Loan, subsidy, power woes hit Zimbabwe wheat hopes
12:54 UK, 20th Jul 2012
Credit shortages, subsidy hiccups and high energy costs have dashed hopes of
a rebound in wheat production in Zimbabwe, leaving a country once known as
the breadbasket of southern Africa facing another year of record imports.
Zimbabwe’s farmers will produce 20,000 tonnes of wheat in 2012-13, well
below the 75,000 tonnes that the government initially targeted, and historic
harvest levels, US Department of Agriculture officials said.
“Wheat production is on a declining trend since 2001, when Zimbabwe produced
more than 300,000 tonnes,” the USDA’s South Africa bureau said in a report.
“A number of constraints, such as unreliable power supplies for irrigating
the crop, dilapidated irrigation infrastructure, and late payments by the
[state-run] Grain Marketing Board, have contributed to the declining trend
in wheat production,” the briefing said.
Thanks to “erratic rainfall”, the harvest of corn, the source of the food
staple mealy meal, looks set to decline too, by more than one-third to
900,000 tonnes.
‘Little wheat-planting activity’
Zimbabwe’s wheat production should be more resilient – against weather
upsets, at least – as the crop is typically planted under irrigation, in the
April-to-May period,
However, the sowings window “passed with very little wheat-planting
activity” after fertilizer companies failed to release nutrients targets by
a government-backed $20m support programme.
This was “due to the government’s failure to settle a $50m debt dating back
several seasons”, the USDA said, adding the state also owes money to “the
majority of” farmers for wheat deliveries made in October.
As a further financial setback to farmers, loans for inputs are only on
offer for up to 90 days, “mainly due to the unavailability of credit because
of Zimbabwe’s high country risk”, while farmers report paying interest rates
of 30% a year on loans.
The country’s economic situation has in fact significantly improved since
the administration of President Robert Mugabe began power sharing with the
opposition Movement for Democratic Change was implemented three years ago.
Inflation, which hit 500 trillion per cent in 2008, has fallen to less than
5%, and the economy expanded by more than 7% a year.
Power struggle
Even growers who did get wheat into the ground have faced high costs of
irrigating it, estimated at $700-800 per hectare, on top of charges of
$350-500 for inputs and labour, according to the Zimbabwe Farmers Union.
For output to be viable requires electricity prices of about $0.03 per
kilowatt hour, rather than the $0.14 per kilowatt hour farmers are charged,
the union said.
The USDA officials estimate Zimbabwe’s wheat imports reaching a record
250,000 tonnes in 2012-13 for a fourth successive season.
In the October-to-April period, Russia was the biggest exporter to Zimbabwe,
with 25,722 tonnes, with Argentina another major supplier.