News Column

Seed Houses Target 52 100 Tonnes of Maize

August 20, 2014

Seed houses are targeting to produce at least 52 100 tonnes of seed maize this year up from 52 052 last year, an official has said. Zimbabwe Seed Trade Association chairman, Walter Chigodora said seed maize production levels would increase slightly. "We are expecting a slight increase in the production of seed maize due to an improved yield mainly attributed to last season's good rains."

He added: "The Government should introduce seed harmonisation and all the land that is lying idle should be utilised so as to further increase output."

Mr Chigodora, however, said production might decline in the long run if necessary measures are not put in place. This, he said, entailed the crafting of a clear agriculture policy which can turn idle land to productive.

Zimbabwe Commercial Farmers Union president Wonder Chabikwa attributed the expected increase of seed maize production to the increase in the number of seed houses in the country.

Zimbabwe has not been producing sufficient maize to meet national demand over the years due to poor rains and lack of funding forcing it to import from neighbouring countries such as Zambia, South Africa and Malawi.

Currently 1 655 300 hectares of maize seed has been planted.

In order to incentivise farmers to produce maize, Government last week gazetted a statutory instrument compelling buyers to procure grain at a price pegged by the Minister of Agriculture, Mechanization and Irrigation Development.

Under SI (122) of 2014, Agriculture Marketing Authority (minimum Grain Producer Prices, 2014), the minister may announce the minimum producer price of maize, sorghum, pearl millet, wheat and finger millet at the beginning of the marketing season.

At $390 per tonne for maize, grain buyers have argued that the farmers could still be viable at a far less producer price.

For instance, with production cost estimated at $817 per hectare, the expected return per ha is 91 percent. At a producer price of $260 per tonne and $817 per ha, farmers could still achieve a return per ha of 27 percent.

In addition, buyers are also arguing that Zimbabwe has the highest maize producer price in the region, ahead of Zambia at $220 per tonne and South Africa ($210).

Zambia has also pegged minimum price for sorghum at $220 per tonne and $259 in South Africa.

While production costs for both crops are relatively lower in these countries compared with costs incurred by local farmers, the buyers insist that does not justify the $390 minimum price set by the Government.

The traders argue that $390 producer price will have ripple effects on consumers as it will cause an increase in the prices of cereal end-products. This includes a 4 percent increase in all sorghum product prices.

It will also result in a 15 percent reduction in sorghum volume and a $4,5 million decline in VAT and corporate tax due to Government. Council levies would also fall by $350 000.

Low demand would slow capex investment that would have stimulated the economy. Lager prices would also increase by 3 percent and this may result in 6 percent reduction in lager volumes while VAT, excise and corporate tax will fall by $4 million.

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Source: AllAfrica

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