Remapping the agriculture future

Kudzanai Gerede
THE dry spell which hit most of the country for the greater part of the agricultural season comes with huge negative economic bearings as Government’s already strained Treasury department is now faced with the task of setting up an unforeseen budget for the importation of grain to cover for the domestic crop failure. Despite natural factors like insufficient rainfall, floods and unpredictable weather patterns due to climate change, the agricultural sector which employs more than half of the country’s population, both formally and informally, is faced with a myriad of challenges ranging from lack of sufficient investment and borrowing by businesses and banks respectively, skills and underutilisation by land owners in some instances among other challenges.

This week, President Mugabe bemoaned the underutilisation of A2 farms which is immensely contributing to low yields.
This will further dim the prospects of reaching economic growth targets as the agriculture sector has not yielded as projected.

Poor disbursement of inputs like fertiliser and seed on time did not help the situation either, prompting farmers to grow poor seed varieties.
This is the case with most developing countries in the region where governments are faced with the task of mitigating these challenges with lean budgets at their disposal as the corporate world tends to distance itself from financing the sector.

Analysts often argue that if agriculture is to become a thriving industry once again in this era of climate change, it needs to be treated seriously as other industries such as manufacturing, mining and tourism, where huge investments are put in place with the same intent of profit making hence making a case for agribusiness.

Agribusiness is hence synonymous with corporate farming, it encompasses all components of the agriculture value chain, from farm input producing, processing companies, distribution, scientific research and machinery which will be able to create an agriculture industry which is financially equipped to curb climate change complexities and also provide more formal jobs in a country gripped with high unemployment.

A World Bank report last year forecast that Africa’s Agribusiness could be worth $1 trillion in the next two decades.
But executive secretary of the UN Economic Commission for Africa, Mr Carlos Lopes, said inasmuch as he agreed to the projected growth in Africa’s agribusiness, it remained to be seen if the disincentives such as low prices pegged by governments for farm produce will be addressed.

“There is a disincentive policy that is an impediment to higher productivity in agriculture. This is true if we continue to practise, from the development aid perspective, food security and poverty reduction policies as the only entry points to agriculture. But I have difficulties understanding how we can pour about $1 billion into agriculture every year from development aid alone without any results because we still have the same yield per hectare today that we had 20 years ago,” he said.

“The problem is that we are doing poverty reduction and not doing economic activity,” he added.
Agribusiness is therefore essential in stimulating activity as it also creates “smart” agriculture-related jobs preferred by the young people within the sector itself and in other countries it has even seen more banks and finance institutions prepare to venture into the sector.

In the region, banks like Standard Chartered have embraced agribusiness as they have found unorthodox ways of doing business with farmers in rural areas and still thriving from it.

Instead of the traditional collateral, banks are now using value commodity being financed as collateral for input financing as opposed to conventional mechanisms where collateral is secured through physical assets and balance sheets.

Agribusiness expert Mr Midway Bhunu said specialisation of agricultural forms was also critical if the country was to realise food security.
“We still have opportunities to maintain a balanced position in terms of our food security equation,” he said, adding that the country can invest heavily in prime livestock regions like Matabeleland where crops do badly.