers.

Since then, Zimbabwe has failed to meet its food requirements.

WFP is currently giving food to 1 million people, mainly the extremely poor who depend on farming to survive.

The United Nations has already appealed for $488m in food aid for Zimbabwe for last year and the first months of this year.

At least 85% of the population is unemployed and 49% malnourished, according to WFP figures, with 83% living on less than $2 a day.

The country — once the regional model of an African country functioning at maximum capacity was for the past decade in utter economic collapse, wracked by multi-trillion percent inflation until the introduction of the multi-currency regime in 2009.

Sadly, the government has blamed the country’s misery on international sanctions and chronic droughts.

In turn, the world blames Zimbabwe’s woes on Mugabe and Zanu PF’s chicanery, endemic corruption and the catastrophe of land redistribution.

Commercial Farmers’ Union (CFU) president Charles Taffs in an interview said arguably, Zimbabwe has transformed land from an economic asset into a political asset. CFU essentially represents Zimbabwe’s ever-shrinking constituency of white farmers.

His argument is, therefore, that land administration systems must strike an appropriate balance among the social, political and economic function of land in order for agricultural and economic growth to occur.

Taffs said the substantial contraction in agricultural output after 2000 has been almost entirely due to much reduced commercial farming productivity.

He said plantings and herd sizes in the small-scale farming sub-sectors have not varied much from normal during the 12-year period since 2000.

“The collapse in commercial farm output has been the primary cause of total economic decline in Zimbabwe. At its peak agriculture contributed to as much as 30% of GDP as well as being a significant employer of human effort. This production was supported in the commercial sector by a full basket of land rights which included use rights, transfer rights, exclusion and enforcement and exclusion rights. These measures within the commercial sector have been replaced since State acquisition and Zimbabwe requires a mechanism to resolve disputes and ensure land rights are made secure in all categories,” Taffs said.

CFU agriculture recovery and compensation manager Ben Purcell Gilpin also said since the land resettlement legislation in 2000 — taking back for new farmers, reportedly, what the white colonisers had staked unilaterally in centuries past — the country has been in economic free fall, unable to feed itself, arable property lying fallow and villagised resettled (A1) farmers selling their produce by the roadside where formerly massive crop yields were sold to foreign markets.

Listen to the interview below:

Gilpin said: “Prior to Constitutional Amendments 16 (2000) and 17 (2005) the rights to private property were afforded reasonable levels of protection. However, major problems have arisen because fast-track compulsory acquisition has not been done properly. Government methods of acquiring land did not follow the legislative requirements pertaining to this, including paying compensation.”

The narrative of white farmers driven off farms by new farmers, often violently by mobs — has been well-documented since 2000. Yet, it is the far more numerous farm workers who have suffered most as their jobs disappeared.

It is depressing to drive across Zimbabwe’s highways –Masvingo, Mutare, Bulawayo, Nyamapanda, Bindura looking upon kilometre after kilometre of disused land, the grass waist-high where once neat furrows of crops were cultivated.

These departures from the law and best practice have significantly contributed to the erosion of both foreign and local investor confidence.

From 2000 to date, production of maize declined 79%, wheat 90%, soya beans 66%, citrus 50%, fresh produce 61%, dairy 59%, beef 67%, coffee 92%, tea 40%, according to various sources.

Only tobacco, a major foreign currency generator, has rebounded markedly in the last year from a near 80% decline. In 1980, agricultural sector contributed 14% to the GDP, grew to 20,4% in 2001, but fell to 12,5% last year.

Mining has gained up to 20% since 1980, but manufacturing slumped from 24,9% during the same period to 21,1% in 2012 while all productive sectors fell from a combined 47,7% to 33,5% of GDP. As agriculture continues on a downward spiral, mining has since overtaken the former as the mainstay of the economy.

Taffs said the reasons for the decline were: “The lack of transparency with regard to the selection of beneficiaries of land resettlement and the criteria employed in their selection including the prima facie improper selection of senior government officials and civil servants, members of the judiciary and of the security services as beneficiaries of land resettlement.

