Moving forward in Zimbabwe - Brooks World Poverty Institute - The ...

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Moving forward in Zimbabwe Reducing poverty and promoting growth agricultural production growth has not kept pace with population growth. In addition, it is clear that the crisis has caused a severe decline in Zimbabwean agriculture and the rural economy in general. Key causes of this decline include: • Collapse in agricultural commodity marketing and pricing. The hyper-inflation environment (231 million per cent) gravely affected returns on agriculture – a factor that is not lost even on the illiterate farmers. This has meant that most people who used to produce for the formal market are reluctant to do so as the delays in processing payments mean that by the time they are paid the money is worth nothing. Households that used to produce for the markets have stopped and produce mostly food crops for subsistence. • Asset attrition. The protracted decline in the economy since 2000 has also resulted in asset attrition as households sell off assets as a consumption smoothing strategy. This often means selling off liquid assets that are also necessary for agricultural production. A decline in cattle numbers has been particularly obvious in some areas although in other areas the crisis has actually seen an increase (Mavedzenge et al 2008). Lack of cattle undermines availability of draught power and also compromises income and consumption smoothing strategies. • Labour shortage. There is a basic assumption of labour abundance in rural Zimbabwe owing to displacement of former commercial farm workers. Available evidence suggests that apart from migration of the able bodied, an inability to hire labour by the smallholder farmers means that labour shortage is a limiting factor on production. Most able bodied young adults that provided family labour have either left rural Zimbabwe for other countries in the region or have opted for non-farm rural activities like artisanal mining. This has created labour constraints on production at the family farm. The lack of skills has become a limiting factor. As experienced and trained smallholder farmers have been dying off due to old age and HIV/AIDS the agricultural skills base has been undermined significantly. • Declining soil fertility. Initial productivity increases in communal lands after the war could be accounted for by the virgin land effect. Once soil fertility declined due to use over time the high external inputs model of production (hybrid seeds and fertiliser) that was introduced has become too expensive to maintain, especially given declining profitability due to poor pricing structure and lack of state support. • Drying out of private finance for agriculture. Once the state stopped supporting the smallholder farmers with inputs, most became indebted and failed to secure private finance needed for inputs. It is quite clear that during the years following a drought when some free inputs were made available there was always a productivity spike, especially in food crops like maize. In the post-2000 period the demise of commercial farming that used to provide bridging income for inputs among resettled farmers has worsened the situation. Before the demise of large scale commercial farming some smallholder farmers could seek temporary employment on farms and used this to purchase inputs. Others relied on urban formal employment to generate the inputs. Once the large-scale farms were taken over during the post-2000 invasions and the formal sector jobs began to decline due to the deteriorating economy this income smoothing strategy was no longer available. • Insecure tenure. Even if private financing was still available, the terms under which land is accessed remains one of the key limiting factors. It is clear that apart from the state and agricultural commodity brokers, financial institutions did not extend credit facilities to the resettled and communal farmers due to lack of tenure security. They stopped supporting large scale commercial farmers once the land invasions started. The productivity effects of this and all the above are apparent when we take a look at what has happened to maize production. A look at the maize yields (Figure 3.1) shows that average maize yields for communal smallholders remain low – below one tonne per hectare since 2000 despite the sector having registered an average yield of 1.5 tons per hectare in the 1990s. While total maize Figure 3.1: Maize yields by farm type. 36
Moving forward in Zimbabwe Reducing poverty and promoting growth area has grown to one million hectares, it is still 25 per cent short of the 1.2 million hectares of the 1990s. Hence, it is insufficient to restore food production to these levels unless maize yield increases by over 50 per cent to 1.5 tons per hectare. Part of the reason for the decrease in the yields of maize in communal areas relates to declining soil fertility and general soil degradation with time as the farmers were failing to replenish the soil fertility (Mano, 2006). Considering the maize output, there has been a progressive decline in the productivity of this staple crop. Maize produced by the communal agriculture sector rose to as high as 80 per cent of the marketed output in the post independence years of the 1980s due to strong infrastructure, financial and other agricultural support provided by the state. As Figure 3.2 shows, there is significant weather-related fluctuation in maize production. Specifically agricultural production in 1995 and 2002 coincided with drought years. The impact of farm disruption during 2002 also caused a decline in production, while the dramatic collapse in large-scale commercial farming maize production from 2000 as a result of the land reform programme is also evident. The rise in output from the resettlement areas shows the effects of more land and other inputs being made available while the general decline in communal lands output from 2000 can be explained as the effects of the crisis that by 2007 had left most of them too poor to farm. After 2000 the agricultural sector was fraught with complex domestic institutional and market challenges ranging from the skyrocketing rate of inflation and the economic contraction begun in the 1990s, to a worsening macroeconomic situation, social and political upheaval surrounding national elections, and the Fast Track Land Reform Program. Acute shortages of foreign currency crippled the national economy and affected the domestic supply of essential agricultural inputs as well as the ability to import supplements to ensure food security in the face of below normal rainfall seasons and lack of strategic grain reserves. In response to rising hyperinflation and threats of social unrest, the government reintroduced controls in maize marketing and pricing policies that further increased the transfer from rural smallholder maize producers to urban consumers. 3.4 Agricultural policies The following section examines some key elements of Zimbabwe’s agricultural policies. Due to its great importance, land reform is treated in more detail in section 3.7. Marketing of agricultural commodities in Zimbabwe Marketing of agricultural commodities in Zimbabwe consists of two main channels: the official (and often controlled and restrictive) and the open (usually formal and informal small-scale) market channel. There is also a third channel which can be viewed as part of the second. This is the parallel market channel and arises when there are severe restrictions on the movement of commodities along any of the marketing channels. Agricultural marketing institutions are key determinants of efficiency in agricultural production and consumption. During the 1980s, agricultural marketing was dominated by four parastatals, 4 which bought agricultural products from both smallholders and large-scale commercial farmers. These include the • Grain Marketing Board (GMB), which is responsible for the marketing of white maize, soybeans, wheat, sunflower seed and coffee (controlled products) plus red sorghum, white sorghum, pearl millet, groundnuts, edible beans and rice (regulated products); • Cotton Marketing Board (CMB); • Dairy Marketing Board (DMB), which bought milk and butterfat; and • Cold Storage Commission (CSC), which handled beef and sheep products. The Agricultural Marketing Authority (AMA) supervised the operations of marketing boards and operated through commodity committees. The policy of a single-channel marketing system was designed to guarantee state procurement and disposal of surplus production. Producer and selling prices for controlled commodities were fixed by government following recommendations by the Ministry of Agriculture and negotiations with producers. Export commodities were priced at close to border prices but generally cost-plus pricing was the main method used to arrive at the final price. Set prices were both pan-seasonal and pan-territorial. Figure 3.2: Total maize production in Zimbabwe, 1993-2007, by farm type. 37
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