COMMERCIAL FARMERS’ UNION
PRESIDENT’S REPORT TO CONGRESS -2015
REALIZING ZIMBABWE’S AGRICULTURAL POTENTIAL
PETER STEYL
1. INTRODUCTION
My report to Congress will highlight some of the tremendous potential that the agricultural sector has for growth and the type of goals we should aim for in the future so that we have clear strategies and activities to carry out to ensure that agriculture is positioned as the main driver of Zimbabwe’s economic development.
Irrigation Potential
There is debate about the potential area in Zimbabwe that could be put under irrigation. Government figures indicate an area of between 2,0 million and 2,4 million hectares. This comprises some 5% of Zimbabwe’s total land area 0f 39 million hectares. The fact is that only 122,000 hectares or 6% of this potential area is actually developed. Zimbabwe has immense irrigation resources at its disposal. Government has a 50 year plan in place for developing 2 million hectares of irrigation by 2063. Exploiting our irrigation potential has been stressed in national development plans in the past and is one of the main targets in the current ZIM-ASSET plan.
Irrigation Development in Zimbabwe
· Agriculture is the greatest water user in Zimbabwe accounting for 79 percent of total water use. Agricultural water uses are for irrigation and livestock watering.
· Irrigated agriculture will continue to dominate the water demands for Zimbabwe in the foreseeable future.
Role of irrigation in agricultural production, the economy and society
§ About 70 percent of the population of Zimbabwe depends on agriculture for food and employment. However irrigation is important for successful crop production in the country as the greater part of the country (that is National Regions III, IV and V) receives inadequate rainfall for agriculture.
§ Even in the wetter Natural Regions I and II, mid-season droughts are common making supplementary irrigation necessary. Supplementary irrigation is also used to extend the growing season of certain crops or enable the early planting of such crops as tobacco, groundnuts, and cotton.
§ The major irrigated crops in the country are wheat, barley, cotton, sugar cane, tobacco, soybeans, fruit, vegetables and maize.
Evolution of irrigation development
Before proceeding it should be noted that there is some controversy about current areas under irrigation and the potential area that could be developed for irrigation in Zimbabwe. Sometimes in the past the figures were derived by adding all irrigated crop areas together to reach the total, regardless of whether the crops were grown in summer or winter. As is well known winter crops like wheat and barley are usually grown in rotation with summer crops like soya-beans on the same lands. Thus an element of double counting occurred in deriving total national irrigated areas. When winter cereal cropping was at its height at the end of the 1990s winter cropping areas regularly exceeded 50,000 hectares so the element of double counting was large.
Before and after independence in 1980 successive governments have invested heavily in dam construction and irrigation infrastructure.
· In 1960 the total area under irrigation was only just over 18,000 hectares
· By 1970 this area had increased by more than four-fold to 80,000 hectares.
· At Independence in 1980 the irrigation area had nearly doubled from the previous decade to 151,000 hectares. This figure includes an element of double counting.
· In the late 1970’s the then Government introduced the farm irrigation fund at very low interest rates to stimulate wheat production. This boosted the irrigation area despite the instability associated with the war of liberation that was taking place then. The fund continued to operate in the early 1980’s.
· In 1999, FAO estimated that the total equipped area under irrigation was 173,500 hectares
· In that year just over 50,000 hectares of winter crops were grown and allowing for double counting the operational area under irrigation in the country was only 123,000 hectares.
· This coincides nicely with the estimate in the World Bank water Sector Investment Analysis 2013/2014 report which states that the winter irrigation area in 2000 was 122,000 hectares. This figure includes both winter cereal crops and perennials like sugar cane.
· Satellite imagery was used in deriving the area in the World Bank report so it is reasonably accurate.
· This same report states that by 2013 satellite imagery showed that the winter irrigated area had dropped to 51,000 hectares.
· Thus, some 72,000 hectares of developed irrigated lands were recently identified as being unutilized.
· This decrease has occurred because irrigation schemes have fallen into disuse with dams requiring rehabilitation and because equipment was damaged during the land redistribution exercise.
There are other figures produced by government departments and quoted by FAO but I will not go into them as I believe they carry the flaws I have already mentioned.
A strategy to expand the national irrigation area must first bring the 72,000 hectares that is already developed, but unused, back into production. This represents a “quick start” approach to a national program of irrigation development.
