Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Govt struggles to raise agric funds

Govt struggles to raise agric funds

By Business Writer
Wednesday, 21 December 2011 08:36

HARARE – The government is struggling to raise capital to support the 
2011/2012 agricultural season after two critical fund-raising schemes were 

This comes on the back of the Agricultural Marketing Authority’s (Ama) 
360-day agro bills targeted at raising $100 million only realising $17,7 
million out of the first batch of $50 million expected from private players.

The money was meant to be raised though two $50 million batches.

Previously, Ama had managed to raise only $4,5 million out of a $20 million 
financing target to fund soya beans production in the country.

Although government has given tax and asset status prescriptions as an 
incentive on the $100 million agro bills, market analysts say the 10 percent 
interest rate was not competitive.

“An independent investor would not invest in Ama bills with return less than 
10 percent when they can get such returns on simple deposits with banks, a 
more secure investment,” said a banker who requested not to be named, adding 
that government, through its Grain Marketing Board (GMB), had a record of 
defaulting on loans.

“The only way out for the government — since the Ama bills have prescribed 
asset status — is to push pension funds, asset management companies and 
other financial institutions to hold a certain percentage of their assets in 
Ama bills.”

The reluctance by market players to take up the bills, particularly 
financial institutions, appears to be a result of a cautious approach which 
the companies adopted after GMB defaulted on a similar scheme in 2004.

Loopholes in GMB’s stop order system have seen farmers, especially communal 
farmers who are also beneficiaries under the scheme, defaulting on the 
loans. Grain producers have tended to bypass the stop order system by 
selling produce to other buyers taking advantage of the fact that grain, 
unlike tobacco, can be sold anywhere.

Eric Bloch, an economist, said the Ama bills were a noble attempt to boost 
agricultural production, but the under-performance and lack of capital in 
the local market would posed a challenge to the initiative.

“The major problem in our industry is that there are very few companies who 
have the liquidity to venture into such projects,” he said.

Agriculture support is essential to Zimbabwe’s attempt to revive its 
agricultural sector.

The country, sustained by huge grain imports, is currently trying to boost 
its agriculture production, including key crops like soya beans, which is a 
major raw material in the food manufacturing industry.

Since the decline of the country’s agricultural sector, soya beans demand 
has far outstripped production with supply at 20 000 tonnes per year against 
the national demand of about 220 000 tonnes per year.


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