‘Farming means planning well’

scooped the Tobacco Sales Floor Grower of the Year award, having come out tops in terms of the quality and quantity of the tobacco delivered to the floors. He got second prize in the same competition last year. Executive Business Editor Victoria Ruzvidzo sought to establish the secret behind his success:

Question: How does it feel to be the country’s number one tobacco grower?
MK: I feel proud to be Zimbabwean. I feel more than equally able than our yesteryear oppressors as we have now shown that we too can produce viably. Above all, I feel hugely indebted to those who fought for the emancipation of our country from the bondage of colonialism, with some losing limbs whilst others paid with their dear lives. Out of their selfless gallantry, today we have the land back to its people, and as Zimbabweans we are now able to flex our God-given muscles and mental capabilities to show our prowess in tilling the land as a free people. The deep feeling and taste of self-determination is beyond description.

Question: How much tobacco did you deliver during the just ended marketing season and what other farming activities are you engaged in?
MK: I delivered 710 bales or 70 tonnes to the floors. On my farm – Pamene Farm in Makonde, Chinhoyi – I also do cattle, 200 hectares maize and greenhouse production. My passion is to do the best I can to contribute to the growth of the agricultural sector and hence the economy.

Question: What do you attribute your success in agriculture to?
MK: This modest achievement has come about as a direct derivative of several centripetal forces that conspired in a complementary fashion. Firstly, I have a very strong rural background where I was born and grew up. My upbringing in the Headman Masasire area in Bikita was characterised by perpetual toiling in the semi-barren fields. Out of the rocky, dry patches of land, we had to eke a living through gruelling subsistence farming that was on the fringes of destitute existence. Secondly, my family’s modest success in farming is as a result of having a dedicated team at the coal-face, the women and men that make up my team at the farm. Without their dedication, all my dreams would have come to nought. Third is the key aspect of planning ahead of time. Farming means planning well ahead of time so that when seasons come, you are ready. Implementation review systems are also vital, as the devil in all productive projects is in the detail of actual execution. The seedbeds have got to be done on time. Agro-chemicals, fertilisers and coal have to be procured on time. Lastly, to be a successful farmer, particularly in the area of tobacco, one must not compromise on quality. Success also requires that one endures an ever burning fire in one’s belly to exceed stakeholder expectations. In other words, one must have an ever-burning aspiration of being more than just good at what one does.

Question: What are the challenges that you see as constricting further growth of the tobacco sub-sector?
MK: Tobacco is a specialised sub-sector and the new farmer is facing several challenges. Firstly, there is a serious lack of Government support to the A1 and A2 farmers. The second challenge is that the representative bodies in the tobacco industry need to do more in terms of educating farmers on the technical aspects of growing the crop.
The next one is a debilitating tendency by the few tobacco merchants to offer prices that are way below the quality now being produced by the new farmers. The next challenge is that our auction floors are too centralised which makes it difficult for new farmers across the country to easily access them.
Furthermore, the other challenges are that most of the country’s rural areas have remained unbanked while insurance firms are levying unreasonable premiums and we have seen farmers losing much of their crop to hailstorms.

Question: In this regard, as the top tobacco farmer in the country, what policy advice do you proffer to Government in the area of agricultural support in general?
MK: Well, usually I prefer to channel my pieces of advice to our principals in Government behind the scenes through the set channels for that purpose in my other official life as advisor to the RBZ Governor, my mentor, Dr Gideon Gono. As an active farmer, and in the context of celebrating this modest achievement my team and I have registered, perhaps I will drift a bit from this noble convention and put across a few points in response to your question.
I want to first make an irrefutable statement that the world over, particularly in Europe, North America, South America, Asia, and Australia among several other territories, national agricultural success there is achieved through deliberate Government support to farmers, in terms of resource allocation, institutional technical support, market arrangements and general agricultural policies. One can easily analyse the national fiscal budgets of those countries and the most prominent fact clearly apparent is that the agricultural sector in those countries gets significant support.

In the UK, for instance, their government there has specific subsidies for the following areas: peas, beans, cattle, sheep, other crops; general livestock, compulsory slaughter support; least favoured area support (LFA); and agri-environment subsidies, which in 2009 totalled £3,0 billion. Over and above what the UK pays to its farmers, farmers in the UK also get direct payments from the EU. In 2008, for instance, each UK farm got euro 12 517 from the EU’s farm subsidies program. Under the EU’s Common Agricultural Policy (CAP), particularly in the formative days of the EU, agricultural subsidies were as high as 65 percent of the entire EU’s total budget expenditures which has now been moderated to around 40 percent of EU budgets in the present day.