The rate at which irrigation development has occurred is supported by available data on dam construction to some extent. According to ZINWA records the number of farm dams before 1980 was 2386. Currently the total is 4120. However it should be noted that these are registered dams only. There are a good number of dams that have been constructed and have not been registered with ZINWA. FAO puts the total number of farm dams in Zimbabwe at +/- 8000.
Future Outcomes from Irrigation Development
§ With climate change and recurrent droughts in the past few years it is good that irrigation development is now part of the strategy to counter this.
§ Government has realized the importance of irrigation and it has been factored into national development targets.
§ An increase in irrigation-based crop production will assist Zimbabwe to produce staple food surpluses on a regular basis again and dispense with the need to rely on food imports.
§ An increase in the output of exported farm produce due to irrigation expansion will boost foreign exchange earnings that can be used to accelerate economic development.
With this information in mind we can be positive and use ideas from the past to promote future development
The Golden Dawn Project
For many decades the development of Zimbabwe has been spearheaded by the agricultural sector. During this time it has been recognised that Zimbabwe has tremendous income generating capacity from irrigation development. Back in the 1970’s the potential was outlined in a proposal called the “Golden Dawn”. At that time 35 500 hectares had been brought under irrigation by private enterprise and the Sabi-Limpopo Authority
In essence, and using financial data that has been updated to 2015, the detailed proposal stated that US$ 3 billion worth of agricultural produce could be generated every year by developing up to 405 000 hectares under irrigation.
The development would be focussed in the basins of the Lundi, Save, and other rivers lying south-east of the country’s main watershed. This region has good soils and abundant river water and excellent dam sites. However it lies mainly in Natural Region 5 which has low and very erratic rainfall and irrigation is essential if cropping is to flourish.
Besides sugar, it was foreseen that rice, cotton, winter wheat, and horticultural crops could be grown.
It was estimated that this development would cost US$5.6 billion over 25 years. The main benefit would centre on providing employment for nearly 400,000 people in farming, industry, and commerce in that region. When families are included this represents a consumer market of one and three quarter million people.
Some of the envisaged development has occurred since then, more notably at Mkwasine, Chisumbanje, the Middle Save East Bank and more lately the Tokwe-Mukorsi Dam.
However, only one sixth of the potential irrigation area has been developed and there is scope for a very substantial expansion in agriculture in that region of Zimbabwe through irrigation.
Furthermore, there are also other areas of Zimbabwe that have good potential for irrigation development, For example, the proposed Kudu Dam on the Munyati River near Kadoma will result in an irrigable area of 30,000 hectares in the Kadoma, Sanyati, and Gokwe areas which will generate jobs in all sectors of the value chain for an estimated 100,000 persons. Another dam planned for this region is the Mhondoro B Dam to be constructed near Chegutu. A whole range of crops can be produced when both of these developments take place. Further afield, Muzarabani District in the Zambezi Valley is another example of an opportunity for irrigation development.
As a major goal for the future Zimbabwe must strive to achieve a “Golden Dawn” as originally envisaged. Besides providing dependable food supplies to Zimbabwe’s urban centres and ensuring food security for all persons, our manufacturing sector will receive better and more reliable supplies of raw materials for value addition. Examples include ethanol extraction from sugar and textile products from cotton lint.
This is exactly what all national development plans have sought to achieve in the past, and as already stated irrigation development is an important component of the current ZIM-ASSET plan.
It must be remembered that what I am proposing is extra to the current US$ 2 billion agricultural output that is already being achieved in this country. In effect if fully implemented the plan would much more than double the current farm contribution to GDP. And it would also provide a substantial number of new jobs both within agriculture and in upstream and downstream industries.
The impact of achieving self-sufficiency in staple food production is a very important goal for Zimbabwe. For example this year Government has set aside US$300 million for maize imports because of the bad harvest last season. In effect this money is being paid out to farmers and transporters in other countries and not to our own farmers. The foreign exchange used to import food could be used to import goods and materials vital for our development.
Development of water resources should be undertaken on a regional basis on a public sector – private sector partnership basis. Agencies should be created for this purpose. A forerunner that can be used as an example is the Sabi-Limpopo Authority.
The Sabi-Limpopo Authority was established by an act of parliament in 1965. It operated in a defined area in the lowveld of south-eastern Zimbabwe. The functions of the Authority were to exploit, conserve, and utilize the water resources in this area with the object of promoting it economic development in the national interest, and to promote, establish, operate, and co-ordinate undertakings for the economic and social development of the area. To facilitate this, the Authority was granted a wide range of powers, some of which are exercised with the approval of some ministries.
