The Sunday Mail
Peter Gambara
IN Shona we say: “Ukarera imbwa nemukaka, mangwana inofuma yokuruma.” (The dog that you pamper with milk today will bite you tomorrow.)
This is exactly what Government has done with the cooking oil manufacturers over the past years. Last week, the same pampered manufacturers caused an artificial shortage of cooking oil. They doubled the price without any justification. The Reserve Bank of Zimbabwe has been allocating foreign currency to the tune of US$20 million per month to import crude cooking that the manufacturers then re-pack and sell on the local market.
In 2016, manufacturers imported crude soya bean oil worth US$120 million. This is against a situation where the same manufacturers are reluctant to fund local farmers to grow soya beans. Statistics from the Agriculture, Mechanisation and Irrigation Development Ministry show that soya bean production decreased from 47 832 tonnes in 2016 to 35 744 tonnes this year – a 25 percent decline. That production is only 24 percent of the annual national demand.
It has always been Government policy that those manufacturers that directly benefit from a crop should take the responsibility of funding its production. Tobacco merchants have taken over the production and marketing of flue cured tobacco. Over 60 percent of the crop sold is contracted to local tobacco merchants.
A similar arrangement was in cotton, where merchants sponsored the production and purchase of the crop. Under these arrangements, merchants source the funding for production and purchase from banks. In case of tobacco merchants, most of this funding is sourced from outside the country. The injection of that foreign currency into the economy is well appreciated as it helps boost the availability of forex.
At the closure of the tobacco floors around August each year, the stopping of that forex inflow is felt. There is, therefore, no good reason why cooking oil manufacturers should not adopt the same concept and fund the production of soya beans and save US$120 million in forex. After years of maize shortage to feed our economy, this past season, Government embarked on the Command Agriculture maize programme, where they provided farmers with the necessary inputs to grow the crop.
The response has been massive and GMB is struggling to find storage space for the maize as over 2,7 million tonnes of grain are expected. Cooking oil manufacturers should be challenged to do the same. There is enough land and interested farmers who would want to be contracted by these companies to grow soya beans, but this has not been forthcoming. The cooking oil manufacturers were invited by Government to come on board and sponsor the production of soya beans under a similar arrangement, instead they have tried to find all kinds of excuses.
The cooking oil manufacturers claim there are not enough arrangements in place to contract farmers. They allege that farmers will side market the soya beans, since the crop can easily be sold on the market as there are a lot of traders who are ready to pounce on the opportunity to buy the product when they were reluctant to sponsor its production. Such a problem also existed in the cotton Industry until the Cotton Ginners Association sat down with Government and came up with Statutory Instrument 142 of 2009.
After the sale of cotton was liberalised after the demise of Cotton Marketing Board, there was a manifestation of fly by players, mainly from the Asian region, who would come into the country at marketing time and entice farmers who would have been sponsored by other players to sell the crop to them. This lead CGA to persuade Government to come up with SI 142/2009, which essentially prohibits any buyer who has not sponsored any farmer from buying the crop.
SI 142/2009 also established the Cotton Marketing Technical Committee that falls under the Agriculture Ministry and is made up of ginners’ representatives, representatives from the four farmers unions, as well as other stakeholders who use the cotton products like the oil expressers. Surely, a similar arrangement can be put in place for soya beans and only licensed traders will be authorised to buy the crop.
However, putting in place this legislation and mechanisms requires funding and its high time cooking oil manufacturers do so. They will need technical staff. Another arrangement would be to use the existing Command Agriculture maize mechanisms. Under the maize scheme, the Government received financial support from private companies. The Government then made sure that they incorporated the security sector to monitor all growers in conjunction with Agritex technical staff.
Under such an arrangement, growers are constantly monitored to ensure that they have prepared the land, planted the crop, applied the necessary fertilisers, sprayed the crop and most importantly, that they have harvested and send the product where it is supposed to go.
Last season, farmers were only supplied with top dressing fertilisers based on the actual areas planted to maize as well as the stage of the crop. That way, inputs were only directed to deserving farmers. At harvest time, a monitoring and evaluation team also went around the country, checking on all farmers on how many of each input they had used and how many tonnes of the product they had harvested and sold. Sponsorship of farmers this year will be based on the performance of those farmers last season. Those who did not deliver will simply not get new inputs and they will be asked to account for the used inputs.
If cooking oil manufacturers are afraid that contracted farmers will abuse their inputs or side market, they have that option to channel their funding through Government’s Command Agriculture programme.
Government has already indicated that this summer season, they will be funding the production of 60 000 hectares of soya beans. They have since also announced an attractive producer price of US$610 per tonne. The soya beans will be delivered to GMB. At least 150 000 tonnes of soya beans are required to produce enough cooking oil. The 60 000 hectares that Government intends to contract will roughly produce 80 000 tonnes, leaving a shortfall of 70 000 tonnes.
That will translate to another 54 000ha. Just for us to be certain to meet local demand, let us just challenge local cooking oil manufacturers to match the 60 000 hectares that Government has targeted. Altogether, it means we should have at least 120 000 hectares of contracted soya beans next season and over 150 000 tonnes of soya beans produced. It costs about US$600 to produce a hectare of soya beans and the US$120 million that RBZ allocated to the cooking oil manufacturers is enough to sponsor 200 000 hectares of locally grown soya beans.
Farmers start harvesting soya beans in April and therefore RBZ should only allocate enough forex until March next year. After that, they should actually ban the importation of crude cooking oil and tell all manufacturers to source locally. A similar arrangement has worked with local grain millers. There is still ample time to identify and contract capable farmers. The planting of soya beans only starts around mid-November and will continue until about Christmas time.
As a general guide, they should target farmers who have a history of growing soya beans and prioritise those farmers in heavier red soils. Soya bean production tends not to do well in sandy soils and black soils are usually waterlogged. Going around the country, there are massive areas of ideal land that are lying idle. A third alternative is for the cooking oil manufacturers to put in place the necessary arrangements to grow soya beans. Under such an arrangement, the cooking oil companies will have their own tractors and equipment to till, plant and spray the crop on the identified properties.
They will need their own production and extension staff to monitor the production. Such an arrangement makes sure that they are in control of the production process and it will minimise the chances of side marketing. However, this option is likely to be expensive. The country has the land, able farmers and the suitable conditions for the local production of crops that are used to produce cooking oil. There is, therefore, no good reason why the country should continue to be held to ransom by cooking oil manufacturers who want to be allocated US$120 million a year to import crude cooking oil.
Peter Gambara is an agricultural economist and consultant based in Harare. He wrote this article for The Sunday Mail
