WELLINGTON BANDASON Policies Pursued By The Government Of Zimbabwe In Terms Of Agricultural Input Supply To Farmers.

Year in, year out, the Government of Zimbabwe makes a concerted effort to plan and provide a framework for the next agricultural season. This is done, mainly, with the view to ensure food security for the nation. Food security is not the only reason though, from agriculture comes raw materials for other industries, employment of over sixty-five percent of the rural population and related industries; export earnings for the country among other reasons. This process of coming up with guiding principles to influence actions and decisions in how agriculture is to be financed, what is to be produced, how produce is to be marketed constitute agricultural policy formulation. The on line dictionary defines policy as a plan or course of action, as of a government, political party, or business, intended to influence and determine decisions, actions, and other matters. This write up will talk about the policies pursued by the Government of Zimbabwe in terms of agricultural input supply to farmers. The inputs to be discussed in this write up are seed and fertilizers for the staple crop, maize. The write up will also discuss reasons why these policies were put in place; what they are supposed to achieve; the source of funding conflicts and possible constraints likely to be encountered. In Zimbabwe, food security, defined in terms of availability of maize as the staple food product, has remained an issue of great concern in view of the increased incidence of drought-related hunger. In Zimbabwe, Food security is inextricably connected to national security and political sovereignty as most of the population is engaged in subsistence agriculture. Agriculture is thus not just another sector of the economy, but it has far reaching implications on political influence, support, economic performance specifically employment, food availability, balance of payments position as well as peoples livelihoods. The Government of Zimbabwe thus recognizes the importance of food security, and that of agriculture and this is seen in its policies in Agriculture. They are designed with the view to fulfil the fundamental goal to expand agricultural output at a faster rate than the population growth rate thereby ensuring food security. The main policy pursued in Agriculture is that of subsidising the provision of inputs to farmers mainly targeting resource poor farmers. These policies are always being revised so as to improve in an effort to ensure that every agricultural season is a success by making inputs available to farmers at reasonable prices and in a timely manner. Rohrbach et-al (2004) cited in Guveya et-al (2009) gives the reasons to justify the need for agricultural assistance by governments to farmers. These include: Poor rainfall leading to widespread shortfalls in food production relative to household and community needs. Shortage of basic foodstuffs on retail markets, increasing the probability that farmers will consume some of their seed supplies. The sharp decline in economic growth, reducing remittance income and off farm employment. Shortages and consequent high price of agricultural inputs on the retail market.

The high incidence of HIV/AIDS resulting in labour shortages, capital losses and a large proportion of child headed households. All these reasons are applicable to the Zimbabwean situation justifying the policy of subsidizing input provision to farmers. Furthermore, Agriculture is the backbone of Zimbabwes economy. According to the Commercial Farmers Union (CFU), traditionally, for every dollar directly invested in agriculture, three were invested in downstream industry and services. It provides employment and income for 60-70 percent of the population, supplies 60 percent of the raw materials required by the industrial sector and contributes 40 percent of total export earnings. Despite the high level of employment in the sector, it directly contributes only 1519 percent to annual GDP, depending on the rainfall pattern (Government of Zimbabwe, 1995), and this is a statistic that understates the true importance and dominance of the agricultural industry. It is generally accepted that when agriculture performs poorly, the rest of the economy suffers. For that reason the Government of Zimbabwe pursues the policy of supporting its farmers mainly through the provision of subsidised inputs. In his 2012 Mid-Year Fiscal Policy Review Statement, Honourable Tendai Biti stated that one of the reasons for the Government of Zimbabwes policy of subsidising agriculture is to increase productivity. For example, the current maize average yields are 0.6 tons per ha against a world average of above 4.2 tons per ha and high regional performers such as South Africa of 4.0 tons per ha. Thus there is justification for the subsidising of inputs to make them accessible and affordable to farmers so as to ensure an improvement of productivity on the farms. Going back to the history of Zimbabwe on the issue of input subsidies, we find that the postindependence (1980) agricultural policies focused on developing a high degree of food security through production while improving the welfare of rural population as well as in urban areas. Government directly stimulated agricultural production by way of policies and measures. These measures include, input support, provision of tillage services, provision of credit and strengthening of research. Indirect stimulants in the form of subsidies and income policies were employed to stimulate production and demand. During the same period, food insecurity at both household and national levels fell. This policy framework that was being followed by the Government was known as the growth with equity programme. It was pursued by the Government between 1980 and 1990. It sought to redress the colonial legacy in favour of communal farmers and it met great successes as the smallholders became the largest suppliers of maize and cotton to formal markets within the first five years (1980-1985) of independence. By the early 1990s, the interventionist policies had reached their limit and could not be sustained any further, forcing government to embark on market-oriented reforms including in agriculture. The Government embarked on a program known as the Economic Structural Adjustment Program (ESAP), adopted in 1991. With the advent of ESAP, there was a shift in food security policies. Downsizing of operations by the GMB and the closure of several collection points became the order of the day. Subsidies were discouraged under ESAP. As a result unsustainable chronic increases in food prices became the order of the day throughout the ESAP period.