Besides resuscitating this particular organization, others can be created to develop other regions.
Conservation and Dams
Many areas of Zimbabwe have suffered from severe soil erosion and have become non-productive. Erosion has also caused many dams to become silted up. I now wish to discuss briefly a simple method of countering this unwelcome development.
The Vetiver system, a technology of soil conservation and water quality management, is based on the use of vetiver grass. Vetiver grass is a densely tufted, perennial clump grass with stiff leaf bases which overlap. Several aspects of vetiver makes it an excellent erosion control plant in warmer climates. Unlike most grasses, it does not form a horizontal mat of roots, its roots grow almost exclusively downward, 2–4 m, which is deeper than some tree roots. This makes vetiver an excellent stabilizing hedge for stream banks, terraces, and rice paddies, and protects soil from sheet erosion. The roots bind to the soil, therefore it cannot dislodge. The close-growing culms also help to block the runoff of surface water. It slows water’s flow velocity and thus increases infiltration and reduces evaporation, thus protects soil moisture under hot and dry conditions. The mulch also protects against splash erosion. The stiff foliage also blocks the passage of soil and debris which gradually builds up a soil terrace.
Zimbabwe’s vetiver champion was Jano Labat of Chiredzi. Jano was formerly a sugar farmer. In the early 1990s Jano started using vetiver grass for stabilizing his field drains, irrigation ditches, and farm roads. At the same time he championed vetiver grass across Zimbabwe. He has supplied planting material, advice and good will to hundreds of would be vetiver users in a country where soil erosion is estimated to cost billions of dollars annually. Like most technologies it is rather slow to be accepted hence there is a need for authorities to push for its adoption.
It should be noted that many farm dams are in need of rehabilitation with cracked or collapsed walls. These dams require repairs to be made and then vetiver grass should be used to maintain earth walls in good condition and prevent silting
Conservation Agriculture
In recent years conservation farming has taken off in many areas as a good method of preventing soil erosion and maintaining soil quality. This technology is ideal for use in Zimbabwe given the climatic conditions that we have and should be encouraged in all of our natural regions. We applaud Government’s recent efforts to promote Conservation Agriculture. We believe that this method if adopted by farmers could dramatically improve agricultural output.
Environment
The increase in Tobacco production in Zimbabwe has been a very welcome development and we are keen to ensure that the successes of the past few years in this regard are built upon. However, I want to briefly mention the great damage being done to our environment by the unsustainable production of Tobacco that causes deforestation as a result of using timber for curing. Vast areas of our tobacco growing areas are being denuded of indigenous trees because of this method of curing in the last few years. Many thousands of small scale tobacco growers have been encouraged to grow this crop by tobacco trading companies who have not made provision for supplying them with coal for curing purposes. These farmers are too poor to buy coal for themselves and resort to cutting down trees to carry out tobacco curing. Recently a levy has been imposed on tobacco sales to finance forest rehabilitation but the impact of this has been very limited so far. We cannot afford to export our forests in the form of cured tobacco because it has no long term sustainability. If foreign based companies want to purchase tobacco from Zimbabwe their pricing must accommodate methods of curing that do not damage our environment.
IMPROVING COMMUNAL CATTLE PRODUCTIVITY PROPOSAL
Regarding a brighter prospects for agriculture in the future I would be remiss if I did not mention livestock, and here I am talking about the beef cattle industry in particular.
Beef Cattle in Zimbabwe
· Estimates of the size of the national beef cattle herd range up to 5.3 million head.
· Of this number over 4 million head are found in the communal areas, and this is made up of mainly indigenous breeds with nearly 90% of households owning cattle.
· Historically annual off-take from the commercial herd has ranged around 20% while from the communal herd it has been less than 3%.
Indigenous Breeds
· The main breeds indigenous to Zimbabwe are Mashona, Tuli, and Nkone.
· Research findings have shown that when indigenous breeds are compared with exotic breeds raised in communal conditions, they outperform exotic breeds in terms of fertility, survival and yield characteristics.
· They are better adapted to ingest feeds of poor nutritional value and survive better in harsh climatic conditions when compared with exotic breeds.
· In addition big bodied exotic breeds have no advantage over indigenous breeds as they require more feed, and a much higher standard of animal husbandry in order to maintain them in harsh environments.
