Between a rock and a hard place

12 Aug, 2022 - 00:08 0 Views
Between a rock and a hard place It is better to to grow maize locally than having to import

eBusiness Weekly

Part One

It is often said that if you think you are going to fail, you finally will. At the beginning I had titled this article ‘Zimbabwe’s agriculture industry in dire straits’ but on second thoughts, I changed the title to the form that you are reading above.

Up to this day, many observers and commentators have blamed, and are still blaming the ‘Mugabe regime for killing the country’s economy, its agriculture industry included.

As can be expected, because of its raison de te, nature and form, Zimbabwe’s land reform programme is a subject loaded with much controversy.

As a result, it is a matter that has divided many people throughout the Western world where most of the entities who regard themselves as stakeholders [to it] are found.

But whatever the case may be, this exercise had and still has, its own good and bad sides.

On the one hand, many believe—in some cases rather grudgingly—that this was a necessary programme. The (initially positive) involvement of countries such as the USA, itself a country not directly connected to the British Empire, in the Lancaster negotiations—the latter being a system within which the phenomenon took place—is a significant factor here. (In this case the USA had promised to fund the property compensation process but it later reneged on the undertaking).

Furthermore, the fact that more positive developments later took place in our neighbour South Africa, where they are still using the mistakes made in this country as a benchmark and/or standard for taking corrective action there, attest to the argument that this was a necessary exercise.

Naturally, those who were opposed to the programme, were quick to point fingers at the  challenges that subsequently cropped up as a consequence (of it), regarding the development of a sustainable food production system in the country.

In this regard, many negative connotations were made in the process. “Mugabe’s disastrous land grab exercise had turned a former bread basket of Africa into the world’s basket case”, has been the main mantra.

The most fascinating, but rather sad aspect to this matter, is the attitude of a sizeable proportion of African stakeholders—some of them local — to it. Some of the latter have been literally aping the said mantra, word for word.

That said, a close analysis of this matter reveals the variegated nature of the latter’s attitudes and perceptions to it. While some of them are being genuinely (but naively) sincere in their views, others are aping ‘his master’s voice’. Some of them are even getting paid for taking that position.

Still more fascinating is the category of Zimbabweans who profess to ‘have seen the light’ and now want to come back—in some cases having actually done so—who now want land ‘to farm’.

Be that as it may, it is from a positive perspective to this matter that I am analysing the case in this piece.

My attitude here is that we should not apologise for taking back our land from our former colonisers. The other part of my attitude is that there is no reason to believe that we are on the path of failure.

After all, it is often said that every successful entrepreneur has experienced failure on their way up the ladder of success.

In this part of the article, let us look closely into what has gone wrong to result in the current (almost, but not entirely) dire condition of the industry.

Because of the conditions that pertained then, Zimbabwe’s land reform project had to be chaotic. So to my mind, any view to the contrary can only be naïve. So given this condition and subsequent outcome, we need to consider what action to take in order to arrive at the desirable position for the industry.

But to effectively achieve that state, it is necessary to first analyse the current events and the steps being taken in the implementation process by the stakeholders, some by design and others by default.

Currently, this industry is in the sick bed due to a number of reasons. These are a poor state of the funding systems; a low capitalisation level; corruption, mismanagement, and the use of a basket of foreign currencies of which the US dollar is the main one.

Fast forward to the current situation in the country. Currently, farmers are still harvesting their crops, maize being the latest one of these. Due to the recent drought, the total volumes of maize expected from this season’s crop are only a fraction (say half) of the forecast volumes.

Now there is a challenge here. Government seems to be economic with facts on the matter. They do not seem to be heeding the farmer’s appeal for the latter to consider their plight with compassion.

The government, through the GMB, seems reluctant to pay a decent price for say, maize. After much haggling between the government and farmer unions—currently a weakened group—the former has now agreed and promised to pay the farmers US$90 per ton of maize plus $100 000 RTGS.

Meanwhile the farmers are analysing what this situation implies and they can easily see trouble ahead. With the fast deteriorating exchange rate that is currently ( 2/8/22) at 1:600 $RTGS 100 000 will yield approximately US$166 per ton. Adding US$90 to this amount will yield an equivalent of US$256 per ton.

This is an amount close to the import parity price of maize, so it appears reasonable enough a price. But is it? Here is where the whole matter thickens up. But how so?

Here is how: The whole issue revolves around the currency black market—a realm that is not devoid of regime change politics that may be linked to the next elections.

The current position of the farmer is that under current conditions, whether he/she likes it or not, he may well likely fail to return to the land.

On considering the matter from this perspective, one can deduce that a hungry electorate is an angry electorate and so it can do the unexpected. No need to belabour the point here, suffice to say that Government cannot afford to ignore the current plight of the farmer.

Under such circumstances the farmer should naturally be on the side of the government, so it will not be wise for the latter to see things otherwise. Here history bears the farmer out.

So it only stands to reason that the farmer stays on the land, let alone making a profit from his endeavours. In any case, all sensible governments today, and throughout history, have stood on the side of their farmers.

One only needs to consider the events currently taking place in the Eastern European region and their impact on the world’s cereal market to appreciate this fact.

In this respect, did you ever imagine that your bread comes from the Steppes of Eastern Europe?

So here it goes without saying that our government just has to make available, adequate funds to grow enough maize for our immediate and future requirements. As Margaret Thatcher, the former British prime minister was fond of saying; “Tina”; there is no alternative!

But then, one needs to appreciate that the government is in a dilemma here. On the one hand it needs to stabilise the local currency. (Without our own currency we are doomed!)

On the other hand, the country needs to acquire the US$ for trading purposes. In the current circumstances, there is no practical alternative to the US dollar. Sadly, this is not a matter of ZANU(PF)’s doing. It is a matter steeped in this country’s history, politics and economics.

So with regard to the matter of the country’s agricultural industry—especially that of our staple food, maize—let me make a proposal here.Consider two alternatives; one is to pay the farmer all his maize in US dollars; the other is to peg the price of maize to US dollar and keep it floating so that any changes in the exchange rate are  automatically adjusted to that rate in such a way as to buffer the farmer from any exchange rate shock.

Of course, this approach will need the cooperation of the retailers. But nothing ventured, nothing gained.

On the other hand, the gold coin strategy seems to be prone to manipulation and sabotage so I am not considering it as an alternative here.

At this point, I know that there are many questions that arise in the minds of all the stakeholders concerning this matter. Here are some of the main ones: Does government have the money to purchase the available maize in US dollars? If so, why is it reluctant to pay the farmers a viable price of same?

In this respect, the farmers are asking why they should not be treated the same way as artisanal miners and tobacco farmers who are getting a much better deal than themselves. Does this mean they are less important than these other business people?

Ultimately government may be compelled to import the maize in foreign currency. So is it better to import maize than to grow it locally?

A close scrutiny of the matter shows that the latter alternative far outweighs the former for many reasons, not the least of which is its implications on many fronts. For example, farming forms the base of this economy.

So it becomes a matter of priorities on the part of government here. And if we follow Maslow’s hierarchy of needs, food comes above everything else. This knowledge needs no rocket science.

At this point more questions arise. To my mind, the most critical of these is; how should the government raise these funds? Hopefully, the answers to this question will enable us to solve the challenge.

That said, the first thing to appreciate here is that this is not a new problem (see my articles in this paper; Why are Africans failing to feed themselves?).

So, when confronted with such a challenge we need to revisit the past to see what we did wrong to arrive at this dire state. In doing so we find that the funds made available were not managed soundly. In sum, the appropriate term for this phenomenon is ‘mismanagement’.

But because ‘mismanagement’ is a term that tends to cover many aspects of the practice, it becomes necessary to tease it out here. If and when we do so, we find that the major aspects of mismanagement in this case were found at the policy and operational levels.

At the policy level, the decision to fund every farmer was not a good one as we shall see later in this piece.

At the operational level, the major negativity was corruption, followed by apparently minor aspects such as the lack of the close monitoring of operations on the ground through farm visits and discussions with farmers at the individual and (occasionally) group level.

But whatever the case may be, a critical examination of the matter shows that, if both of these aspects — that is policy and operational, had been properly implemented—they should have been closely linked since farm visits would have indicated whether the selection process was sound or not.

But of course, this is where corruption comes into the equation. And when corruption sets in, all conditions meant to reduce risk are ignored or set aside.

And here remember we are dealing with money and  debt matters. To my mind, this is where the whole system fell short resulting in the current demise.

This is where Government falls out with the private sector as represented by the lenders, the banks. And here politics and money make incompatible bed mates. Politicians got huge chunks of funds — ostensibly for the purpose of farming –which they are now reluctant to pay back.

Logically, such attitudes have the effect of mortifying the agricultural industry and, at a higher level, the whole economy. So in order to deal with this malady, more stringent risk control measures need to be put in place first. Again there is no alternative here.

But of course, some measures that ameliorate the farmer’s plight here can be put in place.  Subsidies are the commonest tool in this case but these too can be abused if the system is not properly managed.

For the farmer’s benefit, they should be placed at either the input procurement or at the marketing stages?

And in this country, this matter has dirty politics embedded in it. Once the government makes known its intention to subsidise the farmer every party along the value chain wants to take advantage of the situation.

Sadly, once we are in this realm, politics readily creep into the matter, starting at the national to the regional, right up to the international level.

This speaks to the need for the government to be involved at all those levels. This is where individuals with the appropriate knowledge and experience should be called in to advise the authorities.


Shambare is an agriculture economist based in Chinhoyi and is reachable on 0714045435


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