By Almot Maqolo
HARARE – As Zimbabwe’s economy is based on agriculture, the decreased agricultural production is expected to negatively affect industry and other sectors.
Conversely, inflation is forcing farmers to ignore a government directive that compels them to sell their produce to the Grain Marketing Board (GMB) within two weeks after harvest saying the price offered is “too little”. Zimbabwe’s annual consumer price inflation climbed to 96.4% in April 2022 from 72.7% in March which has eroded incomes.
Monthly inflation rises sharply to 15.5% from 6.3% in March. Analysts say main upward pressure came from transportation and food, as rising fuel and bread prices have triggered a wave of price hikes of basic commodities around the country
In April 2022, the southern African nation set new prices for maize and traditional grains at ZWL$75 000 per metric tonne, up from ZWL$58 000 and ZWL$70 000 respectively. At the time of announcing this price it was equivalent to USD439 at the official rate.
The new prices are likely to be eroded by inflation before they procure inputs for the next cropping season. Literally, authorities need to wake and smell the coffee that in every corner in Zimbabwe the US$ is actually trading at RTGS400 not the auction system rate.
For now the amount may seem okay, but the challenge is when one wants to go and buy inputs.
Everything is indexed using the parallel market rate of the US dollar. If you buy in ZWL, they charge you a premium. These are some of the concerns the authorities need to address in order for the farmer to be able to go back on the land.
While the agriculture output will be lower than prior year given the impact of adverse weather
conditions, a situation which will create a high demand agriculture produce in the economy. According to the latest 2021/22 Second Round Crop and Livestock Assessment Report maize production is estimated at 1 557 914 metric tonnes, which is 43% lower than the 2 717 171 metric tonnes which were produced in the 2020/2021 season. In the same vein, traditional grains production is projected at 194 100 metric tonnes, which is 44% less than the 347 968 metric tonnes output of the previous season. Above all, the total cereal production projection is 1 752 014 metric tonnes, against a national cereal requirement of 2 267 599 metric tonnes.
So to improve strategic grain reserves and arrest side marketing there is a need for the government to come up with lucrative payments. Officially the grain reserves hold nearly 800 000t. Zimbabwe requires 1.8 million tonnes of maize annually and with the projection, the country would need to import upwards of 400 000t.
On the other hand, dodging the GMB undermines the cash-strapped government's efforts to keep grain prices affordable for consumers and wastes input subsidies provided to farmers. Also doing business on the black market comes with its own risks as some farmers have been victims of counterfeit money as payment but could not report it to the police for fear of being arrested.
To ensure timeously payments to farmers for their produce, the Government availed an initial $52 billion to GMB. If this comes into fruition, already pressed farmers will not be subjected to taking lower prices from black market traders who pay cash on delivery.
As a matter of fact, GMB should make sure that farmers get their money in time, so that they do not spend much time or days waiting for payments – burdening them with more expenses. Having observed their concerns, farmers do not want to lag behind in terms of summer cropping preparations due to delays in payment.
There are wider calls for dollarisation as the Zimbabwean dollar keeps depreciating, but policymakers have stuck to their guns and ruled out dollarisation. Even Treasury Chief Mthuli Ncube has ruled out paying farmers in United States dollars for maize deliveries, but said there were exceptions for those growing export-oriented crops.
The government believes that the food-insecure rural households require a total of 720,707 tonnes of cereal to meet their needs over a year, while the food-insecure urban households require 500 320t maize during the same period.
