adminElita Chikwati Agriculture Reporter
Government will soon reintroduce the stop order system for all crops to enhance participation of the banking sector in funding agriculture, a senior Government official has said.
Presenting the 2016 National Budget recently, Finance and Economic Development Minister, Cde Patrick Chinamasa said restoration of the stop order system was vital to enhance agriculture financing.
He said the stop order facility would provide the desired certainty of loan repayments thereby guaranteeing the sustainability of lending which is required by banks, depositors and borrowers.
“The Bankers Association of Zimbabwe is, therefore, working on developing robust arrangements for the re-establishment of the stop order system for all agricultural crops,” he said. “This will be in consultation with all relevant stakeholders, including the Reserve Bank, the Ministry of Agriculture, Mechanisation and Irrigation Development and Treasury.
“This should embrace marketing of a wider spectrum of crops, such as soya beans and cotton, in a similar manner to loan recovery arrangements for tobacco.”
Minister Chinamasa said amendment of the Farmers Stop Order Act, Chapter 18 Section 11 will be undertaken to protect lenders by providing for the participation of all financial institutions, as well as curbing side marketing of crops.
“The challenges in the cotton sector have seen collapse of cotton production against the background of low returns to the producers,” he said.
Zimbabwe Farmers Union agriculture economist, Mr Prince Kuipa yesterday said the reintroduction of the stop order system was noble as it would give financial institutions confidence that they will recover their money after lending to farmers.
He urged those working on the programme to ensure that loopholes were plugged since side marketing was still prevalent in the tobacco and cotton sectors.
“The stop order facility used to be there and it worked well on institutional arrangements,” said Mr Kuipa. “Back then, there used to be a centralised marketing of all major products. We had the Cotton Marketing Board, Cold Storage Company and Grain Marketing Board.
“The system can still work well in a liberalised market. The stop order facility is however not proof that farmers will not side market their crops. Some tobacco and cotton growers still side market their crops because there are buyers who buy the crop.
“The issue of side marketing has affected the cotton industry. We should build a system where with a centralised system so that the farmer does not get the money directly after sale but the money is transferred to his account where debts will be recovered.”
Farmers have been experiencing challenges accessing funding from banks as most financial institutions prefer lending money to tobacco growers through contractors.
Bankers have on several occasions revealed that they are willing to lend tobacco farmers money because the sector has an organised marketing system.
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