Saturday, 17 August 2013

Agriculture sector can still recover


Column by Eric Bloch

So great was the agricultural production that Zimbabwe was renowned as the region’s “breadbasket”.

Not only did the nation produce enough to feed the entire population, but it was also exporting considerable quantities to neighbouring countries and further afield.

The produce included maize, beef (much was exported to the European Union, over and above fully addressing national needs), sugar, cotton, tea, coffee, citrus, and much more.

Zimbabwe was also the world’s producer of the second largest quantities of quality virginia tobacco.

Because of the magnitude of the country’s agricultural operations, more than 300 000 Zimbabweans were gainfully employed, enabling self-sufficiency for these farm employees, their families and dependants.

Thus, over two million people were directly beneficiated, over and above the downstream economic inflows generating employment for many more, and yielding comprehensive revenue inflows to the fiscus.

Tragically, almost the entirety of Zimbabwean agriculture sustained a massive and prolonged downturn from 2001 onwards, albeit a major increase in tobacco output from 2008 onwards, and a marginal upturn concurrently in the production of other agricultural produce.

However, overall the agricultural sector remains a fairly minimal contributor to the national economy, in contradistinction to its former economic role.

Several factors explain the critical contraction of agricultural production, the first and foremost being the manner in which the land reform programme was carried out.

Government decreed that all rural lands were henceforth state-owned and tacitly condoned innumerable farm invasions and concomitant expropriations by some elements of the population, mostly the “war veterans”.

This was not helped by the unilateral and contemptuous disregard for domestic and international law, human and property rights, as well as for prevailing Bilateral Investment Promotion and Protection Agreements.

Many of the invasions were targetted only at white farmers, with massive expropriation of plant, machinery, equipment and livestock rather than at any productive usage of the land.

In consequence, Zimbabwe was suddenly denuded of much of the agricultural expertise accumulated over many years, as well as much-needed equipment and other resources.

Moreover, because of the government’s invalidation of all title deeds and the vesting of ownership wholly in the state, new farmers did not have collateral needed in order to access bank or alternative loan funding needed for each season, as very few of the new farmers had the required funds.

Compounding these production hindrances, government recurrently failed to ensure timeous availability of essential agricultural inputs and frequently prescribed unrealistically low prices for produce that mandatorily had to be sold to state-controlled enterprises such as the Grain Marketing Board.

As a result, other state enterprises (such as the Zesa), failed to provide regular and reliable supply of power at viable tariffs.

Meanwhile, a long overdue trigger for agricultural recovery has been activated.

The new constitution prescribes that the state-issued farm leases will be accorded negotiability and transferability status, enabling them to be used as security for agricultural borrowings.

However, if that is to be successfully implemented, there is need for government to issue leases to the new farmers, because the majority of those farmers only have offer letters, but have never received proper leases.

Also of key importance to enable access to the necessary funding, the state must create an economic and political environment which will ensure substantial inflows of funds into banks and financial institutions, enabling them to provide the greatly-needed facilities for the agricultural sector.

Yet another constructive measure would be for government to incentivise contract farming. The agricultural crop that to date has enjoyed the greatest recovery is tobacco. From a record national crop of over 237 million kgs in 2001, production progressively declined, to less than 40 million kgs by 2007.

But then several major tobacco companies embarked on contract farming where they accorded farmers access to essential inputs such as seed, fertilisers and chemicals.

They also provided funding for other operational costs, recovering the costs incurred and the funding availed to the farmers by mandatorily requiring the sale of the crops to the company which provided the resources.

As a result, there was a marked increase in tobacco production, reaching approximately 160 million kgs in the 2012/2013 season (which is still far short of the record 2001 production, but markedly greater than that between 2002 and 2007).

It would be advantageous to Zimbabwe if contract farming could also be extended to maize, winter wheat, cotton, sugar, citrus and livestock production.

That facilitation and motivation of diverse contract farming could be readily achieved if government would diminish its quasi-monopoly to purchase and on-sell certain crops, and if it would incentivise private sector funding of crops on a contract farming basis by the introduction of appropriate tax incentives and allowances.

The state should facilitate and motivate agricultural joint ventures and should seek to entice some of the experienced and skilled farmers who were forcibly ousted from their successful farming operations.

Yet another potential trigger for recovery could be to terminate the leases and farm occupancies of the many who have acquired such farms without meaningful production, instead using them solely as living quarters or weekend “getaway” destinations. The repossessed farms can then be reallocated to those who use them effectively, including some of the unjustifiably displaced.

The availability of water is also important and Agriculture ministry and Zimbabwe National Water Authority as well as by the Energy ministry have a task on their hands to ensure the available water can be regularly and reliably pumped to the fields, and to ensure the required operation of irrigation systems.

It also entails substantive de-siltation of rivers and dams, construction of further dams, and constructive funding programmes for the acquisition and installation of requisite irrigation systems.

These actions should be reinforced by the discontinuance of all customs duties and other imports on irrigation equipment and the waiver of Value Added Tax (Vat) thereon.
Original Article Here

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