“The selection of members of the judiciary as beneficiaries of land reform is one of the factors that appears to compromise their independence. It is a trite tenant of law that justice must not only be done, but must be seen to be done. It is thus highly inappropriate for these judges to preside over cases where white commercial farmers attempt to assert their rights against the operation of the fast-track land reform programme.”

Addressing the annual World Bank conference on land and poverty recently, Taffs added: “This situation has had a disastrous effect on commercial farm output. The confidence required for investment and growth in commercial agriculture is almost non-existent. For practical purposes of securing working capital requirements, there is now little difference in the two previously dominant forms of tenure.

“The commercial agriculture sub-sector was founded on, and developed because farmers were able to mortgage their fixed properties and raise finance by providing financiers with mortgage bonds. This system of providing security for credit was fundamental to being able to carry out farming operations, and governed investment and output. It was the cornerstone to stimulating the entrepreneurial spirit that developed this sub-sector.

“There have been moves to introduce lease agreements to replace the title deed system. The object is to put in place a system of tradable leases that financiers will accept as security for loans. So far, the government has not produced a standard lease document acceptable to financiers as security for credit advanced.”

Gilpin, a former commercial farmer also said he bought his farm in 1987 — none of it inherited — but it was seized, with all of the equipment. “My heart bleeds when I visit my farm and I see there is no activity. We have about 300 farmers still farming, but about 1000 others are in towns. We have applied for resettlement, but we have been denied that right, it is somewhat racial.”

Gilpin further said: “Newly resettled farmers have been warned against leasing their farms to whites lest they lose them. It appears that some Zimbabweans graduating from college have no wish to farm and would prefer to sit in front of computers as they may not have capital to start a farming venture.

“The land reform has turned every piece of farming land worthless, and without title you cannot convert it into cash. Listen, every white farmer is not opposed to land redistribution. We all know the colonial history of this country. But, what happened and continues to this day is something else. There is need to have some respect for the rule of law. There has to be restitution and respect for property rights. We don’t have any of that right now.”

CFU estimates the government would need $3 billion to resuscitate the ailing agricultural sector, adding over $12 billion would also be required to compensate white farmers evicted from farms.

“The government doesn’t have that kind of money, and we are negotiating. It takes quite a while to build investor confidence, and by paying up that would show that it is serious about protecting property rights,” Gilpin said.

Has Zimbabwe’s prolonged economic derangement and the resultant collapse of the country’s social infrastructure been entirely self-afflicting? The government is saddled with a $10,7 billion external debt representing 103% of GDP debt, yet Mugabe on Monday this week said he will move towards indigenisation of foreign owned firms with renewed vigour. The move could discourage foreign investment acutely needed to get off the country’s knees.

Foreign firms are by law expected to sell 51% of their stake to indigenous Zimbabweans, described as “formerly disadvantaged”.

Meanwhile, farm and urban land seizures have continued unabated in Harare and Beatrice in the last two weeks.

Zimbabwe cannot possibly begin to heal itself as long as the agriculture sector remains in such colossal disarray.

While there has been some recovery in production since 2008, largely on the back of the adoption of a multicurrency system, Taffs said much of the recovery was being driven by a move to contract farming.

Yet, a hopeful Gilpin said: “We do not have all the answers to the problem. We need a consensus on this matter. We are saying give us 49% of the farms and we will do our bit to try and restore the country’s breadbasket status. We can get back on our feet again. We have nowhere to go; we have only known Zimbabwe as our home. Why should we be discriminated against?

“We are saying create wealth and redistribute it equitably. The myth is that we have a shortage of land for resettlement, but that’s not it. The fact of the matter is we have turned the whole country worthless. Notably, the decline in beef production has been accompanied by the virtual loss of the valuable seed stock industry built up over the preceding 100-year period.”

