Biti tells govt to give farmers long leases
Saturday, 15 October 2011 16:10
BY NDAMU SANDU
FINANCE minister Tendai Biti says there is need for long leases that can be
used by farmers to borrow from the banks among a host of recommendations
designed to make agriculture a viable business. This, according to Biti,
will allow farmers to go directly to the banks after government has realised
that budgetary support alone is not the solution to the problems facing the
agriculture sector.
“Wherever I have gone, farmers are crying about the absence of collateral
and you can’t have collateral without securitised long leases,” he said.
“The Attorney General has completed the work and it’s now up to
(Agriculture, Mechanisation and Irrigation Development) minister (Joseph)
Made and Minister Murerwa (Herbert). It’s important that security of tenure
and collateral is there because farming is a business and every farmer must
have a business model,” Biti said.
“Nowhere in the world does government support agriculture. it can come with
a few subsidies here and there and can look at its vulnerable sectors, but
government can’t look after agriculture.
“Long leases will allow the return of a land market in Zimbabwe. there isn’t
a land market and if you can’t trade in land, it becomes dead capital. A
commodity needs two issues: use value and exchange value. So far our farms
have use value, but no exchange value.”
The Bankers Association of Zimbabwe (Baz) recently said they want lenders to
be given the same rights as the government in the ownership of land to
resolve the issue of collateral.
Banks argue that by having the same rights as the borrowers, they can
recover the debts.
Government has amended some clauses to the 99-year leases to entice banks to
accept them as security.
Baz said Clause 17.1.1 states that the lessee cannot cede, assign,
hypothecate or enter into a working partnership without the authority of the
lessor and that the lessor has six months to respond, which does not work
for debt recovery.
Biti said with liberalisation measures instituted by government in 2009,
prices should be determined at the floors like what happened at tobacco and
cotton auctions.
“This year the price of maize was US$285 per tonne, but in a liberalised
environment government should leave that role to a commodity exchange and
the ministries of Agriculture and Industry have put a grain commodity
exchange,” he said.
“Once you have a producer price, a floor price that is not equal or
consistent with import parity, you have got a problem. Our price this year
was US$285 per tonne, but people are bringing maize from Malawi and Zambia
at US$190 per tonne.”
Biti said the Grain Marketing Board (GMB) will only buy grain for strategic
reserves. GMB used to have a monopoly on the marketing of grains, but that
stopped in 2009.
The absence of a commodity exchange means that farmers are not getting value
for their produce.
The GMB has been failing to pay for grain delivered and is offering some
farmers inputs instead of cash as payment for their produce.
Zimbabwe does not have an operating commodity exchange. A commodity exchange
launched in January is still to take off nine months on.
Biti promised to ensure that the exchange is kept running to ensure fairness
in prices.
Over the years, farmers have waited for government support as they cannot
access the financing from financial institutions.
In addition to that, the GMB has been unable to pay for deliveries to the
depot.