adminKudzanai Gerede Business Correspondent
Zimbabwe’s once beaming agricultural sector remains a key economic pillar despite its growth having been sluggish in recent years owing to a myriad of economic and climatic challenges. The sector has seen its contribution to gross domestic product plummeting from highs of 30 percent in the mid-90s to the current levels of below 20 percent.
Chief among the major challenges curtailing the growth of the sector has been a paradigm shift from the agribusiness approach to a more food security oriented approach. This means that the one-time productive communities are now accustomed to subsistence farming rather than for economic purposes.
This has created a situation where the yields are no longer huge as before, hence minimising communities’ resilience in case of shocks associated with farming such as crop price volatility and drought which has left most farming communities in constant need of food aid.
This has mainly been caused by the under capitalisation of strategic institutions crucial for agribusiness systems like the GMB, COTTCO and CSC which once had the capacity to pay farmers for all commercially marketed agricultural products.
Economic analysts stress that whilst agriculture’s core purpose is to carter for the food needs of practicing communities, agribusiness however creates resilient communities in the face of adverse agricultural volatilities.
Conventionally, through the country’s robust agribusiness systems, communal farmers used to produce massive agricultural products which saw large surpluses of grain for exports accumulating.
At independence, previously marginalised communal farmers marketed not more than 25 percent of commercial produce but by the end of the 1980s to early 1990s, 65 percent of commercially marketed maize was coming from communal farmers, 70 percent of cotton and about 30-35 percent of marketed beef was supplied by communal farmers.
This buoyed value chain industries that either provided agricultural inputs such seed, agrochemicals, fertilizers and farm equipment or those that fed on agricultural raw materials such as food processors, marketers and manufacturers from cotton and timber products.
Following years of sanctions induced economic decline, Zimbabwe’s once thriving agricultural sector saw most of its agribusiness systems crumble as most of the sector related institutions faltered due to viability concerns as most traditional Western markets had closed avenues.
For an economy striving for diversification of its export basket which has been stifled by poor performance of the manufacturing sector especially in capital intensive industries such as the clothing, motor assembling and metal manufacturing among others, reviving a strong agribusiness sector which a majority of the country’s peasants can become full time participants can help create value chain industries enough to boost the manufacturing industry.
Agribusiness have the capacity to revamp the now moribund industries like paper production which used to employ a substantial figure in Mutare, wood making, leather, chemicals, clothing and textile production among other direct industries.
Micro Financing and Banking, warehousing, marketing, advertising, transportation and carpentry are some of the business opportunities that can arise from a robust agribusiness sector.
The Confederation of Zimbabwe Industries Manufacturing Sector Survey released last year showed that the country’s manufacturing sector slumped 22 percent down to 34 percent capacity utilisation in 2014 from 57 percent in 2011. The decline has also been attributed to low performance of the agriculture sector which conventionally creates raw materials which feed into some of the country’s manufacturing industries.
Despite commendable recovery gains in the sector, not much has been invested in reviving and probably modernising the agribusiness sector due to tight fiscal space.
The climatic changes remain a challenge but with much resources in the areas of scientific research and innovative ways to ensure resilient seed varieties and new farming methods the sector can be revived.
In his 2016 National Budget presentation, Minister of Finance and Economic Planning, Patrick Chinamasa allocated US$ 3 million towards Research and Extension Services as a critical tool vital for competitiveness and improved productivity of both large and small scale farmers.
A 2014 World Bank report forecasted that Africa’s Agribusiness could be worth $1 trillion in the next 2 decades.
United States Agency for International Development, Private Enterprises Officer Mr John Macy says agribusiness is the solution to Zimbabwe’s economic woes.
Zimbabwe has 1,5 million small holder farmers and a population of more than 60 percent sustained by agriculture both directly and indirectly, hence creating a vibrant agribusiness sector will not only ensure food security but also provide jobs which might not be necessarily into cultivating, but white collar jobs which are created along the agricultural value chain and attractive to youths.
However realising a vibrant agribusiness will need overcoming a myriad of challenges.
“One of the challenges facing Zimbabwe is a general lack of competitiveness,” notes Mr Macy.
“Yields are very low; cost structures are very high, productivity in general whether on the farm or in the factory is extremely low. Factory utilisation is by any standard very low so the cost structure of companies that are making basic inputs such as seed and fertilizer as well as processors and so on is not competitive,” he added.
He says the lack of competitiveness has made it difficult to create industries that have the capacity to manufacture from or process agricultural raw products under the unforgiving costs of production witnessed in the country and still remain viable.
This has been worsened by poor infrastructural development especially in marginalized areas of the country were marketing of produce requires one to travel long distances to access the nearest market.
“On top of that agribusiness requires massive investment in a number of areas. We have logistical systems which are not in place, road systems which are in a poor state, transport systems which entails a dilapidated railway system and inconsistent trucking companies. We also have border crossing points which are very slow and prone to non transparent transactions,” he added.
He however says the country is in a better position to create an efficient agribusiness system than most of its regional neighbors. He said they (USAID) have been working with rural farmers in Mutambara and Honde Valley in banana farming which has generated substantial income for local farmers in the areas.
“This country unlike other regional countries is blessed with seed companies, fertilizer companies, farming organisations and processors. It has a legacy of agribusiness that works but it has however declined in strength after years of deindustrialisation,” said Mr Macy.
Economic analysts have however been critical of the approach taken by some developmental partners which was precipitating a culture of dependence to aid. Whilst aid was critical especially in time of acute food shortages currently prevailing, building resilience in communities by creating trade linkages or beneficiation rather than quick money would benefit a larger part of the community.
Mr Macy says whilst they have worked with farmers in Nyanga who grow chilli-pepper and immediately supply it to the USA for processing, a small proportion was benefiting from this economic activity. There is a general consensus that the ideal scenario would have been the establishment of local processing factories locally that would then sell the final product to external markets as that would benefit a larger proportion of the local population through value addition and employment creation.
The concept of value addition is in line with government policy but unfortunately has been widely emphasized in the extractive sectors, a case that was also applicable in agriculture.
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