Unpacking cabinet’s GMB riot act
The Zimbabwe Independent 6 October 2017
THIS week cabinet read the riot act on the Grain Marketing Board (GMB) after reports that some of its officials ill-treated farmers and refused to accept small grains.
By Peter Gambara
Complaints against GMB have continued unabated since the start of the marketing season in April this year. In this article, I will dwell on the role and functions of the GMB as envisaged by the Grain Marketing Act (Chapter 18:14), as well as complaints levelled against it by farmers.
The establishment of the GMB is provided for in the Grain Marketing Act (Chapter 18:14), an Act that mandates it to ensure national food security through procurement and management of the Strategic Grain Reserve (SGR).
The functions of GMB are also listed in that Act as being, firstly to ensure orderly marketing of controlled products. GMB also has the function of buying and selling any controlled product delivered or acquired, provide storage, handling and processing facilities for controlled commodities, maintain stocks of controlled commodities, import and export-controlled commodities as necessary and any other things as required by the Agriculture ministry.
Under its function to maintain the SGR, GMB has a mandate to buy grain and maintain it on behalf of government. It will take grain from producers, notify government and Treasury pays for the delivered grain. However, it is also important to stress that government is supposed to provide funding to GMB to maintain the SGR.
Cases that have been raised by farmers against GMB are many and varied and these include cases of officials conniving with unlicensed buyers to reject maize from farmers on the strength of it having above acceptable moisture content, which maize would be accepted a few hours later after the unscrupulous buyers bought the maize from the farmers. GMB accepts grain with a moisture level of not more than 12,5%.
When most farmers take their grain to the GMB, they will not have the resources to pay the transporters and therefore once a whole truckload of grain is rejected based on high moisture content, they are then faced with a double tragedy of having to pay the transporter twice to return the load to the farm.
In order to try to minimise the losses and headache, some farmers ended up selling the grain to the unscrupulous traders who normally hang around the GMB depots, waiting to take advantage of such desperate farmers. These accusations have therefore placed question marks on how genuine the moisture testing processes have been and farmers have ended up accusing some GMB officials of conniving with these traders.
GMB moved quickly to encourage farmers to first bring samples of their maize for moisture testing before they delivered their maize and this seems to have worked well.
GMB has also been accused of failing to provide GMB acceptable empty bags. While some GMB depots have bulk concrete structures, quite a number of depots store maize in stalks in 50-kilogramme bags. Tarpaulins then cover the stalks.
However, over time, it looks like sun rays will penetrate these tarpaulins and reach the bags. If the bags are of the cheap type that cannot withstand the sunrays, the bags will break and the maize will be lost. There have been cases of maize that has got rotten whilst in the hands of GMB, due to this challenge.
Due to the expected bumper harvest this year where over 2,5 million tonnes of grain were expected to be delivered to GMB, local empty bag manufacturers were caught unaware and not ready for the massive demand.
The GMB concrete silo structures can accommodate 749 500 tonnes, while the open storage system can accommodate another three million tonnes of bagged grain. It therefore became necessary for GMB to import the necessary ultra-sun ray resistant bags from outside the country.
However, the current forex shortage seems to have played its part in delaying the importation process.
The shortage of these empty bags therefore continued well into August, as farmers were only able to access these bags from GMB in drips and drabs. One hopes GMB will move in to ensure that they have secured enough empty bags now to avoid a similar situation next season.
Farmers have also complained about the lack of arrangements to move grain from the farms and GMB satellite depots to GMB storage depots.
Most farmers do not have the resources to pay transporters before marketing their grain and are therefore faced challenges of paying transporters before ferrying the grain to GMB. This therefore delayed the delivery of grain to GMB depots as farmers look for the money.
Small-scale farmers also face the additional challenge that they would like to market small quantities of grain and it becomes cumbersome and expensive to hire smaller trucks to do so. It is best for such farmers to form groups and take their grain to centrally located satellite points, where 30-tonne transporters can then come and collect the grain.
GMB normally sends its contracted transporters to pick up grain from these satellite depots, but in most cases, it took long, with the result that rodents attacked some of the grain. The delays in picking up the grain also mean delays in the affected farmers getting their money.
Those farmers who managed to hire transporters to take their grain to the GMB depots complained that they were faced with long queues at depots and that it took ages for them to be able to deliver. This was caused by the shortage of labour to offload the trucks. Some small-scale farmers also complained that they were made to follow the same queues with 30-tonne trucks, when they just wanted to deliver as little as a tonne only.
