The Sunday Mail
Private sector financing will be crucial to the growth of the agricultural sector as the over-reliance on Government support is unsustainable, Agriculture, Irrigation and Mechanisation Deputy Minister Paddy Zhanda has said.
Government remains a key financier of agriculture in Zimbabwe.
The Presidential Inputs Scheme, which last year had a resource envelope of more than US$250 million, helped thousands of emerging small-to-medium scale farmers access seed and fertilisers.
In the 2013/14 farming season, banks advanced US$600 million towards agriculture, but nearly a sixth of this was from the Agricultural Bank of Zimbabwe (Agribank), a State-owned enterprise.
Mr Zhanda told a Confederation of Zimbabwe Industries Economic Outlook workshop in Harare recently that farmers should seriously consider contract farming, particularly for crops such as maize and wheat – areas banks have of late been reluctant to fund citing high risk.
Government spent US$3 billion on grain imports in 2009 alone.
“The future of agriculture lies in contract farming, which gives pre-financing and ready markets. Farmers need to be contracted even by supermarkets,” Mr Zhanda said.
Economist Mr Midway Bhunu said the entire value chain in contract farming needed monitoring and evaluation in order to prevent side marketing.
Engaging farmers’ unions, opined, would be crucial.
“Government has a lot to deal with and may be constrained to fully support farmers. Therefore, private sector participation would be ideal.
“The implementation part of the deal is the challenge, but if there is proper regulation which involves input suppliers, buyers and farmer organisations, then contract farming would be successful.
“Everyone will know that only a particular company is allowed to buy such produce from a certain district,” explained Mr Bhunu.
This year’s 3,5 percent economic growth is premised on a 23 percent growth in agriculture, including double digit growth in both mining and tourism.
Contract farming is reportedly working well in the tobacco sector.
Two thirds of the 100 000 farmers who produced US$600 million worth of tobacco last year were on contract farming.
Previously, this model supported the cotton industry.
Agriculture is key to Zimbabwe’s economic growth.
The Zimbabwe Statistics Agency estimates that as many as 71,8 percent of Zimbabweans are employed in the agricultural sector.
