eBusiness Weekly
Business Writer
Farmers have to reach an impressive level of production if they are to fully benefit from their businesses as Government support will only come through inputs as opposed to marketing of crops.Apart from supporting farmers through various input support schemes such as the Command Agriculture programme as well as the Presidential Inputs Support Scheme, Government has also been playing a key role in the marketing of crops.
Through the Grain Marketing Board, Government has been paying prices that are much higher than import parity prices, giving rise to subsidies, which it now considers as unsustainable. According to the 2019 National Budget presented by Finance and Economic Development Minister Mthuli Ncube last Thursday, Government has been paying $570 per tonne of soya bean, against $530 per tonne paid by players in the domestic market and also higher than the import parity price of $400 per tonne.
For maize, Government has been paying $390 per tonne, against $360 per tonne paid by players in the domestic market, and also higher than the import parity price of $290 per tonne.
For wheat, Government has been paying $500 per tonne, against $360 per tonne paid by players in the domestic market, and also higher than the import parity price of $340 per tonne.
“Current prices depict distortionary elements with large differences between local producer and import parity prices, giving rise to subsidies.”
This according to Minister Ncube, is not sustainable.
“While agriculture subsidies are deemed beneficial for guaranteeing food security world over, their sustainability is essential,” he said.
He said: “Under the TSP, Government seeks to ensure high agriculture production, for food security while at the same time improving the health of public finances through living within means. This entails containing subsidies within the capacity of the Budget.”
As a result, Minister Ncube said, Government’s objective is to gradually withdraw from actively participating in marketing of crops, paving way for market forces to reduce distortions and fiscal burden.
Minister Ncube said to reduce the burden on the fiscus in financing local grain purchase, Government will finance procurement of 500 000 tons of Strategic Grain Reserves, while the private sector is expected to procure the remainder on the open market.
He said, the Budget recommendation is, therefore, to gradually close the gap between floor producer and import parity price levels, mindful of the importance of guaranteeing profitability and viability of farmers. Government’s move does not mean an end to agriculture support as it will continue to support farmers through various other initiatives.
“This is premised on the fact that Government already shoulders the costs on supportive services, including irrigation infrastructure development, which are all meant to support and enhance productivity of farmers. Moreso, farmers are currently already being subsidised through inputs support,” said Minister Ncube.
Apart from giving farmers inputs, Government believes provision of extension services is critical to increased productivity and yields.
To improve access to extension services, Government will re-prioritise allocations of resources to the sector towards extension services to improve training and experience of extension workers, as well as their mobility with a view to enhance the capacity of farmers. Government will also increase resource allocation towards the area of research and development as a way of improving yields.
Well-funded research services will allow adoption of new technologies and varieties in the agricultural sector, critical for enhanced productivity of local farmers.
