What Govt should consider this winter

01 Jun, 2014 - 00:06 0 Views

The Sunday Mail

The winter wheat planting window is almost coming to a close and once more the area planted to the crop is dismally low. While the country requires over 400 000 metric tonnes of wheat per year, the wheat hectarage in Zimbabwe increased from 47 843 ha in 1996 to a peak of 70 585 ha in 2004 before falling to around 10 000 ha in 2013.

It seems the perennial problems that have dogged the crop over the past few years continue to affect the hectarage of the crop. These problems include lack of secure funding for farmers, unreliable electricity supplies, poor producer prices and unreliable markets.

Lack of funding and low profitability
The winter planting window normally starts on May 1 and by that time most farmers will not have harvested their summer crops and, therefore, not in a position to fund the growing of the crop themselves. In the past, Government would set aside funds for the crop in the National Budget, but this year the Minister of Agriculture, Mechanisation and Irrigation Development, Dr Joseph Made, made it clear that Government would not provide such funding. Government has also argued that the primary responsibility to fund the crop lies with end-users such as bakers and millers. The same concept has been successful with tobacco and cotton. By the same token, millers and bakers are expected to contract wheat growers.

An example of a successful winter contract growing scheme is the Delta Barley Scheme under which farmers receive inputs from the company to grow the crop. However, our local millers have over the years failed to sponsor the production of wheat.

Local banks have shunned financing the production of wheat mainly because of its low margins. It costs roughly US$1 200 to produce a hectare of wheat. Most farmers average between three and five tonnes per hectare, depending on their management. And with the Grain Marketing Board producer price at US$460 per tonne, a farmer will make a margin of between US$180 and $1 100 per hectare.

Load-shedding and the finance factor
The fact that wheat production is sometimes dogged by electricity load shedding and breakdown of pumping units, the chances of farmers realising the lower margin are high, making it risky to sponsor production of this crop.

The second challenge with winter wheat production is to do with electricity availability as well as the costs of local electricity and payment arrangements. Zesa is only able to produce approximately 1 200 megawatts of electricity against a national demand of 2 200 megawatts.
To balance the equation, the Zimbabwe Electricity Transmission and Distribution Company resorts to load shedding. This gets worse in winter, thereby compromising wheat production.

A lot of farmers have also complained that they find themselves with outrageously high electricity bills after growing wheat, thereby making the venture unviable. Even Dr Made himself at one point lamented the high cost of irrigating wheat using electricity.

Farmers have often argued that they are not able to pay their electricity bills every month unlike urban dwellers as they only get money when they sell either their summer or winter crops. ZETDC recently acknowledged this fact and agreed in principle that farmers can come up with payment arrangements and settle their bills at the end of each season.

Payment delays
The issue of payments to farmers for delivered produce has also contributed to the loss of interest from farmers in growing the crop. Farmers can sell their wheat to GMB or to private millers, but in both cases they have not been paid on time. The Ministry of Agriculture, Mechanisation and Irrigation Development recently indicated that GMB had no funds to purchase maize from farmers; it therefore follows that it will not have funds to buy the wheat crop.

Local millers claim they are normally given three months’ credit by international suppliers to pay for deliveries and therefore they would also want to be given time to pay farmers.

This has resulted in most local millers preferring to import rather than grapple with local marketing arrangements. Last year only a few millers were buying wheat at harvest time.

Late announcement of producer price
The announcement of the wheat producer price has been another contentious issue in the past few seasons as Government has failed to announce the producer price on time. The marketing season of wheat officially starts on September 1 and by that date Government is expected to have announced the wheat producer price. The absence of a floor price has left farmers at the mercy of private buyers who offer very low producer prices, some as low as US$280 per tonne.

Peter Gambara is a farmer and agricultural economist.

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