Impact of economic crisis on agriculture threatens recovery

Zimbabwe's major fertiliser companies say they may not be able to supply the country with desperately needed agricultural inputs, unless government addresses problems such as the shortage of foreign currency. Production in Zimbabwe's agricultural sector hit an all-time low this year and the slump in output of Southern Africa's former bread-basket - which has been blamed on the government's fast-track land resettlement programme, erratic weather and the impact of HIV/AIDS - could worsen, fertiliser producers of have warned. The major national seed supplier, Seedco, had a more positive outlook, saying it had 1.9 million mt of seed, 91 percent of the country's annual seed needs of 2,1 million mt. But the company warned that the critical shortage of fertiliser may scuttle attempts at an agricultural revival, in a country where 80 percent of farming activities depend on availability of the inputs required for various types of soil conditions. The Zimbabwe Farmers Union had previously warned that inflationary pressures were having an extremely negative impact on the ability of farmers to access agricultural inputs. The fertiliser companies, Zimbabwe Phosphate Industries (Zimphos), Zimbabwe Fertiliser Company and Windmill (Pvt) Limited, said the industry has been operating at low capacity for the last eight months, managing to supply only 240,000 mt of fertiliser to the agricultural sector - compared with a normal capacity of 370,000 mt over the same period. The companies made the statement in a joint report, "Fertiliser Industry Situation Report: September 2003", submitted last week to the parliamentary portfolio committee on Lands, Agriculture, Water Development, Rural Resources and Resettlement. They said the fertiliser industry would require at least US $2.45 million a month for the next four months, beginning in September, to reach maximum production capacity and satisfy the country's fertiliser needs for the farming season that has just begun. Their report also called for increased speed in the transportation of raw materials by the National Railways of Zimbabwe (NRZ) in order to reduce crippling road haulage costs. "NRZ should move a total of 27,000 mt of raw materials per month if the industry is to avoid excessive road haulage costs. The industry's capacity ... will depend entirely on the extent to which these requirements are fulfilled," the report said. Problems at the financially strapped NRZ have affected the industry, as the parastatal was able to transport only 58 percent of the raw material needs for the entire fertiliser industry between January and August this year. The NRZ is facing a critical shortage of goods wagons, with many in a state of disrepair. It has also lost four of its diesel locomotives in head-on accidents, blamed on the lack of signal and communications equipment along the major lines. "Inadequate deliveries of phosphate rock, pyrites, sulphur and coal by rail remain a serious problem. Road haulage is having to be used, although it is 15 times the cost of moving the same commodities by rail. For the past three months, 50 percent of the phosphate rock and sulphur had to be moved by road and this is likely to worsen with more tonnage moved by road," the industry pointed out. Foreign currency shortages over the past eight months had affected the industry's ability to import essential raw materials such as sulphur, ammonia, potash and industrial chemicals, as well as plant maintenance spares and accessories. Failure by creditors, including the Tobacco Growers Trust (TGT), to service their debts had also worsened the position of the industry since January. "In the first eight months, the industry managed to get only 32 percent of its monthly operational requirement of US $2.45 million in foreign currency. The industry is owed US $4 million by the Tobacco Growers Trust. Preferential fertiliser prices were given in 2002, on the understanding that TGT will provide this forex. However, failure by the TGT to do this has prejudiced the industry of huge cash reserves and reduced its capacity to fund forex purchases from the market," the companies said in their report. Load-shedding by the Zimbabwe Electricity Supply Authority (ZESA), introduced throughout Zimbabwe early this year when the country experienced a power crisis, still continues to affect both domestic and industrial consumers. Government-imposed price controls were also identified as contributing to the viability problems facing the industry. Seedco also submitted a 10-point seed crop growers stimulation plan, calling on government to promote, among others: "twinning" arrangements between new and established growers to enable an exchange of ideas at farmer level; intensive training for seed growers; and the setting of competitive producer prices to sustain grower viability. "There is a need to maximise farmer productivity to raise the average national yield from 0.7 mt per hectare to 1 mt per hectare. There is also a need for an extensive extension/agronomy drive at farmer level to promote the use of drought avoidance measures like irrigation and water conservation. Government should also provide farmers with price incentives to encourage them to grow a surplus," read part of the Seedco submission. Agro-input industries have not been spared the various shortages that make up the country's economic and social crisis. The report showed that Zimbabwe could face a deepening food security crisis due to a lack of inputs. Efforts to obtain comment from McKenzie Ncube, chairman of the parliamentary portfolio committee on lands, were unsuccessful. Lands, agriculture and rural resettlement minister Dr Joseph Made was also not available.