Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Loan, subsidy, power woes hit Zimbabwe wheat hopes

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. 


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