Perennial constraints hurt Zimbabwe agriculture output

THE 2013-14 agricultural season is going to be an uphill task as a lot of farmers — most of whom are already seriously indebted to financial institutions — fail to access funding from banks.

Report by Victoria Mtomba

Financial institutions have become wary of farmers as many of them have not been able to pay up their loans on time, making chances of banks extending loans to them this year very slim.

Bankers’ Association of Zimbabwe (BAZ) senior economist Abel Sanderson in October told delegates at a stakeholders’ consultative workshop that most banks were grappling with non-performing loans particularly from the agricultural sector.

Sanderson said most banks were sitting on short-term financing while the country had a demand for long-term funding.

“Banks at the moment do not have that kind of long-term money owing to the transitory nature of the structure of the deposits in the banking sector.

“Most of the farmers do not have 99-year leases, even then, these leases still need to be improved so that they become usable as collateral against funding sourced from banks,” Sanderson said.

BAZ chief executive officer Sijabuliso Biyam said indications were that banks would channel $620 million towards the 2013-14 agricultural season.

But the issue of collateral remains a thorn in the flesh for most farmers resettled during the land reform programme embarked at the turn of the millennium.

Biyam, however, said individual banks would come up with their own criteria on funding requirements. With such funding, some farmer organisations project that Zimbabwe will meet its annual grain demand of 2,2 million metric tones.

Smallholder farmers are currently receiving input support announced by the government which includes a bag of compound D fertilizer, one bag of ammonium nitrate, a 50kg bag of lime and 10kg of seed per household.

But critics are pessimistic that a myriad of factors affecting the sector will result in subdued performance of agriculture, once the mainstay of the economy.

Efforts to get a comment from Agriculture minister Joseph Made and his deputy Paddy Zhanda were fruitless as their phones were not answered by the time of going to print.

Commercial Farmers’ Union president Charles Taffs said the shortages of funding and inputs would affect this year’s agricultural season.
“We are not prepared for the 2013-14 agricultural season,” he said.

“We need to put agriculture back on the map. Farmers should be able to raise their own funding and re-establish the value chain.”

Seed Co chief executive officer Morgan Nzwere said the seed-producing firm had adequate supplies for the whole nation for the coming season.

“We have 22 000 tonnes of seed, that is enough to cover our market,” Nzwere said.

“We are prepared and we have reduced the distance for the farmers and made the seed available at nearby retailers. We give retailers credit to sell the seed for cash because we do not have the capacity for credit risk.”

Zimbabwe’s economy is agro-based and one million people are directly or indirectly employed by the sector.

Over 400 000 people earn their wages through agriculture while there were 600 000 farmers. The agriculture sector contributes over 15% of the gross domestic product according to official figures.

The sector has been overtaken by the mining sector which is now the major foreign currency earner for the country.

Although the economy is largely agro-based, the output of various crops such as maize, wheat, cotton and soya bean has been declining due to bad weather patterns and lack of financial resources.

Agriculture minister Joseph Made erlier this year said the 2012/2013 agriculture season was not successful as close to half of the output was written off.
Zimbabwe’s maize requirements currently are at 2,2 million tonnnes compared to a 400 000 tonnes output last year.

The country imports maize from Zambia and Malawi to meet its requirements.

The country has recorded a positive story on tobacco with 91 278 farmers having produced the crop during the 2012-13 season.

A total of 166,6 million kilogrammes of the golden leaf have been produced earning the country $612 million in revenue.

The country has seen a major movement from farmers who were producing maize, wheat and cotton to tobacco due to the high paying nature of the golden leaf.

The government so far has provided $161 million support to 1,6 million households in the country. The funds will be used to buy seed, fertilizer and lime.

The funds have been channeled towards old resettlement, small scale and A1 farming areas for 2013/14 farming season.

The money availed by government is still below the $2 billion that is required for the resuscitation of the agricultural sector.

The funds will be used to supply households with 10kg of maize or grain seed, 50kg of compound D fertilizer, 50kg of ammonium nitrate fertilizer and 50kg of lime.

Finance minister Patrick Chinamasa said farmers should not expect miracles for the funding of the agricultural sector, but government was committed to the sector as it was the mainstay of the economy.

An expert with a local agricultural bank said most of the funding for the agricultural sector was not yet in place as funding comes from the budget.

“All government-promised funding has not yet been availed and this shows preparedness is not really on course. Most of the funding was supposed to be provided before the onset of rains. Moreover, production, which is supposed to be funded through the budget, has to wait until the budget has been presented, likely next month or January,” the economist said.

The economist said the success of the 2013-14 season is difficult to estimate given the fact that the 2012-13 season had a mid season drought.

Experts’ opinion

ZIMBABWE is likely to import more maize next year to plug the deficit as government continues to dither in funding agriculture, experts have said.
In an interview yesterday, John Robertson said the agricultural sector is facing a collection of difficulties to have a successful season with funding being the major one. Zimbabwe has an annual grain consumption of 2,2 million metric tonnes.
“We have to import a substantial amount of maize as a nation and it is not government that will foot the bill, but the retail sector. The retail sector has to do more of the importing, but they may fail to borrow from the banks,” he said.
Commercial Farmers’ Union economist Antonnette Chingwe said to revive the agriculture sector there was need to identify and implement ways to increase production and productivity of crops and livestock.
“Security of tenure must be provided to all classes of farmers as it is an essential condition for the meaningful participation of private capital in financing agriculture on a sustainable basis. The rural land market which currently does not operate in Zimbabwe must be revived. This will give farmers confidence to make long-term investments on farms,” Chingwe said.
She said the absence of irrigation scheme development is a problem that hinders the move by subsistence farmers to commercial farming where higher yields are realised.
“Infrastructure in the form of roads, machinery and equipment and post-harvest handling facilities should be made accessible to farmers as part of the agriculture recovery process. Improved farming skills are necessary to optimally increase agricultural productivity. The capacity of extension and research service providers needs to be strengthened,” Chingwe said.
Financial analyst Omen Muza said the money that banks have promised to disburse to the farmers has conditions that include a record of good debt servicing.
“The money is not really available because of the indebtness of some of the farmers to banks. Most farmers have non-performing loans so they cannot access the funding. I do not think we are ready and it will be impossible to meet the finance needs for everyone. Maybe government needs to support people based on their ability to produce,” Muza said.