The paradox of agric imports

Golden Sibanda Senior Business Reporter
IT is quite paradoxical that Zimbabwe struggles to guarantee food security yet the country is blessed with some of the most productive and vast land, good climate and large water bodies enough to support agriculture. And not just that, the consequences of failure to guarantee food security and the centrality of agriculture to the economy should also nudge the country to ensure production and productivity of world class measure.

While a lot of issues including lack of funding, expertise, equipment and sometimes unfriendly weather have conspired to constrain production and productivity, guaranteeing a market is certainly a major problem.

Granted, a whole lot of factors militate against sustainable production, per unit yield and efforts to make agriculture equally viable business in Zimbabwe. But do the constraints outweigh the country’s collective wit and limited resources that the country has to rely on imports for its basics.

Challenges affecting agriculture entail short tenure, high cost and shortage of capital, lack of finality on the 99-year leases, the state of the irrigation infrastructure, power issues and not least, the impact of Western-imposed sanctions on the economy.

Nonetheless, there are some low hanging measures Zimbabwe could implement overnight, which would inevitably have significant positive impact on the sector and economy in general. Along with many other issues that need urgent attention, boosting production, efficiency and viability is critical considering agriculture contributes some 16 percent of gross domestic product, only second after mining, which accounts for 16,7 percent of GDP, having recently overtaken agriculture.

Arguably, local agricultural producers are being crowded out by a flood of agricultural imports, essentially being dumped in pursuit of the greenback.

According to Mrs Willia Bonyongwe, farmer and chairperson of the Securities and Exchange Commission of Zimbabwe, the lack of ready markets is a major problem.

“This is a major impediment to employment creation, land reform and to the Zimbabwe Agenda for Sustainable Socio-Economic

Transformation because in effect, the uncontrolled imports are evidently reversing indigenisation, empowerment and development process,” she said.

“I begin by stating the obvious assertion that agriculture is the mainstay of Zimbabwe’s economy. Empirical evidence corroborates that Zimbabwe’s fortunes are tied to the out-turn of the agricultural or rainy season.

“Statistically, therefore, there is a strong and positive correlation between the performance of agriculture as a sector and the overall economic performance. Historically, if the rainy season was good then (normally) the economy would grow and vice versa,” Mrs Bonyongwe said.

In Zimbabwe the relationship between agriculture, industry and commerce was deliberately structured, to have strong and intricate linkages  of up to 90 percent. This meant that agriculture produced for industry and commerce and in turn got inputs and capital goods from the same.

Together with mining, these core sectors and the civil service provided adequate aggregate demand to sustain the economy.

National exports were predominantly tobacco, minerals and cotton lint although in the late 1990s and early 2000 there was a rapid growth in horticultural exports.

“My point is that there was never a time when farmers would produce and not be able to sell their wheat, chickens and vegetables among others.

“Industry and commerce would absorb all. The essence of my contention is that there has been a systematic severance of the historical link between the agricultural sector and commerce in particular which if not checked will destroy agriculture,” Mrs Bonyongwe said.

While the world has globalised, allowing imports to enter willy-nilly is destructive, especially for an economy smarting from the devastating blows of sanctions-induced decade-long economic meltdown.

Even basic economic sense demands protection for the sector at some point.

Zimbabwe Farmers’ Union vice president Mr Berean Mukwende said to make agriculture a viable business, Government should take the lead through a viable a marketing policy that guarantees good rewards for producers.

“The whole thing is about the marketing policy; that is where the whole crux of the matter is. We need policy direction driven by the Government.

“We need to ask what policy direction promotes production, controls prices, liberalises prices? Do we need to protect local industry or leave it to vagaries of international markets or should we impose duty?” Mr Mukwende said.

All this is determined by marketing Government policy direction.

The ZFU vice president said Government should always consult farmers on all agricultural policy issues, put sound marketing infrastructure and provide price support to farmers in addition to input subsidies.

He pointed out that, notwithstanding challenges around resource limitations, Government needed to increase the proportion of support to agriculture and consider cushioning the sector from negatives of imports.

Mrs Bonyongwe said South Africa, for instance, recently significantly hiked the tariff for chickens, mostly coming from Brazil, to protect their industry which complained that chickens were being dumped into their country.

Zimbabwe has become an attractive market partly due to relaxed regulations and its use of one of the most stable currencies – the greenback.

As a result, most of its local chicken producers including the major players are sitting on huge stocks yet everyday truckloads are coming in full of chickens of questionable quality in what also negatively affects the economy.

This year when wheat was being harvested, most of the millers were not taking any wheat because their silos were full of imported                     wheat.

While Zimbabwe has never been self-sufficient in terms of wheat production, never before have local farmers failed or struggled to sell their wheat.

Mrs Bonyongwe said: “Why on earth do people fill their silos with imported wheat at a time local farmers are harvesting? Is this not a deliberate attempt to derail land reform?

“Most farmers end up at the mercy (or is it ferocity) of unscrupulous middlemen who pay half price. Consequently, many have stopped producing wheat.

“You can take butternuts, potatoes, bell peppers, cucumbers and even sweet potatoes we get from South Africa, even with the level of our trade deficit.

“Like most farmers, I have had the experience of trying to sell my produce to our supermarkets, and all the buyers will tell us is they are either expecting or have just taken delivery of a consignment from South Africa.”

Most supermarket shelves in Zimbabwe are largely stocked with South African butternuts and onions, yet poor farmers from Mutoko, Murewa, Domboshava, Honde Valley have to dump their produce at Mbare.

The farmers simply end up surrendering all their produce at grossly discounted prices and this raises questions whether Zimbabwe can really afford this.

Fears abound of whether allowing, with impunity, the influx of these imports is not tantamount to destroying the few determined farmers still on the land. If all producers in industry and agriculture stop producing, can commerce thrive on imports alone? Without other sectors, where will the aggregate demand come from and what are the likely consequences?

Zimbabwe’s import bill continues to grow exponentially, siphoning out all the little available liquidity that should support production to enable economic recovery

While it might be appealing to import, there are other significant opportunity costs which are not immediately noticeable such as loss of employment and revenue to the fiscus, the trade imbalance which worsen the country’s credit rating. Moreover, the benefits never flow to the consumers.

Imports may in certain circumstances be needed to cover demand and supply gaps, however, caution through appropriate tariff and non- tariff barriers is needed to level the playing field and minimise their damage.

There has also been the advent of marketing oligopolies in fruit and vegetables in the form of an anointed exclusive supplier who tends to exploit farmers by making very high returns at the expense of the farmer.