THERE is a looming problem which needs to be addressed as soon as possible before farmers start selling their produce.
For what I am saying to make any sense at all, it is necessary for me to explain how farmers used to sell their produce, how millers used to buy agricultural products and how other users such as bakeries used to access flour, how producers of chickens used to get their feed, etc.
During the days of control of all agricultural products, GMB used to forecast the size of all the crops under production. With this information, it would approach banks to raise the necessary finance to pay for the crops. Farmers would deliver their various crops between May and November.
Farmers would deliver maize, soya beans, sunflower, small grains, groundnuts, coffee and wheat. Regardless of quantities produced and delivered, GMB would take all and pay the farmers within three weeks. Of course there would be payment delays here and there but on average, payment was within three weeks.
The millers, oil expressers, stock feed manufacturers and others would then buy from GMB as they wished, throughout the year.
Retailers, bakeries, pig and chicken producers etc would then buy mealie meal, flour, cooking oil, chicken and pig feed.
In this chain, it was the responsibility of GMB to raise money to pay the farmers regardless of whether there were buyers for the crops produced. This resulted in GMB incurring losses which the government picked up as subsidies.
Controls are not good as they bring many problems. The liberalisation that was done by government around 1994 was very welcome indeed. Farmers were free to sell their produce anywhere within the country. GMB became a residual buyer.
GMB still estimated how much would be sold to it and sourced sufficient funds. What they bought was mainly for strategic reserves. The system worked well until 2001, when by statutory instrument 135 of 2001, government controlled maize and wheat and their products.
Since then we have seen GMB, firstly, failing to produce any annual accounts, hence failing to raise money from the money market to a total takeover of its finances by the RBZ. All the money that GMB has been using to buy maize and wheat was from the RBZ. They were no longer capable of raising any money themselves.
Because of the good rains received this season, there is a mistaken belief that enough maize has been produced. The situation on the ground is that those farmers who had inputs do have a very good crop indeed.
However, they are not many at all. I have driven around the country and we will be lucky if there is 700 000 tonnes of maize. This means that there could be a shortfall of well over 1,3 million tonnes. There is a lot of mealie meal, cooking oil, chickens from South Africa and even Brazil; bread is available. The prices have really come down and one can say that the prices are now largely affordable.
The government has again done well in decontrolling maize and wheat and their products, although I am not sure if the above statutory instrument has been repealed. However, the decision has created immense challenges. Millers are importing wheat at around US$450 per tonne while bakeries are importing flour at a price that squeezes millers out of business. The same is happening with maize where it is not profitable for millers to compete with imported mealie meal which is now available all over the country.
Government has said that GMB should, when buying maize, consider import parity. The import parity price of maize is around US$300 per tonne. This price is well below the costs that farmers incurred in producing this crop.
It must be remembered that fuel coupons were costing US$1,35 per litre, fertilisers were only available on the black market and seed too was not available in the open market. Therefore, the maize that is being harvested now was produced at a high cost. Whatever the price of maize will be, it must encourage the farmer to grow more. In this regard, the imported mealie meal will pose the biggest challenge.
As for buyers of this year’s crops, GMB can be completely discounted. This leaves millers, brewers, stock feed manufacturers and NGOs. The few farmers who have produced maize and soya beans have large quantities. GMB as a buyer was able to buy all the grain and oil seeds in six months.
One farmer in Karoi told me he had 300ha under maize and that the yield would be very good. He will harvest more than 1 500 tonnes. Another one in Bindura told me he was expecting 600 tonnes of soya beans.
The worry here is that while the millers and others will use all the maize in a short space of time, they may not have the financial capacity to pay the farmers as they deliver. Many of these farmers need the money in order to plant wheat starting two weeks from now.
One farmer told me that his good soya crop had no buyer as chicken producers have been driven out of the market by imported chickens. This farmer needs US$700 000 to buy inputs for wheat.Â Soya beans normally are priced at double the maize price.
This means that the price for soyas should be above US$600 per tonne. However, the cooking oil produced would be more expensive than the imported cooking oil that is in the shops.
On the ground, I have not seen any preparedness to plant wheat two weeks from now. For maximum returns all wheat must be in the ground before the end of May; it must all be done under one month.
=Farmers must be supported through some form of subsidy. We all know what happens in France if there is any inkling of tampering with the common agricultural policy of the EU. French farmers drive tractors into Paris and block all the streets. In the US, even honey producers are subsidised. I am talking here of the principle, so the form is open to debate.
=There is need to protect our industries. In protecting industry, government has a dilemma here in that because of the economic hardships in the country any affordable food is welcome to the majority of our people. How then do you protect the local industry while at the same time ensuring that food is available at reasonable prices? The key here is what is reasonable. Government must consider putting in tariffs.
Failure to do so means farmers will fail to produce, industries will close and the people being protected from high prices will go hungry.
=GMB must lease storage space for all the buyers of farmers’ produce. After harvest and during storage, grain needs to be fumigated all the time. This recommendation has the effect of reducing the price to the farmer because GMB must charge for storage and fumigation and somebody must pay for this.
=The potential problems I have highlighted here need to be addressed as soon as possible to enable farmers to make decisions not only about how much wheat to plant but how much to grow next season, which is not far away.
Renson Gasela is deputy spokesperson for the MDC-M and expresses his personal views in this article.
BY RENSON GASELA