However, cattle production in communal areas is constrained by veld poverty and inadequate nutrition, widespread diseases, high mortality, poor reproduction, and low incomes.
A multiple pronged approach is required to tackle these various negative aspects so that a better future from cattle production can be realised by communal farmers. Improving productivity through breeding programs is one strategy that can be used
Breeding Problems
· The absence of fencing infrastructure in communal areas has led to a lack of controlled breeding.
· Bulls and cows of unknown genetic qualities often run together in a village herd made up of cattle owned individually by various households.
· Often inbreeding occurs over the course of time, the negative effects of which are:-
Ø Poor reproductive performance and low conception rates
Ø Unusually high mortality among calves
Ø Slow growth in calves that survive
Proposal for the Future
· The important traits observed in indigenous cattle should be promoted as a means to improving communal cattle production in Zimbabwe.
· There are pedigree indigenous cattle breeders who can be used to begin the process of upgrading the genetic quality of cattle in the communal areas.
· From this source superior indigenous bulls should be selected to begin the program.
· These bulls should be supplied to villages in exchange for the inferior bulls that are there which are removed from the herd.
· This will begin the process of genetic improvement.
· After a period, exchange of the superior bulls will take place between different villages in the program to prevent inbreeding.
However Zimbabwe will benefit from much greater output from the communal beef herd. More progeny that are healthier and on average heavier than at present will result from the breeding program. For example:-
1. The current communal herd off-take is around 3% per annum which equates to 120,000 head for a herd of 4 million. Each additional 1% above the current off-take figure will produce another 40,000 animals that will be sold due to an increase in herd size because of higher calving rates and lower mortality rates arising from the breeding program. If on average these animals kill out at 200 kg cold dressed mass at an average price of $3.60 per kg (CDM) the total gain in income for communal farmers as a whole will be $28.8 million for every 1% rise in the off-take percentage.
2. In addition the current 3% or 120,000 head will be heavier and of better quality and fetch higher prices as the impact of genetic improvement spreads over the whole herd. For example if we assume that on average the animals sold kill out at 50kgs heavier a long term impact will be 120,000 X 50 X $3.60 per kg = $21.6 million in extra income for communal cattle farmers over and above that in section 1 above.
An Agricultural Renaissance for Zimbabwe
The regeneration of agricultural productivity cannot take place until certain conditions are in place to support the process. It must be remembered that farming is a business and future development is dependent on business principles being observed. This must be accepted by all decision-makers involved in our sector. Farmers must be given the means whereby their businesses can flourish and become successful and I now want to discuss this in detail.
All farmers require stability underpinned by certain conditions if they are to engage in agricultural activities and invest in their farms because they have confidence in the future. The presence of these conditions may also affect other stakeholders in agriculture.
PROPERTY RIGHTS
Good stewardship of our land is an important goal for the future and those persons occupying land should be given appropriate incentives to look after their property.
· It goes without saying that all farmers require some form of property rights. It does not matter whether the farming is large scale or small scale, property rights must be in place if the farmer is to feel secure and look after the land properly.
· Without security and confidence farmers are unwilling to undertake any medium to long term investments.
· The issue of long term security of tenure still remains to be resolved. To this end farmers must be granted and hold tradable documents that provide long term tenure security.
· A tradable long term tenure document giving each farmer full entitlement to his or her farm will be the major factor that is above all others in achieving the transformation in agriculture that we want. There are several downstream benefits:-
Ø Farmers now have an asset which has value and can be used as collateral to secure credit.
Ø The presence of collateral results in finance being available to cover short term working capital requirements, and medium to long term finance for capital development and equipment purchase.
Ø Farmers can obtain working capital for farming operations and undertake any productive investments in their businesses with full confidence and be able to obtain finance to this end.
Ø The rural land market is revived because of farmers have individual property rights and financial institutions can grant loans to any category of farmer because there is a collateral base to support loans.
· The presence of individual property rights allow farmers to become fully focused on maximizing food and agricultural raw material production as well as exports.
Property rights must be the cornerstone for development if Zimbabwe to prosper in the future.
RESOLVING OTHER PROBLEMS ASSOCIATED WITH LAND
1. Compensation
The constitution of Zimbabwe provides for fair compensation to be paid for private land acquired by Government. However, little progress has been made on remunerating farmers for their losses.
An appropriate compensation package for all acquired farms and assets would engender confidence and internal and international support. Compensating displaced farmers for their farms and farmers who have been dispossessed of movable property must receive priority and be addressed properly.