The year 2000 saw the land invasions taking place under the fast-track land reform programme. This was in part precipitated by the negative outcome of the economic reforms on prices and consumer welfare. Under this period, the Government reversed some Agricultural policies in order to lend support to the new farmers in recognition of the strategic role of agriculture in economic growth and development. The period from 2000 to date saw a deliberate Government effort to support farmers through the provision of inputs necessitated by the need to prop up new farmers created by the fast land reform programme. (Govere et-al 2009). The remainder of this write up will look at some input support schemes undertaken by the Government from 2004 to the forthcoming 2012/2013 Agricultural season. The 2004/2005 season summer season saw the Reserve Bank of Zimbabwe (RBZ) becoming a major financier of input support programmes through the launching of the Productive Sector Facility (PSF), and later the Agricultural Sector Productivity Enhancement Facility (ASPEF). Both agricultural support schemes aimed to cushion farmers against the high input prices caused by massive inflation rates. The facility saw most A2 farmers who had been weaned from the direct input support accessing funds though Agribank and other financial institutions at concessionary rates. This facility was available up to the advent of the multicurrency system in 2008. The 2005/6 summer season saw the launch of Operation Food Security/ Maguta/Inala. This was a military-led programme supporting farmers with tillage, seeds and fertilisers, and mechanisation. The objective of the programme was to ensure food security by mainly focussing on production of maize wheat and small grains complementing the Ministry of Agriculture. For the 2008/09 growing season, the Champion Farmer Programme (successor to Operation Food Security/ Maguta/Inala)targeting farmers capable of achieving high yields. The 2009/ 2010 season saw more support for the farmers from the Government. With regard to A1 and communal farmers, Government provided subsidised fertilizer inputs. Under this scheme, a 50kg bag of AN fertilizer was sold at US$7 against the market price of US$28. Overall, farmers accessed 32 843 tonnes of top-dressing fertilizers which Government subsidised to the tune of US$40 million. Government support for agriculture was complemented by resources amounting to US$74 million mobilised by cooperating partners under the coordination of the Food and Agriculture Organisation. These supported over 738 000 vulnerable households under the input pack scheme, where each household received two 50kg bags of fertilizer, one AN and one compound D, as well as 10kg seed.(2010 Fiscal Policy Review Statement) For the 2011-12 Agricultural season, The Minister of Finance, Honourable Tendai Biti outlined how the Government of Zimbabwe was to finance it in his 2011 Mid Year Fiscal Review Statement. The Minister stated that Government, in partnership with local input producers, managed to secure agricultural inputs worth US$75 million which were to be accessed by both A2 and Vulnerable farmers as highlighted below:

US$30 million Input Facility This scheme targeted farmers that had delivered grain to the Grain Marketing Board and had not yet been paid for their deliveries. The farmers were to access inputs such as maize seed, fertilizers and lime against outstanding amounts for grain deliveries.

US$45 million Input Facility This scheme targeted 500 000 vulnerable farmers including 100 000 vulnerable households and was to be complemented by support from Non Governmental Organizations due course. The scheme was structured as follows: US$8.1 million Agriculture Input Support Facility for the Vulnerable This facility will support 100 000 vulnerable farmers with an input package comprising 1x 10 kgs maize seed or 1x5kgs of sorghum, 150 kgs compound D and 1 x 50 kgs Ammonium Nitrate. The farmers were to access the inputs from GMB depots for free through a voucher system. US$20.3 million Communal Farmers Subsidised Agriculture Inputs Support facility This facility was to support 250 000 communal farmers with an input package similar to the one mentioned above. The identified farmers were to be given a voucher which would enable them to access inputs at subsidised prices from GMB depots on cash basis. US$ 17 million A1, Small Scale Commercial and Old Resettlement Farmers Subsidised Agriculture Inputs support facility This facility was to support 150 000 A1, Small Scale Commercial and Old Resettlement farmers with an input package comprising 1x 25kgs maize seed, 150 kgs compound D and 2x 50 kgs of Ammonium Nitrate valued at US$17 million. Access to inputs by this category of farmers was to be through the same mechanisms as outlined under the Communal Farmers Subsidised Inputs Support Facility. The Government of Zimbabwe has continuously refined the policies to suit the present. For the 2012/13 Agricultural season, some changes in the support with input subsidies have been made taking into consideration complains made by various stake holders in the past. The Minister of Finance, Honourable Tendai Biti said under the new policy farmers would buy inputs directly from suppliers instead of waiting for Government to buy on their behalf as this disturbed their plans due to late delivery of supplies. This in a way may also curb the issue of the dependency syndrome amongst some farmers. There have been cases were farmers did not do any input procurement and just wait for the Government to provide. If the inputs do come in late, the Government got blamed. That will not be the case this coming season. Inputs will also be accessed through the normal supply chain as the subsidy would be given to the suppliers thereby having a multiplier effect in this sector of the economy. The Government of Zimbabwe is however reported to be facing a serious liquidity crisis, so there is a general feeling that the provision of cheap lines of credit and subsidised inputs may prove to be a challenge although this would boost agricultural output. The Zimbabwe Independent Newspaper quotes a well known Zimbabwean Economist John Robertson as saying that farmers demands would not be addressed by the new policy because Government was well known for failing to deliver on its promises. He also said Government

