The Sunday Mail
Word From The Market with AMA
The coming in of the Second Republic raised confidence among horticulture exporters as demonstrated by 86 percent growth in earnings recorded in 2018. However, the following two years would see these earnings decline significantly mainly due to challenges caused by Covid-19. To build upon the growth foundation laid in 2018, a multi-stakeholder approach is needed to increase productivity, profitability, and sustainability of horticultural farming in Zimbabwe.
The inaugural Annual Horticulture Investment Forum hosted by the Horticultural Development Council recently provided an opportunity for the meeting of like-minds in the horticultural sector. The aim was to discuss policy alignment and consensus on key issues as well as solutions to challenges bedevilling the sector.
The mantra during the forum was “30 by 2030” where the sector is seeking a 30 percent average annual growth rate by 2030 to reach earnings of US$1 billion.
To achieve an upper middle-income status by 2030, the horticulture sector must contribute to the country’s export earnings growth.
The “30 by 2030” goal dovetails with the Government’s aim to ensure horticulture contributes meaningfully to GDP and export receipts. The Horticulture Recovery and Growth Plan (2020 -2025) aims to facilitate the production of horticultural products such as fruits and vegetables for export and local consumption in a bid to revamp the agricultural sector while promoting value-added produce.
The Government has further demonstrated its commitment to revive the horticulture sector by setting up a Horticulture Revolving Fund to the tune of US$30 million.
The fund will close the funding gap in the value addition and beneficiation of fresh produce, which has resulted in horticulture value chain margins being unsustainably squeezed.
The HRGP focuses on two broad areas namely private sector-led horticulture development interventions and Presidential rural horticulture development interventions which have firmly put the sector on a recovery path.
Part of the return to the growth trajectory has been attributed to the fiscal and monetary incentives currently being enjoyed by the sector.
These include special deductions on soil water conservation works, suspension of duty on agricultural capital equipment, 50 percent allowable deduction on expenditure on smallholder farmers by anchor farmers. Furthermore, all exporters have the potential to increase retention to 80 percent albeit on the incremental portion only.
Promoting the export of value-added horticulture products
The horticultural sector can benefit immensely from the export of value-added horticulture products. Last month, President Mnangagwa opened a US$1 million fruit and vegetable processing plant in rural Mutoko district, Mashonaland East province.
The new plant is expected to add value to horticultural produce grown by the local market.
Local smallholder farmers stand to derive better value from their value-added produce. In addition, the “30 by 2030” hinges on ensuring that there are local structured markets and market linkages for produce from local farmers. In this regard, smallholder farmers have a key role to play in increasing horticultural export.
Limited access to markets, inputs, and finance, has hamstrung growth as indicated by a perennial cycle of producing low-yielding and low-quality crops. It is against this backdrop that calls for aggregator and hub schemes have been growing, as they generally involve linking smallholder farmers to national and international buyers.
In addition, facilitating financial and technical support to improve yields and the quality of crops, enhancing economic security.
The Hub and Spoke model was discussed and to a greater extent agreed to be an effective way to co-ordinate and promote production and marketing in agriculture. The model can also greatly improve the horticulture sub-sector export market competitiveness access and competitiveness.
The most central element of hub and spoke is aggregation. The hub being the nucleus can house equipment and any other infrastructure such as a packhouse.
As we have seen with the surge in the businesses of sharing around the world such as Airbnb and Uber, the same model can be adopted in agriculture to increase productivity.
There is no need for everyone doing farming to own a tractor.
Within this aggregation, other elements such as quality control, access to markets, logistics, cold supply management etc. can also be housed. The model thus makes it easy for farmers to access success enablers such as finance as they can leverage on established business through exploiting the outgrower relationship.
The same applies to compliance, technology, capacity building and extension services.
Indeed, adoption of this model will promote inclusiveness in the horticulture sector at the same time expanding outreach to smallholder farmers.
The current horticultural revolution is pro-poor as it generates additional employment opportunities in rural areas where labour is abundant, which is critical for achieving widespread and equitable growth.
Patient capital
Any hopes of the flourishing of long-term projects such as citrus production hinge on attracting patient capital and foreign direct investment as well as creating an enabling environment and improved ease of doing business.
In his presentation to the forum, Reserve Bank governor Dr John Mangudya said the bank continues to put in place monetary policy measures to create a conducive environment for business to thrive including horticulture.
However, there was a consensus among horticulture industry players that the surrender of 40 percent export proceeds at auction-rate needed to be revisited. This is because not all suppliers of agricultural inputs are readily accepting the local currency at the auction rate.
◆ Word from the market is a column produced by the Agricultural Marketing Authority (AMA). This article was written using material from submissions made by different stakeholders during the inaugural Annual Horticulture Investment Forum hosted by the Horticultural Development Council recently in Harare. Feedback [email protected] or [email protected]