Several actions need to be taken and are listed as follows:-
o A properly structured compensation program should be drawn up and agreed upon to the satisfaction of all parties and especially displaced farmers.
o Realistic valuations of immovable and movable property must be completed expeditiously.
o Payments of compensation must be completed within a given time frame.
o Where applicable, international funding should be actively sought to support the program.
We need to get the past behind us and move into the future without any encumbrances.
2. Protection of the Law
Evictions and the arbitrary loss of farms in Zimbabwe has been, and still are major factors in discouraging both local and foreign investment. Corruption has also thrived because of non-transparency and non-accountability in the resettlement programme.
The breakdown of the rule of law and the obvious lack of property rights keeps investors away. Donor aid is also not forthcoming in the amounts needed to revive the economy.
Respect for the Law should be observed and justice seen to be served where transgressions take place so that harmony prevails in them.
3. Equal Rights and Fairness for All Citizens
In the agricultural sector there is room for everyone who wishes to farm to acquire and purchase land. Anyone who wants to make a career of farming should be given the opportunity to do so. There should be no distinction on the basis of race, gender, social class, political affiliation, religion, and any other factor that might distinguish one group from another. The principle of “equal rights for all citizens” must be strictly adhered to.
Those persons who have the desire and ability to become a productive farmer should be supported including being given access to finance to begin farming operations. In the past land banks provided long term finance to purchase farms and equipment.
NEW TECHNOLOGIES
1. Research
Over the past 15 years both public and private research facilities have deteriorated due to insufficient funding from both the fiscus and private sources. If our sector is to keep abreast of the latest production technology in the future these facilities must be revamped to meet the challenge. There is room for public sector – private sector partnerships to carry out specific research projects. Zimbabwe’s research facilities were once superior to those in other countries in this region and there is no reason why we shouldn’t regain this position. We are quite capable of breeding high yielding crop varieties best suited to this country given that adequate resources are allocated for this purpose.
2. Skills Development
This necessity revolves around the need to improve output and productivity in all types of farming. Actions need to be taken to:-
· Improve extension services to farmers by using selected experienced farmers as resource persons to mentor and conduct training sessions for farmers groups at grass roots level
· Increase sustainability, productivity and profitability of farming operations by providing appropriate technical and economic services on a sustainable basis into the future.
· In the past tenant farming schemes have operated where new farmers were guided by mentors appointed to oversee their activities. The results were generally very successful and this type of training should be resuscitated as a means for achieving development in our sector.
3. Information and Communications Technology (ICT)
A speech about future development cannot be complete without some mention of ICT. “Smart Farming” is essential for growth in our sector and must be encouraged and adopted.
Adequate access to ICT is essential for the growth of Zimbabwe’s economy. ICT infrastructure and usage has developed exponentially during the past 25 years. This technology gives rapid access to information and allows certain tasks to be carried out much more efficiently and speedily than what prevailed in the past. A free flow of information results in rapid decision making in a business environment. The prospects for growth will be greatly enhanced by improving productivity through ICT use in the future.
This type of technology is becoming increasingly available to all Zimbabweans. Its usage in the rural areas is spreading as ICT infrastructure is installed in the more remote parts of the country. In countries like Kenya farmers receive extension information, conduct financial transactions, and can carry out marketing activities by cellphone and the adoption of the technology is fairly advanced. Zimbabwe has started down the same path, and there is no doubt that our agricultural sector, among other sectors, stands to greatly benefit from ICT development in future years. This type of technology is particularly attractive for younger persons in the rural areas and will encourage them to take up farming as an occupation.
INFRASTRUCTURE
One of the main challenges that Zimbabwe faces in the future is to rehabilitate other existing infrastructure and to add new capacity to meet existing and future demand. Low levels of maintenance since 2000 have been the cause of deterioration of basic infrastructure. The decline in the transport sector is a good example.
Transport
The three main types of transport that serve our economy are roads, railways, and aviation.
Zimbabwe’s road network was once one of the best in Africa and contributed greatly to economic growth. After independence in 1980 significant progress was made in constructing new roads. By 1995 a total network of around 90,000 kms was deemed to be in fair to good condition. However this position has changed significantly over the past decade. Nearly 13,000 km of this total has been reclassified as poor and needing complete rehabilitation. It is hoped that the introduction of toll fees will contribute not only towards this objective but also to upgrade and develop new road links.