had repeatedly promised to pay farmers on time but has consistently failed to do so for past deliveries made to the GMB. Robertson further pointed out Government was cash-strapped and it would be almost impossible for it to fund farming from its resources, unless it relied on borrowed money despite its huge debt. Zimbabwes total debt is said to be about US$10,7 billion. However, Zimbabwe appears set to secure US$100 million in budgetary support from neighbouring South Africa, part of which would be used to finance agriculture and boost productivity. Another Economic analyst Eric Bloch quoted in the same paper, however, is of a different opinion. He contends that although Governments coffers are empty, it could divert funds from other sectors to boost agriculture since the majority of Zimbabweans rely on farming. He said the new Agriculture policy was likely to be implemented fast given forthcoming elections next expected in 2013. Politicians will strive to gain mileage by making this important sector of the economy a success. As has been seen from the various subsidy programmes implemented by the Government of Zimbabwe to support the Agricultural subsidies, the National Budget, donors and Non Governmental Organizations play a part in the area of funding. This has tended to court controversy. It is argued that Government/donor/ NGO-controlled delivery allows control and patronage, buying allegiance through development. The, donors, NGOs and Government often in separate, parallel programmes use an argument of crisis and emergency to promote programmes of input (mainly seed and fertilize) delivery. Some see these as simply dumping (seed and fertilizer dumping) and not addressing a fundamental lack of supply. This fuels patronage, as certain individuals/organisations have an interest in promoting a perpetual emergency which justifies funding flows and field activities. Others, formally working in the corridors of power, may have commercial interests in the seed and fertilizer sector and may directly profit from the activities being promoted. There is profit to be made from a crisis. In the past seasons, various schemes aimed at assisting resource poor farmers have been launched but, at times, these have failed to reach deserving beneficiaries with reports of abuse by high-ranking government officials and those connected to them. They have been reported to have been given priority access of fertiliser at the Grain Marketing Board at the expense of the more deserving ordinary farmers. Regulatory failures do exist in the area of quality control in terms of seed and fertilizers involved in the input subsidy scheme. Under these circumstances, poor quality seed and fertilizers may be provided, and a range of side-marketing and other notionally illegal activities may be promoted. Furthermore, the argument against subsidies cannot be finished without mentioning the burden it puts on the fiscal budget despite its well intended intentions. The limited Government resources at times fail to meet input demand while the inherent leakages in the distribution system have fuelled the black market thereby making worse the situation of the smallholder farmer and the food security situation of the country in the process.

This write has discussed the policy of subsidy provision (the inputs fertilizer and seed) to the farmers highlighting the reason why the Government pursues this policy. An attempt has been made at describing how this policy has been implemented since the attainment of independence in 1980 with more detail being provided for the period the multicurrency system has been in existence (2008 to the present day). Information has been provided on the source of funding for this policy. Some constraints and possible conflicts in the implementation of this policy have also been discussed.

References GoZ Mid Term Fiscal Policy Review 14th July 2010. Presented to Parliament by the Honourable T.Biti Minister of Finance. www.zimra.co.zw The 2011 Mid- Year Fiscal Policy Review (Riding the Storm: Economics in the Time of Challenges) Presented to Parliament by the Honourable T.Biti Minister of Finance. www.z. http://www.zimtreasury.org/downloads/Mid-Year-Fiscal-Policy-Review.pdf 2012 Mid Year Fiscal Policy Review Presented to Parliament by the Honourable T.Biti Minister of Finance. www.zimra.co.zw

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www.cfu.org Human Development Report 1998 Zimbabwe http://hdr.undp.org/en/reports/national/africa/zimbabwe/ZHDR1998-Poverty.pdf http://hdr.undp.org/en/reports/national/africa/zimbabwe/ZHDR1998-Poverty.pdf http://www.theindependent.co.zw/ September 09 2012