CHAPTER 7: SUPPORT FOR AGRICULTURE
Land Utilisation
351. His Excellency, the President, in his inauguration speech, pointed out that under the ‘New Economic Order’, Government’s economic policy will also be anchored on agriculture.
352. As such, beneficiaries of the Land Reform Programme are required to fully utilise the land and improve on productivity.
353. Government is urgently addressing all issues related to land tenure in order to bring finality and closure to the management and ownership of land, critical for improved land utilisation.
Security of Tenure
354. The prevalent form of formalisation of land distribution to beneficiaries across the A1 and A2 land tenure system was ‘Offer Letters’ issued by the Ministry responsible for Lands and Rural Resettlement.
355. In order to address the security of tenure, especially with respect to the A2 model, Government introduced the 99 Year Lease, as a tool for formalising occupancy of re-distributed farms to beneficiaries who would have paid lease rentals, as well as for improvements.
356. To give confidence to beneficiaries that their occupancy is guaranteed, and cannot be withdrawn willy nilly, through the indiscipline of either youths, political leaders, traditional leaders or senior officials, Government is undertaking to institute measures to strengthen the legal standing of Offer Letters and 99 Year Leases.
357. This enables the much needed farm investments, improved utilisation of land and, therefore, production.
Farm Valuations & Surveys
358. It has also been observed that the pace at which farm valuations are being undertaken is limited, resulting in very few issuances of the leases.
359. It, therefore, follows that the proportion of 99 Year Lease issuances against the number of beneficiaries remains negligible, constraining financing by financial institutions and, in the process, perpetuating farm land as dead capital.
360. Going forward, through the 2018 Budget onwards, Government will set aside resources for strengthening capacity of the Surveyor General’s Department to scale up conduct of farm surveys, instead of outsourcing, for rapid issuance of 99 Year Leases.
361. Furthermore, re-surveys of farms should benefit from adoption of technology based Unmanned Aerial Vehicles which take much less time and costs.
Land Audits
362. Having completed the Land Reform Programme, Government is moving to undertake periodic land audits through the Land Commission, established and operationalised in June 2016, with the mandate of ensuring accountability, fairness and transparency in the administration of agricultural land vested in the State.
363. The necessary preparations for the land audits are now at an advanced stage.
364. Through this process, issues of multi-farm ownership, idle land and under-utilisation of land are going to be identified.
365. Idle land represents dead capital and promotes speculative tendencies, if not checked on the part of the land holders. As a result, the economy loses on optimal agricultural production.
366. In this regard, appropriate remedial measures to address prevailing idle tracts of previously productive land, in order to improve agricultural production in the country, will be guided by results from the comprehensive land audits.
Forestry Estates and Conservancies
367. To this day, incidences of land allocations, onto subdivided Forestry Estates and Conservancies, continue being experienced.
368. In some cases, this has been perpetuated illegally and in a manner that negatively affects conservation practices and objectives, with respect to our forests and wildlife.
369. It has been observed that in a number of cases, those resettled have quickly moved in to clear trees and substitute forestry and wildlife production with maize and other crop farming, often at sub- optimal productivity.
370. Studies have already revealed a disturbing gap we now face in suitable wood raw materials a few years from now, due to disturbances that have been caused by unplanned resettlements over Forestry Estates across the country.
371. In order to restore our forestry resources, Government is moving in to bring a stop to this and, where necessary, reversals of some indiscriminate resettlements over both Forestry and Conservancies will be undertaken.
Special Agricultural Production Programme
372. The spearheading by Government of the Special Agriculture Production Programme popularly coined ‘Command Agriculture’, in partnership with the private sector, followed completion of the land allocation phase of the Land Reform Programme.
Thrust
373. The thrust is on full, efficient and sustainable utilisation of allocated land, for increased investment on the land and production.
Farmer Challenges
374. On average, the new farmer had been encountering constraints which became a hindrance to full productive utilisation of the land, bordering around capacity, resources, and elements of insecurity over tenure.
375. The result was much idle farmland, and unaccountability on the part of the farmer with regard to use of acquired land holdings for farming in support of domestic food security, supply of agro-inputs and exports.
Leadership
376. The under-utilisation of land was guaranteed to continue unabated, in the absence of leadership and a champion to provide decisive intervention support, that way perpetuating food insecurity and over- dependency on imports.
377. To untangle the potential for grid-lock and paralysis on farms, Government intervened with introduction of the Special Maize Production Programme, now broadened to embrace other crops and livestock, as a transitional inception intervention.
378. Government recognises that, in the interim, the new farmer would need to be incubated as they learn the ropes and overcome learning-by-doing inefficiencies, that entail yields lower than would obtain with best practices, making a case for transitional producer prices higher than import parity levels.