FUNDING ONLY KEY TO UNLOCK POTENTIAL

THE key to unlock the potential of the country’s agricultural sector is huge cash injection to rejuvenate sagging fortunes of the once buoyant sector and mitigate the effects of perennial hunger, it has been learnt.

REPORT BY WISDOM MDZUNGAIRI/VICTORIA MTOMBA

Agricultural experts told NewsDay that the missing link in the sector was funding at a time local financial institutions were not keen on lending to resettled farmers.

Tobacco Industry and Marketing Board chief executive officer Andrew Matibiri said: “Certainly, the tobacco sector could do with this (enough funding) as evidenced by the fact that 67% of tobacco production is now supported by contracting companies. With over 83% of our growers being self-funded and small-scale (producing up to 2 hectares per year) any financial support rendered would result in very large increases in national production.”

In an interview, Matibiri, however, said there was need for the development of a new system in the banking sector to meet the loan requirements for farmers.

“While in traditional bank lending systems collateral security is required, it is believed that under the Zimbabwean situation a new system needs to be developed that will satisfy the loan security requirements of the lender without necessarily requiring the grower to find security in the form of immovable property. The task to find this balance is not only for the government, but for all involved in agriculture,” he said.

He said the government should put more resources in place for farmer training service to improve their skills while drip irrigation or any other form of irrigation system could help farmers improve their yield by producing quality crops.

“For tobacco, we are fully aware that a higher yield and quality are attained by planting early and providing supplementary irrigation. An irrigation system that is established for tobacco can also be used on any other crop. For small-scale producers drip irrigation is ideal because of its relatively lower costs and ease of operation,” Matibiri said.

Horticulture farmer and Securities Commission of Zimbabwe chairperson Willia Bonyongwe also said the major problem in the agriculture sector was funding as the sector relied more on merchants who contracted farmers to produce crops.

“There is no way we can be competitive when prices are not competitive and the middle man is charging more to the farmer. If we are going to look for funding we should look at the price and the tenure of funding,” she said.

Bonyongwe said farming has a multiplier effect to the whole economy because when it grows the benefits spill to other sectors of the economy such as manufacturing, services and others.

She said the issue of electricity tariffs also needed to be dealt with as farmers were not be able to produce more with a high tariff.

“The tariffs have to be looked at in such a way that farmers get a different tariff otherwise the reprieve will not be helpful as the bills will go back to the same figure as farmers fail to pay,” Bonyongwe said.

Presenting a paper at the economic summit on Tuesday this week, World Bank chief economist Nadia Pifarretti said the agricultural sector had the potential to grow in the long-term.

“The new small-holder sector requires temporary, stronger support to unlock its potential. Production remains constrained by the need to adapt to the new production structure and finance the necessary investments in a context of still very low domestic savings,” she said.

CFU president Charles Taffs last week also told NewsDay that the food shortages currently being experienced in most parts of the country were caused by enactment of poor agricultural policies that resulted in about 70 000 hectares of irrigated land being decommissioned.

“We have always, as a country, had perennial problems with drought because of where we are geographically. So we have to develop irrigation facilities to mitigate the risk of running short of food,” Taffs said. Such irrigation facilities were operating efficiently in the country, helping produce about 600 000 tonnes of maize from the commercial sector whether there was a drought or not until they were downsized in the 1990s.

But, CFU said the current position was that as a result of wholesale acquisition of farms the land market in the large scale commercial sub-sector has collapsed and no properties were being traded.

Taffs added: “The collateral value of immoveable property has been locked up and this has jeopardised the ability of private sector financial institutions to back agricultural production and infrastructural development.

“Those few commercial farmers who are still operating are provided with finance mainly on the basis of past creditworthiness ratings. The new farmers (ie those who have been allocated farms) are in a worse position because they do not hold title deeds to the properties that they have taken over, and nearly all have no track record or creditworthiness ratings.

“As such, few banks are prepared to provide them with credit. This has seen the rise of risky contract farming as the only source of funding working capital requirements.”