The Sunday Mail
THERE is a telling statistic that came out in the Mid-Term Fiscal Policy Statement that was released on Thursday July 30, 2015.
In an environment where growth in practically all other sectors of the economy has been upwardly reviewed – from 3,1 percent to 3,5 percent for mining; from 1,2 percent to 1,6 percent for manufacturing and from 2,9 percent to 3,9 percent for construction – a 8,2 percent decline in agriculture is sobering.
Initially, the sector was forecasted to improve by 3,2 this year. So huge has been the tumble in agriculture that it has weighed on the country’s overall economic growth.
The country’s output, or GDP, is now expected to grow by 1,5 percent, down from the initial projection of 3,2 percent. Put simply, all these statistics mean one thing: We will have to rely on a farmer elsewhere in the region to fill our stomachs.
Zimbabwe is perhaps the only country in sub-Saharan Africa where indigenes own the means of production courtesy of the land reform, which naturally corrected and democratised land ownership.
But a decade after this historic feat, there is need for a new revolution to increase output.
What can be debated at this stage are the policy tools that are available at Government’s disposal to effectively drive up production.
It is unacceptable for Mashonaland Central, which is considered as the country’s most productive region, to produce 1,27 tonnes per hectare when it can easily produce 10 tonnes per hectare of maize.
It is unacceptable for Zimbabwe to struggle to feed less than 13 million people when obesity is becoming a challenge in China, which has more than 1,3 billion mouths to feed. It is also equally unacceptable for the bulk of local farmers to continue to bank on the axe, the plowshare and the hoe – inventions that were revolutionary in agriculture in 3000BC – to produce when innovation has since given birth to agribusiness.
Well, it seems as if the country is still caught up in the grip of British economist Thomas Malthus’ prediction that human production on the farm will not keep pace with human consumption at the table.
But there is need for an open and honest conversation of how Government and the private sector can spark the new revolution of transitioning from traditional communal agriculture to big agribusiness.
There is money to be made in the industry.
Though it is often claimed that the ability to produce more food stems from one of the country’s most important inventions: the farm, in Zimbabwe’s case, where many locals have benefited from land distribution, more inventive methods to finance and subside agriculture have to be explored for it to become a meaningful venture for most farmers.
Subsidies: insurance, producer prices, export support
Government, in line with its philosophy to anchor local economic growth on agriculture, has invested a lot in the sector during the Zimbabwe-dollar era through various support facilities and also post-dollarisation through price supports for various produce.
Statistics from the Reserve Bank of Zimbabwe (RBZ) last week showed that the Grain Marketing Board buys a tonne of maize at US$390 against a regional parity price of US$265, which is US$125 more.
Despite this level of support, there is still need for more investments. The world over governments continue to provide support to farmers in various ways that include, but are not limited, to direct payments to farmers; price supports implemented with government purchases and storage; regulations that set minimum prices by location, end use, or some other characteristic; subsidies for such items as crop insurance, disaster response, credit, marketing, and irrigation water; export subsidies; and import barriers in the form of quotas, tariffs, or regulations.
Even developed countries such as the United States of America (USA) continue to pour in obscene amounts to farmers in the form of subsidies.
And this has been happening since the New Deal and the Agricultural Adjustment Act of 1933.
The U.S. government heavily subsidises grains, oilseeds, cotton, sugar, and dairy products.
It is believed that the farm programmes cost about US$20 billion per year in government budget outlays in recent years.
It has become so absurd that critics of continued subsidies accuse the US administration of turning farmers into fat cats.
There are now sections that cynically claim that US farmers are now growing subsidies instead of growing produce: The more they don’t grow, the more they are paid through insurance programmes, and the more they also invest on land than they likewise don’t tend to.
According to the US Government Accountability Office between 2007 and 2011 the paid some US$3m in subsidies to 2 300 farms where no crop of any sort was grown, while between 2008 and 2012, US$10,6 million was paid out to farmers who had been dead for over a year.
This emphasises how the US government splurges on farmers to ensure that its farmers are pampered and its farms are more productive.
Though direct farm aid payments still subsist, the federal crop insurance programme is equally comforting.
But unlike direct farm aid payments, which are capped at US$40 000 per farm, there is no limit on crop insurance subsidies.
It has often been assailed as wasteful corporate welfare.
Many believe that crop insurance has since grown into a income support mechanism that almost eliminates risk from agriculture.
By law, insurers are obligated to cover all who apply.
In cases of disaster the programme automatically disburses aid, often within 30 days.
Also, two-thirds of the premium costs are paid by government.
Conversely, in developing countries government tend to tax and regulate agriculture.
Countries such as South Korea and Taiwan, which switched from penalising farmers to subsidising them and protecting them from imports, now have the highest subsidy and protection rates in the world.
While Government might not have the wherewithal to make such huge investments, there are several proposals that have been made by monetary authorities to support production.
One of the worthy interventions made in the Monetary Policy Statement of August 5, 2015 is for Government and the private sector to support only serious and productive farmers.
“For instance, supporting 2 000 serious maize farmers to produce 100 hectares per farmer with a target of 6 tonnes per hectare would produce 1,2 million tons of maize. The same is true for A1 and communal farmers, who, if carefully selected and funded would sufficiently produce to feed the nation,” noted Dr Magudya last week.
In line with RBZ recommendations, further avenues should be explored to convince banks on the need to commit a sizeable chunk of their portfolio to the productive sectors of the economy.
Statistics last week noted that of the US$4billion that was loaned out by banks as at June 30, 2015, 25,65 percent was allocated to individuals, while 18 percent went to services.
Remodelling this system to channel more resources to agriculture and mining will help to turn the transform the economy from being consumptive to being productive.
Furthermore, there is need to commercialise the political victory that has been scored through the improving relations between Zimbabwe and the EU.
It is, however, reassuring to learn that the RBZ intends to work with the Agricultural Marketing Authority (AMA) and the Horticultural Promotion Council (HPC) to try and re-capture the lost markets in the EU.
This will help augment export earnings that are presently solely supported by the tobacco crop in the agricultural sub-sector.
As the summer croping season approaching, the onus is on Government to come up with a concrete policy that ensures that at least the crops that are put under production cannot be affecting by the vagaries of unpredictable weather conditions.
Agriculture still has to be supported in fact and in deed.
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