Eddie Mahembe & Paison Tazvivinga:economists

THE importance of the agriculture sector to the Zimbabwean economy and the citizens’ livelihoods cannot be overemphasised. According to the World Bank (2019), the agriculture sector contributes about 10% of the formal gross domestic product (GDP) in Zimbabwe.

It contributes over 40% of recorded national exports, 60% of raw materials to agro-industries and provides employment and income to over 60% of the population (FAO, 2020). Through its various policies and public pronouncements, the government has always alluded to the fact that agriculture is a strategic sector and key to the economic recovery programme.

The Zimbabwe Transitional Stabilisation Programme (TSP) projected that agriculture, mining, manufacturing will be key sectors to the projected economic growth of above 9% in 2020. The TSP further positioned agriculture as one of the key sectors which presented a “quick-win investment opportunities for realisation of self-sufficiency and food surpluses that will see the re-emergence of Zimbabwe as a major contributor to agricultural production and regional food security in the Southern Africa region and beyond”.

As part of supporting the agriculture sector, the GoZ, in conjunction with both domestic and foreign partners, has implemented several programmes in recent years. Against this backdrop, it is important that we understand the dynamics in the agriculture sector over the past few years and make inferences into the future, focussing mainly on impact of government support on production levels in the sector.

Agric support schemes assessment
Some of the agricultural government support programmes directly driven by the state in recent years include fast track land reform Programme (FTLRP), farm mechanisation programme, command agriculture scheme (which used to be called operation taguta/sisuthi), special agriculture production initiative (focussed on inputs supply and distribution chain), presidential input scheme, among others.

Earlier this year, the government entered into a US$58 million deal with the former Soviet republic of Belarus. The Belarus Facility includes a training of local farmers and farm implements. In June 2020, President Emmeson Mnangagwa launched the US$51-million John Deere Mechanisation Facility.

Sadly, these interventions have recorded limited success in boosting production in this sector. More so, in light of the adverse climatic conditions that have been experienced from the turn of the century, persistent droughts — an average of one in every three years, and cyclones that have ravaged parts of Southern Africa.

This has resulted in a net effect in food production index of a marginal 0,3% average increase from 2001 to 2016. This is comparatively low against neighbouring countries such as Mozambique and Zambia who have managed to increase food production by more than 4% over the same period.

As shown in the graph, Zimbabwe had the highest food production index of almost 94,5% in 2000, comparatively, Mozambique had 88,24%, Namibia had 84,05% and 85,61% for Zambia. The increase in neighbouring countries comes without corresponding increase in agriculture land as a percentage of total land — the percentage increases are a negligible 0,2% for Mozambique, 0,4% for Zambia and 0,5% for Zimbabwe. This poses a question, why we have lagged behind our peers despite government efforts to support the agriculture sector.

One way to answer this is to understand that our agriculture support has been more reactionary rather than proactive. It has focused on the short-term goal of which its fulfilment has been hampered by lack of support structures — seed input has been provided but drought has been an impediment to realise improved productivity.

This means that our solution was not all encompassing; addressing only a part of the problem. There is need to put in place a framework that guides policy setting around what the support seeks to achieve, how it will be implemented, its effect on agriculture productivity in the long term and accompanying economic and socio-economic conditions that contribute to the success of envisaged support. That way, policy makers are likely to come up with an intervention that addresses all challenges.

Mozambique, despite experiencing more or less the same adverse climatic conditions, managed to improve her food production because they invested in the underlying support structures of the agriculture sector, that is, investment in infrastructure, extension services and research and development.

Comparatively, the main support for Zimbabwe government has been through farm inputs, mainly seed and fertiliser. Although this is commendable, researchers, like Jayne and Rashid (2013) as cited in OECD/FAO (2016) report, applauded the success of fertiliser subsidy programmes in improving productivity in countries like Zambia and Malawi, however, they disputed the effectiveness of such programmes in the long run. They cautioned that costs tend to outweigh benefits in future. Their recommendation was a holistic approach which entails investment in, “agricultural R&D, extension programmes focussed on improved soil quality and physical infrastructural development”.

Additionally, not all agriculture support strategies are economically viable. Input support without associated return on investment cannot be into perpetuity. It becomes economically burdensome especially in a deteriorating macroeconomic environment.

Hindle et. al., (2016) cautions that, “input subsidising programmes channel resources into a narrow set of technologies, whether these are locally appropriate or not. They are standardised and inflexible and absorb public resources that could be used in other ways to support small holder farmers”.

Therefore, there is need to understand the associated opportunity costs to each support programme.

Moving forward
It is hoped that the recent move to invest into tractors, combine harvesters, planters and low bed trucks through the US$51 million Belarus facility and US$51 million John Deere facility is a realisation by the authorities that there is need to invest in capital goods. The fact that the facilities are being accessed through commercial banks such as CBZ, Stanbic and Agribank brings transparency as previous distribution strategies crowded out the private sector.

Funds have also been channelled towards dam construction and irrigation rehabilitation. Of concern though is the delay in revamping agriculture-related research work and institutions.

There is little effort being given to that end besides the finance minister’s note in the mid-term budget review stating that going forward government will support such research work.

The importance of research and development was emphasised by Hindle et. al., (2016) when they pointed out that in the long-run, research and development tend to have higher returns per unit of spending compared to investment in infrastructure like roads.

It goes without question that agriculture extension services have deteriorated, with limited capacity to provide effective services. Capital stock on commercial farms has also been decreasing. Research and development has declined. This has been exacerbated by the loss of human capital. Deterioration has also been noticed in irrigation infrastructure. These challenges call for more tailored policies if the sector is to realise sustainable growth. If these negative trends are not deliberately reversed through well-structured and well-targeted policies, there is little hope of achieving potential positive impacts of the support interventions in the agriculture sector.

It remains to be seen whether the recently announced US$3,5 billion land compensation deal with dispossessed white commercial farmers would lead to an improvement in agricultural productivity. However, as argued in this article, a holistic approach is recommended. Basic economics teaches us that for production to improve, policies and strategies should take into consideration at least four factors of production, namely: land, labour, capital and entrepreneurship.

Mahembe and Tazvivinga are development economists and researchers. These New Perspectives articles are coordinated by Lovemore Kadenge, independent consultant, immediate past president of the Zimbabwe Economics Society (ZES). — [email protected], cell: +263 772 382 852.