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Edgar Vhera
Agriculture Specialist Writer
THE Horticultural Development Council (HDC) has revealed that the sector is feeling hard by the slashing of incentives credited with boosting export earnings by 12 percent from US$72, 9 million in 2021 to US$81, 6 million in 2022.
In the policy measures contained in his 2023 monetary policy statement, Reserve Bank of Zimbabwe (RBZ) governor Dr John Mangudya announced the suspension of incentives to horticulture exporters.
Under exchange control directive RY002 of 2023 the incremental export incentive that allowed horticulture exporters to retain 100 percent only on the incremental portion of exports was discontinued with effect from February 01 this year.
Also, all existing dispensations for retentions of export proceeds above the statutory requirements were abolished effective February 6 this year.
HDC chief executive officer Mrs Linda Nielsen appealed to the Government to restore the incentives saying their removal would curtail the sector’s growth and slow the march towards the achievement of a US$1 billion industry by 2030.
“To achieve a US$1 billion horticulture industry by 2030 there is need for access to affordable, patient capital and ease of doing business.
“Similarly, it is prudent for Government to restore the incentives that were removed in this year’s monetary policy statement, as current measures have the detrimental effect of curtailing the 30 percent per annum horticulture growth required for the country to achieve its Vision 2030 target of a US$1 billion industry,” said Mrs Nielsen.
The retention of export earnings proceeds in an exporter’s foreign currency account (FCA) was increased to 120 days while through Zimbabwe Investment Development Agency (ZIDA) exemption of retention on foreign investments was granted.
The HDC eport also highlighted that all new exports were exempted from compulsory liquidation to encourage new exporters.
The Intermediated Money Transfer Tax (IMTT) was slashed from four to two percent while the ability to repay foreign loans registered through local commercial banks prior to liquidation was granted.
Capital goods from the horticulture industry continue to be imported duty free in spite of Statutory Instrument 121 of 2022.
The Government also introduced the US$30 million Horticulture Export Revolving Fund (HERF) for recapitalisation of the horticulture sector.
“The final hurdle for the Citrus Protocol was concluded in October last year and planning is afoot for the first citrus export before April 2023. Facilitation of protocol for blueberries and avocados is of critical strategic importance for Zimbabwe as our competitors in the region (including South Africa) do not have protocol as yet.
“There is a huge opportunity for Zimbabwe to gain market share prior to our competitors, but time is critical,” read the HDC report.
The report, however, pointed at areas such as electricity load shedding of up to 18 hours daily and faults that have a negative effect on producers and cold chain maintenance, which need to be attended to so that the set growth trend is not interrupted.
The report highlighted that fuel, packaging and fertiliser prices went high together with constant wage negotiations, which increased cost of production. Increased logistics costs of up to 22 percent compounded by a weak Euro and Rand against the United States dollars impacted negatively on producers as their costs were in the latter currency, added the report.
The report’s product market scan showed that the price of peas went down with between five to six percent against increased cost of business, while blueberry prices remained the same with some competition from Peru.
“There is pressure from the market to move to sea freight instead of airfreight for the coming season to reduce carbon footprints and this will have a knock-on effect for smallholder growers as they do not have enough produce to make a sea freight container.
“So, these will have to continue airfreighting but competing with other Zimbabwean products that would have gone by the cheap sea freight,” continued the report.
The report cited one large local exporter who supplied peas by airfreight last season and was told by the customer that this season at least 50 percent of their supply had to be by sea freight.
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