The biggest complain levelled against GMB has been the late payment for delivered grain. Farmers complained that it took as much as 6 to 8 weeks to be paid after delivering grain. The effects of late payment to farmers cannot be over emphasised.
Some farmers will be relying on this money to pay school fees, pay their farm workers, settle their debts as well as repair their tractors and equipment. Delays in receiving payment means delays in sourcing spare parts for tractors and equipment, and in some cases, these spare parts need to be imported from outside the country. All this will delay farmers’ preparations for the next season.
Initially, government only managed to mobiliSe US$62 million, which was allocated to GMB. This was enough to purchase 158 974 tonnes of maize at the US$390 price per tonne.
The Agriculture minister then indicated that the Agricultural Marketing Authority had been tasked with mobilising an additional US$80 million, while the Grain Millers’ Association of Zimbabwe has promised to mobilise US$312 million to buy 800 000 metric tonnes.
However, the Grain Millers Grain Millers Association of Zimbabwe (GMAZ)would only pay as per their draw down requirements.
Farmers expect to be paid promptly after delivering their grain at GMB and any delays will erode farmer confidence in the system. The late payment of farmers after delivering their grain to GMB in previous seasons has contributed to many farmers abandoning the growing of maize. Farmers had hoped that this time around, it would be different.
There was also poor communication between GMB and farmers, where farmers’ payment details were either missing or incorrectly captured. When farmers made their deliveries, they are required to provide their contact telephone numbers.
However, when these account problems arise, the GMB officials were accused of not making any follow-ups with the farmer concerned on the provided contact numbers. The affected farmers would only discover these anomalies upon making follow ups on late payments.
While farmers will always pour all their venom on the GMB for failing to pay them on time, GMB is not entirely to blame for the delays, as it also has to get the necessary funding from Treasury.
It will take grain from producers, notify government and Treasury pays for the delivered grain. Whereas, GMB takes in grain and notifies Treasury on time, it has no control over when Treasury will release the needed funds to pay the farmers. It can only wait and make follow ups with Treasury; however, the ordinary farmer, who will continue to heap the blame on GMB, does not know such behind the scenes transactions.
Ideally, government, through Treasury, should regularly pay GMB to operationalise the SGR. It costs GMB approximately US$14,50 per month to handle one tonne of maize in its depots.
GMB therefore requires a maintenance budget of at least US$1 million per year to keep the maize on behalf of government. This year, it will definitely be more.
GMB also needs regular funding to rehabilitate the existing infrastructure. The storage facilities at GMB had been neglected for some years and some of these silos are now very old as they were built in 1953.
This year GMB put the estimate to rehabilitate them at US$47 million and six depots needed sprucing up and these include Aspindale, Bulawayo, Banket, Lion’s Den, Concession and Chegutu. Government initially provided US$11,2 million, while Grain Millers Association of Zimbabwe sourced the rest of the funding required for that rehabilitation.
GMB has a standing arrangement with Government under the 1996 Debt Takeover Agreement, where it is allowed to draw down on the Strategic Grain Reserve as payment for their incurred maintenance costs.
However, before doing so, it should seek authority from Treasury to do so. Under the same agreement, GMB was given permission to carry out commercial activities to earn money to meet its operational expenses.
GMB sells maize meal, maputi, salt, rice etc. under the “Silo’ brand under this arrangement in order for them to meet their salaries bill and maintenance costs. They therefore can draw maize from the SGR, equivalent to the money they are owed by Government for maintaining the SGR, mill it or process it into maputi and sell it under their Silo brand.
They now also have a stock feed manufacturing plant in Norton and this uses mainly maize and soyabean meal, among the products that they handle.
Private Millers, under the auspices of GMAZ, have previously advocated for GMB to concentrate on its core business of buying, maintain a SGR, and not compete with them by venturing into the selling of mealie meal on the local market. Some argue that those commercial activities are causing them not to adequately meet their constitutional obligations and therefore they should cease them forthwith.
However, if this should prevail, it means Government would need to regularly pay GMB for maintaining its SGR, so that they can meet their own costs. It is, however, debatable if Treasury will be able to do so on a regular basis.
Gambara is an agricultural economist and consultant based in Harare.