The Sunday Mail
Enacy Mapakame
Business Reporter
FRESH produce worth US$10 million changed hands at Mbare farmers’ market in Harare during the first six months of the year, which is a decline from US$16 million recorded during the same period a year ago, as small-scale producers continue to experience funding constraints.
Statistics from Knowledge Transfer Africa (KTA)’s eMkambo show that the bulk of the produce was mainly from the country’s 10 provinces, with only a marginal contribution coming from neighbouring Zambia. eMkambo is a private agro-based research organisation.
In the January to June period, total sales were US$9,8 million.
Fresh vegetables were the major trading commodity as they raked in $5,1 million in revenue, followed by fruits at US$2,1 million. Field crops worth US$1 million were traded while tubers such as potatoes and sweet potatoes accounted for US$630 000 of the total revenue for the period. Also, farmers sold gourds such as butternuts and wildfruits for US$552 000 and US$195 704 respectively.
The remainder came from other products such as herbs. Mashonaland East contributed 42 percent (US$4,2 million) of the commodities, followed by Manicaland which contributed 23 percent.
Mashonaland West weighed in with US$1,3 million worth of produce.
However, it is believed that most of the small-scale farmers are self-funded as banks’ insistence on collateral is disqualifying the bulk of the ventures.
KTA estimates that 70 percent of commodities that are sold in informal markets are produced through “intangible collateral”.
“With tangible collateral accounting for less than 30 percent of commodities in the market, there is need for financial institutions to revisit their notion of collateral.
“Perhaps it is now ideal to consider factors surrounding the success of a particular farming enterprise as opposed to looking at assets outside a farmer’s line of business,” said KTA.
Recently, banks unveiled a US$1 billion package for crop and livestock farmers for the 2015/16 agricultural season but they insisted on collateral as a precondition for financial support, which makes many of them ineligible for the facilities.
Agriculture takes up as much as 19 percent of bank loans. Bankers Association of Zimbabwe (BAZ) chief executive officer, Mr Sijabuliso Biyam recently indicated that farmers could use a warehouse receipt system as collateral to access funds from banks.
KTA, however, noted that such a model was not suitable for fast-moving commodities.
“The warehouse receipt system which the BAZ has been suggesting as a solution is not as powerful as understanding market dynamics in the people’s market.
“The warehouse receipt system works where commodities are not moving fast. In the people’s market commodities are always in transit and there is no time you can find the market empty,” explained KTA.
In essence, most smallholder farmers, youths and graduates from agricultural vocational colleges are excluded agricultural support facilities because they do not have the requisite title deeds.
It is believed that financial institutions have to take into account a farmer’s production capacity, market participation and trends in the market as alternative qualifying criteria for financing.
Added KTA:
“Real time trends on a fluid market are a more reliable collateral than contractual agreements with a buyer who may have limited means of controlling the market. Banks should consider long term loan facilities of two to five years.”
From October 1, Government hiked import duties on horticulture products such as potatoes, apples, citrus fruits and onions in order to protect local producers who were being affected by the influx of imported commodities.