379. In these circumstances, traditional private partners and bank funders of agriculture also become hesitant to develop fully supportive facilities for the new farmer, necessitating adoption of collaborative financing models by Government and the private sector.
Farmer Obligations
380. The individual farmer remains responsible and accountable for honouring repayment of obligations arising under such financing facilities.
Financing Model
381. Government envisaged the impact of the financing model for the ‘Command Agriculture’, cognisant that this transitional intervention with short-term cost implications on the Budget would anchor improved agricultural production.
382. As we move forward, private sector and commercial bank finance will be required to fully take up its rightful role of adequately underpinning agriculture, particularly, A2 commercial farmers.
383. Accordingly, the 2018 Budget also supports interventions in agriculture. This will progressively and gradually scale down from 2019, leaving Government financial support targeted at needy vulnerable households.
Government Facilitation
384. On the other hand, Government will continue with its facilitative role in the areas of extension services, disease and pest control, provision of bankable leases and security of tenure, development of irrigation, farm mechanisation and other infrastructure facilities.
Horticulture
85. Government plans to coordinate extension of support towards expanded horticulture production from 2018, focusing on providing support towards identified farmers.
386. Some of these farmers would be requiring rehabilitation and expansion of irrigation infrastructure, access to handling technologies, market access, financial services and capacity building.
387. Participating farmers will largely be drawn from both the commercial and smallholder farming communities, with the programme anchored on commercial farmers with expertise in horticulture production.
388. Smallholder farmers will, therefore, participate as out growers.
389. This intervention will provide us with new opportunities to economically empower farmers, particularly smallholder ones, create employment opportunities, as well as earn foreign currency.
Monitoring of Agricultural Inputs
390. Government has instituted measures to ensure effective delivery of the Command Agriculture programme, and accountability of inputs utilised by farmers.
391. These measures include among others, strengthening of the inputs control and distribution systems, as well as programme monitoring mechanisms, at every stage of the supply and distribution of inputs, that way assisting plug potential leakages of agriculture inputs.
392. Reports of abuse and sale of inputs by some beneficiaries, under both Command and Presidential Agricultural Programmes, are being followed up with the support of Agritex officers, and the culprits will be quickly brought to book.
393. Furthermore, the Ministry of Lands, Agriculture and Rural Resettlement is validating expenditure commitments of Sakunda under the Programme, as well as values of inputs supplied and those collected by farmers. This is being undertaken with the support of the Accountant General and the Debt Management Office.
Electronic Management Systems
394. Use of manual capture systems at District and Provincial levels does not provide adequate monitoring of collection of inputs by farmers, hence, scope for double dipping by some farmers, with more than 20 hectares and above, who are required to collect inputs directly from input suppliers.
395. Experiences of missing details of some farmers have been registered with reliance on manual capture systems for inputs disbursements.
396. Hence, arrangements are underway to have all data relating to participating farmers captured in an electronic data collection system, which is expected to ride on the back of the PFMS system.
397. In this regard, the Ministry of Lands. Agriculture and Rural Resettlement is implementing the electronic data management system as a matter of urgency.
398. To contain side marketing by farmers, from the 2017/18 season grain intake, the GMB is being required to decentralise cost recovery Stop Order forms to depot level, as well as consolidate data on participating farmers.
Control over Access to Supplies
399. Absence of effective control and distribution mechanisms had meant that bogus farmers could access inputs through unscrupulous suppliers.
400. This also results in abuse of fuel coupons, through issuance of fuel coupons that would not be commensurate to farmer requirements.
401. Some of the potential risk areas have since been rectified which has seen the logistics committee, in consultation with private financing partners, tightening the distribution and collection mechanisms for both fuel and other inputs.
402. All participating farmers are now required to have their contract papers and release orders for inputs collection, to be processed at District level.
403. For those farmers required to collect inputs directly from inputs suppliers. Government officials have been stationed at inputs suppliers’ depots to clear and monitor collection of inputs by farmers.
404. Other potential leakages being plugged relate to:
· Absence of validation processes over use of tillage vouchers and combine harvesters repairs; and
· Collusion between district Command Centre officials and some farmers, that could result in inputs collections in excess of requirements determined by Agritex ward officers.
Stop Orders
405. Some farmers who would have benefitted from Command Agriculture inputs supplies were being paid in full for grain delivered to GMB despite having loan obligations under the Programme.
406. Government has, thus, moved in to plug potential leakages that could arise. In this regard, participating farmers are also required to complete the cost recovery Stop Order forms at the point of inputs collection.
