Land rentals a long missed opportunity

via Land rentals a long missed opportunity | The Herald July 20, 2015

There is an enduring misconception that our farmers are failing simply because they are not capitalised. While this argument undoubtedly has some merit, a closer examination of the circumstances surrounding their failure reveals that a lack of seriousness and urgency is equally to blame.

Take for instance the fact that Government at one time generously poured hundreds of millions of dollars in fuel, fertiliser, seed and machinery to assist new farmers.

This was a form of capital and one would expect that after receiving free inputs in the first season a farmer would be able to, at the very least, put enough money aside to fund the purchase of seed and fertiliser in the next season.

If something costs you nothing, you are unlikely to value it.

This is a human frailty.

Land freely given can be left idle while other pursuits are followed.

The key to unlocking productivity is to give the new farmers a sense of ownership, of both benefits and losses.

The Government has already given the benefit, but what is yet to be introduced is the potential loss to prod farmers into efficient and responsible use of land resources.

The recent introduction of land rentals is a step in the right direction but the rents being charged by the Government are woefully inadequate.

These rates cannot be determined on a whimsical basis.

An effective land rental will accomplish two things: It will make it expensive to hold onto unproductive land and force those holding onto unproductive land to surrender it to Government. But a balance must be struck, the rate cannot be so onerous as to encumber well-meaning farmers.

The current rentals certainly do not satisfy the first condition of making it prohibitively expensive to hold onto unproductive land.

Under the current regime ($5/hectare in rent and tax) a farmer in possession of a whopping 1000 hectare A2 farm would only need to part with $5000.

If Government had set the rate at $100/hectare there would be an immediate behavioural change.

Take for instance Didymus Mutasa who holds over 1000 hectares.

Would he be able to pay $100 000 in taxes if he is failing to pay $45 000 for a house in Rusape?

I doubt it.

The next question must naturally be how such an individual expects to run a commercial farming operation on a 1 000 hectare farm if he cannot afford to pay for a $45 000 property?

It is important that we distinguish between A1 and A2.

Individuals that are looking for subsistence must be under the A1 scheme.

By accepting a large farm under the A2 scheme you are in fact stating that you are a person of means with the financial capacity to run a commercial farm operation.

You cannot plead poverty after having boasted financial capacity in order to acquire a farm under the commercial A2 scheme.

$100 per hectare might seem unduly harsh until you put things into perspective.

Simply buying potato tubers to cover a single hectare of land costs in the region of $4000.

We have not factored in the cost of labour, fertiliser and other costs associated with potato farming.

If a farmer is unable to pay $100 per hectare in rentals how can we expect them to fund a single hectare of potatoes?

Whichever way you look at it, something is wrong.

This is not to say that these farmers are somehow sinister.

They are simply not cut out for A2 operations.

The question is how do we get rid of those who lack capacity to operate on these large tracts of land.

The authorities have indicated that they will be visiting farms to ascertain productivity.

As a general rule, policies that require physical intervention (door to door inspectors) are poorly considered especially in the corrupt time we live in.

Effective policies change behaviours.

In this particular case, the behaviour we want to discourage is the holding of unproductive land.

If a farmer has to surrender their land because they are unable to pay $100 per hectare in taxes it is pretty clear that the individual in question was never commercial farmer material from the onset.

These policies cannot be effective in isolation.

There are many well heeled indigenous Zimbabweans that could take up space in the A2 scheme and easily pay $100/hectare.

But one can understand why a black businessman would be unwilling to invest on the strength of a 99-year lease that can be withdrawn at the whim of the minister. These powers must be surrendered to the courts.

If an MDC-T government somehow suddenly came to power I suspect many Zanu-PF supporting farmers would be unhappy at having their fate in the hands of an MDC-T minister.

This element of caprice needs to be addressed if we are to build a sustainable ecosystem to support agriculture.

We are in a difficult place that requires bold and difficult decisions.

If Government increases A2 land rentals to $100 per hectare that would bring in $350 million yearly.

That is a lot of money which could be leveraged to improve agriculture in the same way tollgates have rescued our once doomed roads.

Ndatenda.