The railway network connect Zimbabwe with its neighbors and beyond. In the past it has been a major factor contributing to economic growth by facilitating trade. Within Zimbabwe much of the transport of industrial and agricultural goods as well as minerals takes place by rail. This is also true for the movement of this type of freight to other countries and seaports. The use of rail to move freight has an additional benefit in that this reduces pressure on the road network and is far more economic than road transport.
The aviation industry provides international and local air links. For example the horticulture sector relies heavily on air services to move flowers and other produce to Europe and Asia.
The economic collapse during the past decade led to a severe deterioration in rail and aviation services. For example our domestic airline, Air Zimbabwe, has virtually collapsed. The provision of aviation services that can satisfy our air freight requirements must go hand in hand with the development of a thriving tourist industry bringing passengers to Zimbabwe.
Regarding the railways, the annual amount of freight moved by rail was around 14 million tonnes in the 1990’s. By 2009 this had declined to 2.7 million tonnes per annum despite the fact that demand for the service was substantially higher in terms of tonnage required to be moved. Currently there is not enough locomotive and rolling stock capacity to meet demand. This position must be reversed and large amounts of capital must be sourced to capacitate the recovery.
The need to revamp the transport sector cannot be over-emphasized if any meaningful development in the future is to take place.
Electricity
Growth of the economy cannot be achieved in the future unless there is substantial improvement in power supplies. In the past decade domestic power generation has fallen far below demand because of poor maintenance of generating plants. The ongoing electricity supply interruptions and shortages continue to have serious repercussions on getting the economy onto a growth path that will be sustainable well into the future. The need for adequate and reliable power supplies not only affects the farming sector, but all sectors given the forward and backward linkages that exist between them. If these objectives are achieved and low cost tariffs and power saving systems are implemented, businesses in both the rural and urban will be given a basic requirement that will enable them to prosper and grow.
I now wish to talk about a contradiction in the national allocation of power supplies. This subject has very recently been covered by the Minister of Energy and I wish to support his comments and actions on reallocating the Sable Chemicals electricity supply.
This issue is being raised because I have already covered the topic of irrigation development as being the main route for achieving growth targets for agriculture. The simultaneous provision of sufficient and reliable electricity supplies are an essential component of extending irrigation into new areas, and reallocating Sable Chemical’s power supplies to better use is part of this process.
Established in 1965, Sable Chemicals is Zimbabwe’s sole manufacturer of ammonium nitrate fertilizer. It uses an electrolysis process which is outdated and uneconomical now, and when operating at full capacity consumes 115 megawatts of electricity (which equates to about 10% of the national electricity output). At maximum capacity it can produce 240,000 tonnes of ammonium nitrate.
For many years Sable Chemicals has received preferential treatment from Government which has subsidized Sable Chemical payments to ZESA for the power the company uses. In recent years Sable Chemicals has been paying 3 cents per unit with the commercial rate being 9 cents per unit and Government subsidizing the difference. However due to Governments fiscal problems and inability to pay the subsidy Sable Chemicals debts to ZESA has now grown to $150 million.
The point here is that efforts to meet Sable Chemicals electricity requirements has resulted in acute power shortages in other sectors, including agriculture, with many businesses closing and the loss of jobs. Much better use of electricity will result from the decision to reallocate the electricity to other uses.
Just to give an example if the full Sable maximum capacity power usage of 115 megawatts were allocated to agriculture this would equate to enough electricity to irrigate 162,000 hectares of crops. The current 40 megawatts usage equates to 56,000 hectares of irrigation.
Finally, it should be noted that urea imported from the United Arab Emirates could be landed in Harare for between US$370 to US$400 per tonne (inclusive of sea freight, port, and overland rail charges). Compare this with the very recently reduced price of locally manufactured ammonium nitrate of $540 per tonne.
Farmers stand to gain from both more freely available electricity and cheaper nitrogenous fertilizer.
Other Energy Sources
The development of energy sources must not be restricted to electricity alone. Elsewhere in the world there are strong moves to harness solar power and wind power as sources of energy. These types of sources have great advantages in that they are suited to meet climate change challenges as they do not contribute to pollution. Zimbabwe must also follow this route and reap these benefits. The drive for clean power must be incentivized by appropriate financial inducements.