407. Furthermore, plugging of potential leakages is extended to prevent some Ward extension officers recommending farmers without farm/land offer letter to collect inputs, resulting in no recoveries.
Validation &Monitoring
408. Other potential areas of leakages being plugged at supply level include requirements for:
· Enforcement of validation processes over quantities of inputs delivered against quantities of inputs contracted;
· Tighter monitoring mechanisms relating to delivery of inputs to GMB depots by suppliers such that current expenditure commitments are based on Command Centre reports on inputs collected by farmers;
· Procurement authorisations over such inputs as chemicals for the control of Fall Armyworm and Quelea birds within the Financial Agreements; and
· Strengthened Government oversight over input prices negotiations prior to procurement.
Capacitation of Agritex & Command Centres
409. Command Agriculture programme monitoring will be strengthened through the capacitation of Agritex officers and Command Centre Officers at district and provincial level to enable them to undertake routine monitoring of the ‘ programme at every stage of the crop production cycle.
410. In addition, National Task Force monitoring teams will be required to monitor and evaluate the programme on a quarterly basis.
411. Treasury undertakes to support the monitoring exercise at every stage of the cycle.
Loan Recoveries from Farmers
412. A positive culture of honouring loan obligations is emerging among farmers benefitting from empowerment support under the Command Agriculture Programme.
Recoveries from Maize Farmers
413. In this regard, Command Agriculture loan recoveries are running at 66%, with the Command Agriculture Revolving Fund registering repayment receipts of US$47.4 million in loan recoveries from farmers. This is against an anticipated repayment target of USS72 million.
414. Out of the 50 000 farmers contracted to produce maize under Command Agriculture, 33% fully paid their loan obligations, with 22% having partially paid their obligations, while recoveries from others are being made as they deliver to GMB.
415. To encourage our farmers to continue paying back their debt obligations, all fully paid farmers are being prioritised in accessing inputs under the 2017/18 Command Agriculture programme.
416. With regards to those farmers who have partially paid, as well as the new farmers, consideration to be contracted is based on a tight criteria, which includes, among others, the need for a farmer to demonstrate capability to produce.
417. However, as at 23 November 2017, about 10 053 contracted farmers had not ‘ made any maize deliveries to GMB, an indication that these were already defaulting on their 2017 debt obligations.
418. Government has, therefore, instituted measures to ensure recoveries from these farmers, with monitoring teams already deployed to follow up on such farmers who are being made to acknowledge their debts for repayment next season.
419. Loan recoveries from wheat farmers are already underway, with recoveries standing at US$3.6 million, against a target of US$8.8 million, as at 23 November 2017.
420. Further recoveries are being experienced as farmers harvest and deliver their wheat produce to the GMB.
Anchor Companies
421. Agricultural production enhancement will benefit from cooperation between anchor and new companies.
422. This linkage in the sector facilitates access to capital and markets, sharing of best practices, farming knowledge and transfer of expertise, mutually beneficial to both parties
423. More specifically, the identified anchor companies have the critical roles of providing access to capital, training the small scale farmers and coordinating marketing, including exporting.
424. As proposed in the past, Government will consider putting in place appropriate incentives in support of these arrangements.
Farm Rentals & Development Levies
425. In an effort to ensure efficiency in the collection and compliance of farm rentals and land development levies, the 2018 Budget proposes to re-assign Local Authorities as the collecting agent for land fees.
426. The funds derived from Rental Levies will be for use by the Ministry of Lands, Agriculture and
Rural Resettlement, while Local Authorities will utilise funds raised from the Development Levy.
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VAT on Capital Equipment Arising From Change of Policy
998. VAT registered operators are allowed to claim input VAT on capital goods used to manufacture taxable supplies.
999. However, in circumstances where the manufacturer changes use of the capital goods to produce exempt supplies, the plant and equipment is deemed to have been disposed, hence output VAT is payable.
1000. The decision by Government to exempt previously zero-rated supplies, such as margarine, eggs, rice implies that plant and equipment used by registered operators was deemed to have been disposed, resulting in an unplanned output VAT liability.
1001. In order to mitigate the impact of the VAT liability on affected suppliers, it is proposed that the Deeming Provision shall not apply where change of use is emanating from Government policy.
1002. This measure takes effect from 1 January 2018.
VAT Exemption on Goat and Sheep Meat
1003. Whereas other meat products such as beef, chicken and pork are exempt from VAT, meat of sheep and goats is liable to a 15% standard rating of VAT.
1004. This scenario makes goat and sheep meat more expensive relative to other meat products.
1005. In order to level the playing field, the 2018 Budget proposes to exempt goat and sheep meat from VAT with effect from 1 January 2018.