In the USA the government there pays billions of dollars per year to their farmers in the form of subsidies under the term “farm stabilisation” through various pieces of legislation that date back to the Great Depression of the 1920s. (USA 1922 Grain futures Act; the USA 1929 Agricultural Marketing Act, and the 1933 Agricultural Adjustment Act). In 2009, for every dollar an American farmer received, 62 percent came from some form of government support, with the total government support to farmers from all levels topping US$180,8 billion. In America, subsidies give farmers support in the form of extra cash for their crops and guaranteed floor prices for their produce.

This assures farmers viability. In the USA, maize is the top crop for subsidy payments, yet here in Zimbabwe the IMF comes and tells our policymakers that it is bad economics to give farmers subsidies, and alas some here believe the IMF and boom, policies are shuffled accordingly!
There is a common fallacy among some policymakers, particularly in the developing world including here at home, that free market forces are always a saintly virtue and therefore farmers must be left to the whims of free market forces in terms of access to finance and other material requirements. This view is not only primitively shallow in terms of incomprehension of the way markets operate in relation to the welfare function of humanity, but also a clear demonstration of the need for policymakers here at home to be very circumspect when listening to policy advice from the so called “experts” from the IMF and elsewhere.

Personally, I strongly feel that a significant proportion of our economic troubles can be directly traced back to the devious, impractical and more often too theoretical advice that the IMF thrusts on Zimbabwe and unfortunately being overzealously implemented by some policymakers here who see the IMF as some super-god whose views and ways cannot be questioned. We must exorcise ourselves from this inferiority complex of seeing IMF advisors as superior to our own collective wisdom.

Those that care to watch global events will attest to the fact that the IMF and its related multilaterals were hugely embarrassed in the face of the recent series of global economic and financial meltdown that erupted right under their noses.
Since independence in 1980, Zimbabwe and its people implemented the most sustainable agricultural policies that recognised that for success, farmers needed support given the seasonality and peculiarities in the sector.

Early 90s, the IMF came with the mantra of structural adjustment programmes that scorned at farm subsidies and floor price arrangements that were meant to support farmers. (Meanwhile in Europe and America, the IMF turned and continues to turn a blind eye to the vast subsidies being given to farmers there!).
Fortunately, the Zimbabwean Government at that time carefully resisted hasty abandonment of such support to farmers, which saw the creation of various technical farmer support institutions, as well as direct support to farmers through subsidies, extension services and farm mechanisation programs.

Since 2009, however, when the inclusive Government was formed, an unfortunate notable change in tact seems to have been adopted, where support to farmers is now largely being consigned to the market. Under this myopic and faulty approach, farmers are supposed to approach banks with their proposals and get commercial loans. Agriculture is, therefore, seen as an area where Government has a minimal role to play.

This is a monumental blunder in the inclusive Government’s policies in agriculture finance. If not changed, and soon, this policy will decapitate the agricultural sector in Zimbabwe.
As farmers, we see this blind pursuit of market solutions as being starkly retrogressive and naive. By its nature, agriculture is regarded as a merit good or loosely a public good. In the realm of welfare economics, something is called a merit good if it has huge benefits to society in general yet predominantly loss-making to the private producer if unaided by Government. Examples of merit and public goods are education, health, national defence, policing, state security, and in this context agriculture.

When there is little or no Government support, merit goods and public goods will almost always be under-produced by rational private individuals to the overall detriment of society.

Question: So what should Government do to redress this scenario?
MK: Government must, therefore, in the spirit of fulfilling its mandate to the people, allocate more resources towards merit and public goods to hoist the general welfare of society. The common sense here therefore is that farmers in Zimbabwe, as is the case elsewhere in the world, need Government support for them to sustain the nation’s needs. This is basic economics.

This is commonsense. Tragically, however, abundant as it is, this commonsense sometimes does not seem to get used so often by some who are charged with marshalling key decisions in our society.
Instead, they seem to be listening more to the poisoned chalice of the IMF who fly in to tell us that we cut budget deficits through heartless constriction of funding to farmers. This is intellectual obtuseness. I am sure

as they fly out, the IMF “experts” will be giggling in contemptuous laughter at our bizarre affinity to self-mutilate by acquiescing to their diversionary ways.

It is as catastrophic and tragic to hope to create “sustainable fiscal budgets” through cutting funding to farmers, as it is to attempt to reduce bodily weight by cutting flesh from one’s heart and lungs.
The IMF’s advice on farm subsidies and agricultural policies in Zimbabwe is utterly wrong. We must not follow it. In USA, OECD, EU, South America, and Asia they don’t follow this warped IMF advice. Why should we?

