Tapiwanashe Mangwiro
ZIMBABWE’S maize prices are expected to remain above world market levels in the 2024/2025 marketing season, despite the global price decline, as the country targets to rebuild its grain reserves and boost farmers’ viability after a severe drought.
According to stockbroking firm Morgan and Company, international maize prices have dropped to approximately US$180 per tonne due to improved supply from major producers Ukraine and Russia through the Black Sea.
However, the grain’s prices in Zimbabwe are expected to remain elevated as the country restocks its reserves following the devastating El Niño-induced drought last season, which decimated more than 72 percent of the country’s maize crop.
“The commodity will likely fetch a premium over and above the global price in the marketing season of the 2024/2025 crop in Zimbabwe,” said Morgan and Company analysts.
This trend follows the Government’s approval of an incentive planning price of US$360 per tonne for maize in the 2023/2024 agricultural marketing season.
Although the grain prices for the upcoming season may be slightly lower, analysts project that it will still exceed global market levels.
Morgan and Company attributes this to the low strategic grain reserves, which, as of August 2024, stood at just under 264 246 tonnes (t), well below the annual cereal requirement of 2,2 million tonnes.
“This shortfall will likely prompt the Government to offer a competitive price for maize to ensure adequate deliveries to the national reserves,” said the company.
In addition to domestic factors, regional food security challenges are expected to persist, keeping prices high across sub-Saharan Africa.
“Food security risks are likely to continue well into 2025 in several countries, and this will maintain regional maize prices at
elevated levels,” Morgan and Company added.
The Government’s 2024/2025 summer crop plan, unveiled by the Minister of Lands, Agriculture, Fisheries, Water, and Rural Development, Dr Anxious Masuka, contains the set cereal production target.
The plan aims to boost output from the 2023/2024 season’s 744 271t to 3,27 million tonnes, a 340 percent rise.
Maize production alone is expected to reach 2,7 million tonnes, with traditional grains contributing an additional 574,200t.
This would position Zimbabwe’s production well above its food and feed requirements by 33 percent, offering a potential surplus.
To achieve these targets, the estimated financial requirements for the plan are set at US$1,6 billion.
However, the Government is only set to fund 37 percent of this amount, relying heavily on the private sector, which is expected to contribute 60 percent through contract farming schemes, while self-financed farmers are expected to cover 3 percent.
Despite these targets, concerns have been raised over the Government’s limited funding capacity to reboot production sufficiently following the hit after the severe drought.
Analysts are also wary that the private sector may not be able to fill the funding gap quickly enough to meet the demands of the farming season, potentially
limiting the extent of the recovery from the drought.
Agronomist Ms Sheila Musanhi noted that despite the financial challenges, the falling cost of key farming inputs, particularly fertilisers, has made maize production more viable.
The global price of fertiliser, as tracked by the World Bank’s Fertiliser Price Index, has been declining due to improved supply chains and stockpiles of raw materials, with urea currently retailing at US$330 per tonne.
Ms Musanhi explained that fertiliser affordability had returned to pre-2019 levels, following a significant spike during the 2022 crisis.
“The fertiliser affordability index, which measures the ratio of fertiliser prices to food prices, is now close to its 2015-2019 average,” she said.
This reduction in input costs will significantly enhance profit margins for farmers, making maize production financially viable, even if the local price for the grain is slightly reduced in the next season.
With falling input costs, maize farmers are better positioned to make profits, especially when compared to previous seasons, when fertiliser prices had nearly doubled.
Ms Musanhi emphasised that this shift creates a more conducive environment for farmers, allowing them to focus on increasing their output without worrying about exorbitant input costs.
Economist Mr Tinevimbo Shava highlighted the importance of maintaining attractive maize prices to ensure the replenishment of the country’s strategic grain reserves.
“The continued premium on local maize prices will serve as a strong incentive for farmers to deliver their grain to the national reserves, helping buffer our strategic grain stocks,” he explained.
However, Mr Shava pointed out that swift and efficient payment mechanisms are crucial to this process.
He stressed the need for predictable and timely payments, especially in foreign currency, to maintain the confidence of growers.
“Farmers need to be paid swiftly and in a stable currency, otherwise the success of the national maize programme could be compromised,” he said.
Delays in payments have often been cited as being among the factors that may potentially reduce the participation of farmers in maize production and undermine efforts to replenish the strategic reserves.
A combination of favourable pricing, declining input costs and increased production targets creates an opportunity for the country to enhance its food security.