Marketing Infrastructure
In the past agricultural parastatals have played an important role in providing guaranteed markets for designated commodities and in encouraging production development. However after Independence in 1980 it became obvious that if agriculture was to prosper single channel marketing had to go and market forces where there was competition between many buyers was needed. Thus the purchase monopolies that the parastatals held were dismantled and markets for produce freed up. Recently there have been calls for some parastatals to be given monopoly buying powers again. This would be a very retrogressive step. Rather, encourage the creation of privately run commodity exchanges and marketing organizations that will provide farmers fair prices for their produce. An example from the past is ZIMACE. Parastatals can continue to compete in markets as they have been doing and those with storage infrastructure should hire out storage at competitive rates.
OTHER INCENTIVES FOR GROWTH IN THE FARMING SECTOR
Taxation
As I have said there is very low investment and capital input into the agriculture industry. Government must take measures to encourage investment in agriculture.
This can be done by introducing a 100% special initial allowance (SIA) on all agricultural investments. Items covered would include farm machinery, boreholes, water storage infrastructure, farm roads, contours, farm fencing, barns and sheds, silos, farm worker housing, and irrigation infrastructure (eg dams) and equipment. This measure will have the impact of speeding up the rate of investment and returns derived from investment.
Currently the SIA rate is 25%.A 100% SIA will enable farmers to get their full investment cost in the first year as compared to a SIA of 25% that takes 4 years to recover costs. Recovering full cost in the first year helps to improve the farmers’ cash flow and promote investment in other capital items used to expand farming operations. An increase in general farm productivity and profits means more money for the government in form of income tax which will promote economic development.
This is not a new concept. Prior to 1990 the SIA rate for agriculture investments was 100%. This encouraged investment in agriculture, and a very large boost in production followed.
Land Unit Tax
The Rural District Councils (RDCs) have general authority for natural resource management, and operate a system of administration, management and development for districts. One of the ways that RDCs collect revenue is through the imposition and collection of land unit tax. This money is used to fund RDC activities such as road maintenance, borehole servicing, land use allocation, and other ancillary services. The services that RDC offers are indispensable to farmers, and they generally acknowledge the need to pay land unit taxes to local and central government.
Land unit taxes are charged in terms of the Finance Act. Land unit taxes are set at $2 for local authorities and $1 for central government. This brings the total land unit tax to $3/ha/annum. These rates are applicable nationally and regardless of which natural region a farm is situated in.
Land unit taxes impact mainly on beef cattle production which relies on available land for grazing purposes. However, stocking rates vary widely between natural regions with 3 hectares per livestock unit in natural region 1, and 12 hectares per livestock unit in natural region 5 where rainfall is much lower and unreliable. This means that the off-take of cattle in the form of sales in the latter region is much lower than in the former. In addition in natural region 5 any meaningful cropping cannot be done without irrigation, and cattle ranching is the main activity and carries the full burden of the tax.
For an average farm of 1000 ha the land unit tax is $3000/annum. These levies are high when considered in conjunction with other costs like labour, stock feeds, dips, and water provision that ranchers have to cater for. In many cases the tax has resulted in losses being experienced by ranchers and has resulted in high levels of default by farmers in the drier regions. This situation has made it difficult for RDCs to operate viably as a major revenue stream is tied up in unpaid levies.
Therefore, we feel there is need for the government to revise these levies and come up with a rates system that allows for a mutual benefit between the government and the farmer, and results in better viability in the drier parts of Zimbabwe.
It should be noted that the RDC’s are now charging levies on cattle sales. All farmers unions are opposed to this as levies derived from the sale of any farm produce should go to the appropriate commodity association to promote production and research,
Labour
For future development and the creation of jobs in agriculture the mobility of labour is important. Due to the various types of production farmers have use for both permanent and casual labour, the latter being needed only for limited periods during the year.
As employers, farmers must not be hindered by inflexible rules and regulations governing the hiring and dismissal of labour. Hence we support the recent moves to free up the previously onerous conditions regarding retrenchment that saddled employers with liabilities that many could not meet. There should be no need for farmers to have to pay gratuities to workers when they retire or leave employment. Farmers pay contributions to the NSSA and it is that organization that should be providing for the needs of retired farm workers, and not farmers themselves. The payments made to NSSA should cover pensions and all types of gratuities due to workers. The NSSA Board should have proper representation from all of the productive sectors of the economy so that the problems faced by each are understood and acted on.
Furthermore there should be one minimum wage for all types of farm workers. At present there is a differentiation of minimum wages depending on the types of commodity that are produced. Thus more than one minimum wage could apply where a range of commodities are produced on one farm with different categories of workers receiving dissimilar wages. This makes it confusing for the farmer when allocating work when it involves multiple tasking between different rated commodities. It can also lead to resentment building up among lower paid workers when others receive higher wages for similar work.