The reason why it has taken decades for conclusive positions to be arrived at in the World Trade Organisation (WTO) negotiations even to this day is that developed countries, led by the USA and the EU are dexterously protecting their farmers through resistance for the complete removal of farm subsidies, removal of floor price policies and banning of trade in GMO’s among other threats to their deliberate policies they see as strategic in protecting their farmers and hence national interests.
The Americans, the Brits and their cohorts are being smart at the WTO negotiating table! One must wisely protect own national interests and not overzealously swallow bad advice in the hope of being seen as “progressive”.

Zimbabwe must prioritise support to farmers. This common sense works. The farm mechanisation program Government implemented through the RBZ must be sustained under the relevant Ministry and farmers must have access to concessional inputs and subsidised funding as a deliberate strategy for our own national security. This is how elsewhere in the world things are being successfully done. This is why elsewhere they have food security and self-sufficiency in foreign exchange generation.

Question: We see banks in Zimbabwe charging interest rates as high as 40 percent per annum at a time when inflation is low and stable at under 4%, in your view, is this justifiable, wearing your other hat of advisor to the RBZ Governor?
MK: The time value of money concept justifies the charging of interest rates by lenders on the following premises. First, interest charged to the borrower is to compensate the lender for the opportunity cost (next best alternative) of forgone alternative investments had the lender not parceled their money to the borrower. Second, interest is charged to price implicit perceived risk of the borrower.
Lastly, interest is charged to reflect the loss of value of money due to inflation over time. All these factors taken into account also normally build in the cost at which lenders will have raised the money they will be lending.

In Zimbabwe, inflation has been in the 3-4 percent range for quite some time now. When one builds in all the other dimensions of risk, cost of money, the peace prevailing here, and opportunity cost, indicatively, lending rates ought to be in the 9-12% per annum range.
This is my frank professional view and I can argue it through.

It is, therefore, factual that the sort of interest rates we see in the Zimbabwean market, some as high as 45 percent per annum are not only extractive and rent-seeking in nature, but absolutely bizarre and to an extent, a ploy by our external advisors, such as the IMF to derail our otherwise recovering economy.
It is for this reason that I personally do not believe in unbridled market forces, for it is a fact that sometimes these soul-less markets do fail. And when markets fail, there ought to be responsive policy interventions to correct such failures.

The IMF and some people here are vainly arguing that Zimbabwe’s lending rates are high because of high risk of business in Zimbabwe. This is utter nonsense. This is merely a convenient tag which in fact does not hold water at all. Right now it is a known fact that there are raging wars in Iraq and Afghanistan.
In these war-torn zones, lending rates there are low and nowhere near Zimbabwe’s crazy high lending rates, yet here we are in one of the most stable and peaceful places under the sun. In Iraq, the average lending rates there are in the 15-19 percent range, whilst in Afghanistan, lending rates are around 15 percent.

Now why would people want to ascribe high risk premiums on Zimbabwe, much higher than war-torn zones? Again, the IMF is abusing its stature and historical credibility dividends by misdirecting policies here in Zimbabwe. Those among us that believe the IMF policies wholesome should have a sober rethink. I don’t believe in most of the IMF’s cooked up advice.

In my view, our banks here must realise that financial sector profitability in an environment marked by low and stable single digit inflation such as ours comes from thin margins and growing high volumes of business.

Also a low inflation environment dictates that banks make money through the preponderance of non-interest income, relating to creative services, including advisory services that they ought to be giving to an expanding industrial, mining, services and agricultural base.

Question: In your other business portfolios, we hear that you have established a state of the art medical centre here in Harare, how has it taken off ?
MK: The Rockfoundation Medical Centre (RMC), located at number 92 Norfolk Road, Mount Pleasant, Harare has indeed taken off in earnest, offering a wide range of services, itself being Zimbabwe’s first fully digitalised medical centre. It is our modest role towards contributing to society.

Unfortunately our laws do not allow me to further comment on this medical centre in a manner that may be deemed as advertising. Suffice to say the RMC has the following areas: Ambulance; Dental; Eye; Trauma; GP; Radiology (CT-scan, Mammo; General X-ray; Fluoroscopy; Ultrasound; Diascan); Laboratory; Theatre; Pharmacy; and soon there will be impatient services. We are hoping to expand the medical centre into other provinces in the country soon, God willing.