Agriculture, Mechanisation and Irrigation Development Minister, Joseph Made

FARMERS have bemoaned the high water and electricity charges, saying these threatened to undermine farming in the country.
The Federation of Farmers Unions (FoFu) said Zimbabwean farmers, who are currently struggling with poor policy alignment, limited access to funding, high cost of production and poor infrastructure, should be exempted from paying value added tax on electricity and water.
This, they believe, would reduce utility costs which were weighing down their businesses.
“In addition, agricultural commodities should be exempted in the value added tax (General)(Amendment) Regulation, 2016 (No.40) to enable producers to claim back their input taxes on capital expenditures,” the farmers said.
FoFu, an umbrella body consisting of the Zimbabwe Commercial Farmers Union and the Commercial Farmers Union, said it was also imperative for the government to reduce the costs of electricity to farmers by re-introducing the subsidised electricity tariff for agricultural customers.
“In addition, the rural electrification levy can be reduced to lower the cost of electricity to agriculture and industry. This will improve competitiveness,” FoFu said in its 2018 national budget proposals.
A six percent levy is charged on all power purchases in the country, to fund the rural electrification project.
Zimbabwe experienced a bumper harvest in the 2016/2017 farming season due to good rains, amid indications that the country is expecting to harvest over 3,5 million tonnes of maize this year against national requirement of 1,7 million tonnes.
However, ongoing and increasingly severe foreign currency shortages in the country have threatened to affect the consistent supply of inputs for the coming farming season.
Farmers believe that if Zimbabwe is to regain its breadbasket status and increase agriculture production, government must put in place measures that could help reduce the costs of ZINWA water for large estates.
FoFu noted that currently there was a disproportionate differentiation between the price of raw water used for irrigation between large estates and A2 farmers, pegged at $12,45 per mega litre and $5 per mega litre respectively.
“This is unfair and increases the costs of large scale production. In addition, there is no written definition of what a large estate is and it becomes the discretion of ZINWA. In fact, many of these so called large estates have leases or offer letters and therefore fall within the model A2 scheme.
“It is submitted that the ZINWA rate for large estates should therefore be brought into line with the rate for model A2 farmers,” added FoFU.
They also called for zero rate VAT on all primary agricultural commodities and agricultural inputs.
Presently, some commodities are exempted, some are standard rated and some are zero rated.
“We submit that in the short term the following standard rated commodities should be zero rated: sheep meat, goat meat and molasses.”
The farmers, who have so far received $1,4 billion from the government for their maize and tobacco deliveries, also demanded that the Environmental Management Agency charges be slashed as they were affecting viability of farming operations.
“There is need for an agricultural credit policy that takes into account the objectives of the three inter-linked policy areas, that is, macroeconomic, agricultural sector and financial sector policy, as far as they relate to and influence agricultural finance,” FoFU said.
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