US$60m facility for farm mechanisation

19 May, 2019 - 00:05 0 Views
US$60m facility for  farm mechanisation

The Sunday Mail

Martin Kadzere
Business Reporter

Zimbabwe is working on a US$60 million massive agriculture mechanisation deal with an Indian firm, International Tractor Limited (ITL), that will see distribution of tractors, combine harvesters and various implements to benefit local farmers, according to project promoters.

Official documents in possession of The Sunday Mail Business show that Government has already approved the deal.

ITL’s local partner, Glenwood Agriculture Equipment (GAE), which is working with a local bank, says a line of credit also been secured.

It is believed that the  proposal has since been submitted to the Ministry of Finance and Economic Development for consideration.

The deal will see the financier availing US$60 million to ITL— India’s third largest tractor manufacturer — for distribution of 2 100 tractors and 100 combine harvesters to Zimbabwe. The equipment will be sold to farmers, subject to risk assessment by the local bank, which is being used as a local conduit of the facility.

Qualifying farmers will get the tractors, through a facility that is payable over five years. Payments of the equipment will be made through the local bank for onward transmission to the financer.

Depending on performance, the facility may be revolved for 30 years at five-year intervals, as  Zimbabwe ratchets up efforts to mechanise the agricultural sector.

“It is a purely commercial transaction aimed at helping local farmers to modernise their activities,” Glenwood Agriculture Equipment business development manager Mr Israel Chemwai said. “We believe mechanisation is critical to develop our agricultural sector, which is the backbone of the country’s economy.”

Zimbabwe has a deficit of about 30 000 tractors, according to the Ministry of Lands, Agriculture, Water, Climate and Rural and Resettlement.

Permanent secretary for the Ministry Mr Ringson Chitsiko has already given thumps -up to the deal, describing it as “very favourable in support of farming equipment supply to Zimbabwe.”

The ministry signed a memorandum of understanding with ITL in 2014 for the supply of the equipment. This was followed by a technical visit to India by engineers from the department of mechanisation in 2016. The tractors have since been tested and found suitable, with some units already in the market. Between 2015 and 2018, various funding proposals were presented by the ministry to Treasury for consideration.

“May you therefore avail yourself for discussion on the proposed term sheet by (the financier) in support of farm mechanisation…,” said Mr Chitsiko is a letter dated April 16 2019  to his finance counterpart Mr George Guvamatanga .

On the same day, Mr Chitsiko also wrote to the financers advising them to furnish Mr Guvamatanga with detailed term sheet to initiate dialogue on funding arrangements.

While Mr Chemwai would not be drawn into disclosing more on the detailed terms of the facility, he said: “I can assure the nation that the facility will help local farmers to have access to affordable equipment.”

Efforts to get a comment from Mr Guvamatanga proved fruitless by the time of going to print. ITL is the third largest tractor manufacturer in India and biggest exporter to Africa. It is present in 80 countries and since its inception, it has sold nearly one million units.

Efforts to improve local

 agriculture sector

Over the years, Government has come up with a number schemes to support local farmers improve production on their farms.

The notable ones are Farmers’ World scheme, Government sponsored mechanisation programme and Brazilian government- sponsored More Food for Africa programme financed to the tune of US$100 million, among others. There are also negotiations with US equipment and farming implements manufacturer John Deere that also wants to help mechanise the country’s agriculture.

Government is not leaving a single stone unturned as it moves towards mechanising the country’s agriculture.

Share This: