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Edgar Vhera Special Writer
EXPERTS from various farmers’ organisations have commended the Government’s timely move to avail crop and livestock financing to farmers ahead of the 2022/23 cropping season.
The country’s leading agricultural bank, AFC Land and Development Bank of Zimbabwe’s (AFC) business development officer Mrs Annah Gombedza recently revealed that the summer crop finance facility was ready, adding that it would attract an interest rate of 130 percent per annum.
“The financing facility is meant to encourage farmers to take farming as a business by planning their future and day to day cash outflows and inflows against their repayment capabilities. It will take into account the suitability of agricultural enterprises according to agro-ecological region’s potential,” she observed.
Mrs Gombedza urged farmers interested in the loan facility to visit their nearest AFC branches to get application forms on which they will indicate their business plans and cash flow projections before attaching copies of their national identity documents or company registration documents.
“The farmers will also need to submit proof of land access in the form of the offer letter, lease or affidavit together with the application. AFC will upon receipt of these documents do a farm visit, review the application and approve the commensurate loan amount to lend to the farmer,” explained Mrs Gombedza.
Zimbabwe Farmers Union (ZFU) secretary general Mr Paul Zakariya described the Government’s move as timely saying it would go a long way in improving agricultural production.
“This is the most sustainable way of facilitating agricultural growth in the country, as AFC has grassroots branches all around the country.
“Farmers just need to visit their nearest branch, get the application form and attach the required documentation to receive the loan after being vetted.
“Farmers are optimistic that the cost of borrowing the money is not prohibitive and the interest rate has to be below the inflation rate,” said Mr Zakariya.
Zimbabwe Commercial Farmers Union (ZCFU) president Dr Shadreck Makombe also echoed the same sentiments saying the interest rate of around 100 percent was better compared to the commercial lending rate of 210 percent.
“Farmers were initially uneasy with the high commercial lending rates but have since embraced the low productive interest rate from AFC Land and Development Bank,” said Dr Makombe.
Meanwhile, Zimbabwe National Farmers Union (ZNFU) president Mrs Monica Chinamasa has urged the Government to offer farmers subsidised agriculture loans rather than charge commercial interest rates if agriculture is to grow.
“AFC should charge subsidised interest rates to enhance farmer capability and ensure that farming is profitable,” said Mrs Chinamasa.
In order to take farming as a business the prospective farmer has to sell his/her idea through a business plan. The business plan should provide background to the nature of the farming venture, information on key products, customers, suppliers and target market.
It is also important to include information on the farmer’s targeted industry in terms of competition, availability of substitutes, risk factors and mitigation strategies. Producing maize on a hectare, for instance, does not offer enough justification for the application for a loan amount of $574 210 without coming out with a budget to justify it.
The budget specifies cash requirements for each item, which helps bring out the amount needed for the loan. If a farmer has more than one enterprise, there is need to have a gross margin budget for each. The sum total of the values of the different enterprises will come up with the conglomerate budgetary requirement from where the cashflow projection sheet is constructed.
The cashflow projection indicates the calendar time of the year when the enterprise production cost items are incurred on a monthly basis, as well as the final time when funds are received to extinguish the debt.
In the case of maize production on working capital, land preparation is the first outlay item that needs to be done while the final is the receipt of funds from sale of the final product. Capital expenditure (capex) involves the procurement of capital equipment such as tractors, ploughs, dam construction, irrigation installation and many other durable machineries.
Prospective farmers need to complete their cashflow projections encompassing all the crop and livestock ventures to complete the required set of documentation.
The summer crop planting season normally starts around November but farmers ought to have procured all their inputs to take advantage of the early rains.
Online Reporter