Zimbabwe’s farmers ripped off as GMB struggles to raise funding

via Farmers ripped off as GMB struggles to raise funding | The Financial Gazette by Tabitha Mutenga 15 May 2014

FARMERS unions said this week thousands of their members, who had turned to private buyers after the Grain Marketing Board (GMB) failed to pay them on time for delivered maize, have been ripped off. Private buyers have taken advantage of the funding crisis at the GMB to pay lower prices than those gazetted by government.

GMB purchases maize at the gazetted price of US$390 per tonne, while private players have been offering anything between US$355 and US$370 per tonne. Private buyers pay after two to 14 days of delivery, compared to GMB, which has even deferred payments for grain delivered in a certain season to the next season. This has not only led to farmers ditching the parastatal, but forced most small-scale and communal farmers to refocus on cash crop production.

But there have been fears that this shift to cash crops could compromise the country’s precarious food security situation. Zimbabwe Commercial Farmers Union president, Wonder Chabikwa, said farmers were selling their crops out of desperation.

“It is very unfortunate that private buyers are buying grain at less than US$390 per tonne yet they were able to pay US$420 per tonne for imports before the import ban,” Chabikwa said.

“Before the announcement by government we were in negotiations with the buyers and they were in full agreement with farmers that payment should be at least US$400 per tonne to allow farmers to break even considering production costs are at US$291 for a tonne of maize,” Chabikwa said. He further said the liberalisation policy must be revisited to include legal provisions that would compel private buyers to adhere to gazetted floor prices.

“We thought private buyers had understood our position, but unfortunately as long as GMB does not have enough funding to buy grain and pay farmers on time, we can only appeal to private buyers to understand the farmer’s position; they need to go back to the fields and continue producing this crop.”

Agricultural economist, Peter Gambara, said the producer price announced by government must act as a guide to farmers and buyers. “When it was first introduced, it was supposed to be the floor price in the sense that no one was supposed to pay less than that price,” he said.

“However, there is no statutory instrument on the floor price and therefore private buyers always pay slightly less than the government floor price. Government has also not enforced the floor price as millers have strongly resisted the idea of a floor price arguing that this should be determined by market forces. That is not very practical since the commodity exchange is not functional.”

A Zimbabwe Farmers Union weekly market guide indicated that Staywell Trading has been paying US$370 per tonne of white maize. The firm has been paying farmers within two weeks. Kurima Gold has been buying grade A and B white maize at US$355 per tonne and grade D at US$345 per tonne. Farmers have been receiving their payments within seven days from Kurima. These flexible payment terms have attracted desperate farmers to market their maize to private buyers as GMB has been delaying payments.
GMB was the sole buyer of maize until 2009 when the market was liberalised.

Liberalisation was expected to boost competition, stimulate better prices and lead to the production of more maize. But because GMB has not been very active on the market, prices have remained low. Farmers want GMB to be re-capitalised so that it resumes its strategic role of managing the country’s reserves and ensuring food security.
Zimbabwe needs at least 1,8 million tonnes of maize per year and an additional 500 000 for its strategic reserves.

GMB has acknowledged that the past season was characterised by low grain intake, with a total of 33 273 tonnes of maize being received from local farmers in the year ending March 31, 2014. Farmers delivered 249 792 tonnes in the 2010/2011 season, and 212 622 tonnes in the 2011/2012 season.

 

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One comment on “Zimbabwe’s farmers ripped off as GMB struggles to raise funding
  1. John Thomas says:

    Prices are determined by supply and demand. Any attempt to deviate from this will always lead to market failure.

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