Labour law reforms should be crafted in a way that is equitable for both employers and employees and promotes productivity and discipline in the workplace.
FARMER REPRESENTATION AND GOVERNMENT REGULATORY AND ADVOCACY ENTITIES
Farmer Representation
Currently there are four farmers unions and some independent commodity associations that represent various categories of farmers and/or producers. All are involved in campaigning various stakeholders in the agricultural value chain to secure benefits for their members. Also through their various activities they bring farmers together so that problems are debated at grass roots level before being channeled upwards to be resolved at national level. Farmers’ organizations also play a useful role in bringing a level of discipline into the production process by ensuring that their members report disease and pest outbreaks and ensuring that members follow statutory crop destruction procedures.
In recent years there has been moves to combine various activities undertaken by the various organizations. The objectives are to:-
· Avoid duplication of effort where issues are common to all farmers.
· Promote unity among all farmers to strengthen their advocacy stance.
· Continue to initiate closer cooperation between Unions and producer organizations to ensure a common approach to lobbying for benefits for farmers that result in greater productivity. This process began four years ago with the creation of the Zimbabwe Farmers Alliance Trust which is a vehicle used to undertake joint projects between the CFU and the Zimbabwe Farmers Union.
· Through the current Joint Agricultural Presidents Council Create form a federation of all farmers unions to represent all farmers in Zimbabwe.
· Once this is achieved to form an apex entity involving representation from all private sector stakeholders in the agricultural value chain that will negotiate issues involving the whole agricultural industry with Government.
· The apex entity, in turn, will be negotiating with an Authority within government that brings representatives from all ministries and departments that deal with agriculture.
Government Co-ordination and Regulation of the Agriculture Sector in Zimbabwe
Regulation of agro-products and agro-inputs in the country is currently disintegrated and fragmented across various departments and institutions in and outside the Ministry of Agriculture. This brings about inefficiencies and bottlenecks in service delivery, increased transaction costs and causes unnecessary delays in waiting time for decisions to be made.
In some instances there is clear duplication of roles from one institution to the other. A case in point is where an exporter intends to export agricultural commodities. Not less than five trips to various institutions and authorities must be made in order to get a final ‘Control of Goods’ permit.
1. Plant Quarantine Services/Veterinary Services
2. AMA
3. National Bio-Safety Authority
4. Seed Services/Fertilizers, Farm Feeds and Remedies
5. Economics and Markets Department
Whilst farmers appreciate the need to regulate the agriculture sector, there is need to come up with an Agriculture Regulatory Authority which houses related regulatory institutions. Such a “One-Stop Shop” will contribute to reduced transaction costs, reduced waiting time, elimination of duplication of roles and ultimately, contribute to economic growth.
This proposal is already under consideration. However, it is important that the proposed Authority’s activities should also be expanded to cover other responsibilities that deal with all aspects of regulating agriculture and policy making. This means that with a full cross-section of government representation dealing with agricultural issues all views are considered within the policy formulation and decision-making framework.
Private Sector – Public Sector Agricultural Regulatory Board
Finally, obviously a Board must be created where both private sector representatives from the above mentioned apex entity and the government regulatory authority can meet. Full representation from both sides is necessary so that problem resolution and planning for the future is facilitated.
THE FUTURE
I now want to finish this presentation by summarizing our aspirations for farming developments in the coming years.
The future of agriculture will be bright if all the negative issues I have talked about are resolved satisfactorily. Growth and development are contingent on a stable production environment that encourages farmers to expand their business operations.
GOALS FOR THE FUTURE
With the current status quo in mind where do we want to be in, say, ten years into the future?
Desirable Objectives for ourselves are:
· To be fully focused on maximizing food and agricultural raw material production as well as exports.
· To hold tradable documents providing long term tenure security.
· To be able to undertake any productive investments in our businesses with full confidence and be able to obtain finance to this end, as well as working capital for our farming operations.
· To have completed a well-funded agrarian reform program with adequate resources to ensure the success of Zimbabwe’s famers and dispossessed farmers having received compensation.
· To have the full support of Government and other stakeholders in achieving development objectives for agriculture.
· To have a meaningful role in an effective stakeholder collaboration in the formulation and implementation of agricultural policies.
28/10/2015