News Column

Wheat Farming - Food for Thought

June 13, 2014

Victor Makanda



Since the adoption of the multi-currency system, some parts of the agricultural sector have evolved for the better and some for the worse.

Cash crops, in particular tobacco, have done well. During this week, the 166 million kgs tobacco output recorded in 2013 was surpassed whilst the targeted 185 million kg for the year was also outdone.

Food crops, on the contrary, have not done well and this has subsequently resulted in the country resorting heavily to imports to meet national demand. Maize and wheat production have been depressing stories with the latter being the worst hit.

Whilst there has been much talk on pursuing protectionist measures, will wheat production sustainably recover?

In assessing the wheat case, it is key to note that demand in Zimbabwe is huge. This is explained by the 400 000 metric tonnes required to meet national demand for the crop. Wheat is mainly used in bread making by millers and bakers with the nation estimated to consume 1 million loaves daily according to the Grain Millers Association of Zimbabwe (GMAZ).

In turnover terms, the country is selling circa US$365 million worth of bread annually with 60% of that amount being flour requirements worth US$150 million which is mainly imported.

Thus demand is huge supported by the growing need for diversity in diet which wheat provides away from the traditional staple food - maize.

Moreso, bread is regarded by most as a basic commodity which limits its downside in terms of consumption even in the prevailing environment characterised by weakening aggregate demand.

Considering that huge and sustainable demand exists for the crop, production has been pathetic with the 2013 output estimated at 31 000 tonnes (t). This tonnage emanated from the 8,500 hectarage space with average yields per tonne at around 3,65.

Market participants tagged the 2013 season as the all-time low compared to 33 700t recorded in the prior season. Worrying though is the fact that production has failed to rise above 100 000t since 2001 following the land reform programme. The peak production levels for wheat have been recorded in 1990, 1999 and 2001 of 325 000t; 324 000t and 325 000t, respectively.

The sector's low production levels have been caused by power outages; high costs of production particularly on irrigation equipment and other key raw materials such as fertiliser and a regulated marketing system for wheat by government.

Lack of cheap finance has also been another big factor due to lack of acceptable collateral security by farmers.

A cocktail of measures have been taken by the government and industry players to address the supply bottlenecks in the wheat sector.

Protectionism has been one of the key measures and recently the government banned all agricultural imports as a way of capacitating and reviving local players.

Such a move alone will most likely not provide the solution required as what is required is the answer to the pressing needs of frequent yet expensive power outages.

There is also need for the government to assist farmers mainly in addressing the collateral security issue. Most farmers have failed to access funding due to lack of collateral security post the land reform era.

The government may possibly do more especially when it cannot provide funding and subsidies by only regularising the marketability of the 99-year leases.

Such a move is critical as wheat farming is more technically demanding and expensive compared to other crops also requiring huge tracts of land relative to other crops.

Furthermore, resuscitation of wheat production may also be made possible through introducing the contract farming model. A leaf can be taken from tobacco and cotton farming models.

Taking tobacco for instance, production levels have risen as most tobacco merchant and cigarrete manufacturer's finance contract farming.

This model has paid off remarkably especially if the risk of side-marketing is restricted within acceptable levels. For wheat production, with its huge requirement of vast irrigated lands to realise economies of scale, the private sector may need to fund farming of the crop to a smaller number of large scale farmers rather than on too many small scale farmers.

By focussing on these farmers, yields and ultimately quality and output will recover from the all-time lows.

Furthermore, the government must find a way of addressing the pricing of wheat as this has been another stumbling block for the low production levels as they resort to relatively better paying crops such as tobacco.

For instance, the ministry of Agriculture gazetted the price per tonne for wheat at US$466 in the 2013 marketing season.

This led to few farmers selling their crop to the government. The reason for the low uptake was because the price was sub-optimal as GMAZ cited that it costs about US$2 915 to grow wheat per hectare yet with the gazetted price, a farmer would get US$2 796.

Peer comparative figures per hectare are way below US$1 000 particularly in Ukraine, Russia, Australia and South Africa.

This has been the same disturbing situation with maize and has led to food security being compromised and Zimbabwe losing its "bread basket" status in Southern Africa.

Overall, formulation of a wheat policy which addresses the pricing and payment of the commodity as well as catering for the access of relatively cheaper finance will definitely go a long way in reviving production. Provision of irrigation equipment is also another core area as wheat is normally grown between June to October in winter.

With national demand outstripping supply, a big opportunity exists within the sector. All that is required is for the private sector to consider seriously the contract farming model whilst the government on the other hand creates an enabling environment.

More action and less talk is required to resuscitate wheat farming.


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Source: AllAfrica


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