eBusiness Weekly
Kudzi Sharara and Martin Kadzere
Finance and Economic Development Minister Mthuli Ncube has raised a red flag over high default rates by farmers financed under Command Agriculture after the Government picked up huge debts that arose from failure by beneficiaries to repay.
Under Command Agriculture – the state supervised contract farming programme — the private sector provides funding while Government identifies the farmers.
When farmers sell their produce, the investor is paid off from part of the proceeds.
But if there are defaults the Government then picks up the debt. Ncube, seeking to narrow the national budget deficit by cutting public spending – said expenditure on agriculture has been one of the major components driving budget deficit in recent years.
Expenditure on the sector reached $1,1 billion as at August 2018, against an annual budget target of $401 million.
Of this $238 million went towards Command Agriculture, $263 million towards the Vulnerable Input Support Scheme while $505 million was directed to grain procurement.
Of the $1,8 billion Treasury Bills issued between January and July, about $361 million went towards agriculture. Sakunda Holdings is the main financier of Command Agriculture.
“While on the face of it, the TBs issued towards Command Agriculture are a private debt, however, in view of the high default rate by farmers under the Command Agriculture, it effectively means that it is a Government expenditure,” Ncube raised this in his pre-budget statement.
“In view of the implications of the current model of financing, there is need to revisit the mechanism, with a view of lessening the fiscal burden which has a destabilising effect on the macro-economic environment.”
Deputy Minister of Lands, Agriculture, Water, Climate and Rural Resettlement Douglas Karoro, was evasive when asked if the government was considering overhauling the funding model.
“All I can say is that Command Agriculture has been a huge success in stimulating production and productivity on our farms,” Karoro told Business Weekly on Wednesday.
Deputy Chief Secretary in the Office of the President and Cabinet who is also chairman of the Integrated Command Agriculture Taskforce Justine Mupamhanga, said Command Agriculture could not provide detail on action Government would take against the high rates of default.
“In principle, Command Agriculture is a cost recovery programme, from the beginning,” was all he could say.
Without disclosing on how much the government was earmarking for this year’s programme, Mupamhanga said preparations for the 2018/19 farming season have progressed well with over 200 000 hectares having already been contracted for Command.
This is slightly above the maize hectarage contracted last year under the same programme. As of last week, 33 000 hectares of soya bean had also been contracted, according to Mupamhanga.
“Many of the places that used to stay fallow are being utilised and the programme has been successful as we all know.
‘‘There is production of maize for the past two years and it has banished hunger in this respect. It has done the best it can,” he said.
While the Command Agriculture has been hailed for helping Zimbabwe achieve food security, critics say it is time to conduct a cost benefit analysis of such intervention.
