Identifier
Created
Classification
Origin
10HARARE120
2010-02-12 12:02:00
UNCLASSIFIED
Embassy Harare
Cable title:  

Zimbabwe Expects Another Poor Harvest

Tags:  ECON EAGR ZI 
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VZCZCXRO2390
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0120/01 0431203
ZNR UUUUU ZZH
R 121202Z FEB 10
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 0053
INFO SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
UNCLAS SECTION 01 OF 02 HARARE 000120 

SIPDIS

E.O. 12958: N/A
TAGS: ECON EAGR ZI
SUBJECT: Zimbabwe Expects Another Poor Harvest

UNCLAS SECTION 01 OF 02 HARARE 000120

SIPDIS

E.O. 12958: N/A
TAGS: ECON EAGR ZI
SUBJECT: Zimbabwe Expects Another Poor Harvest


1. SUMMARY: Zimbabwe probably will not see an increase in maize
production this year, mainly due to poor weather and small-scale
farmers' lack of financing for seed and fertilizer. There was
reportedly a sufficient amount of seed in the country, but the sole
fertilizer producer could not keep pace with demand. Many farmers
register frustration with the Government of Zimbabwe's (GOZ's)
failure to follow through on promises to subsidize inputs and make
credit accessible. Amid the disappointing outlook for this year,
only tobacco farmers have reason to be optimistic. Outgrower
schemes promise to put more cash in their pockets. END SUMMARY.



Planting Less, Planting Late




2. Zimbabwe faces another disappointing harvest this year.
Production of maize, Zimbabwe's main food crop, is unlikely to
exceed 500,000 metric tons. This is the consensus view of farm
organizations and independent experts. At the low-end, the
Commercial Farmers' Union (CFU),which represents the few remaining
white commercial farmers, projects maize output of around 400,000
metric tons. The head of the Zimbabwe Commercial Farmers' Union
(ZCFU),which represents about 15,000 small-scale farmers (many of
them on land seized from CFU members),expects a harvest of about
500,000 metric tons. In 2009 Zimbabwe produced 534,250 tons of
maize, less than a third of the estimated national requirement. In
2000, the last harvest before the GOZ began seizing commercial
farms in its "fast-track land reform," Zimbabwe produced over two
million metric tons of maize.




3. Many of Zimbabwe's farmers delayed their planting for the
current cropping season, and some reduced the area planted. In
addition to a lack of rain in some areas, a commonly cited reason
is lack of financing. This problem is most pronounced for
small-scale farmers, who in recent years have received seed and
fertilizer on credit from the GOZ's Grain Marketing Board (GMB).
But dollarization of the economy in 2009 put an end to the GMB's
buy-high-sell-low business model, and private suppliers have been
slow to fill the gap in remote rural areas. A survey of some rural
districts in Masvingo, Matabeleland South, and Midlands Provinces
in December showed little preparation had been done prior to the
onset of the rainy season at year's end.




4. According to the Zimbabwe Farmers' Union (ZFU),which looks

after the interests of small-scale farmers on communal lands, the
amount of land put under maize in 2009 (1.2 million hectares) was
just over half the area of the previous year (2.1 million
hectares). Small-scale farmers on communal lands normally supply
most of Zimbabwe's maize harvest. The ZFU says small-scale tobacco
cultivation will hold steady at 40,000 hectares. ZFU projects
planting of cotton and soybeans to be unchanged at 200,000 hectares
and 50,000 hectares, respectively. According to most small-scale
farmers econ specialist interviewed in December, the severe cutback
in GOZ-subsidized supplies of seeds, fertilizer, and fuel was the
main reason for reduced planting of maize.



Expensive Seed, Too Little Fertilizer




5. In its January brief on food security, the Ministry of
Agriculture reported that by the first week of January, between 50
and 75 percent of the normal amount of planting had been done.
Conventional farming wisdom in Zimbabwe holds that seeds should be
in the ground before the rains commence, which happens by late
December in nearly all parts of the country. The Ministry's report
also indicates that availability of seed improved in 2009: of 158
sites the Ministry surveyed in January, 66 had maize seed, more
than five times as many as a year earlier. This report is
consistent with a 2009 USAID-funded study that showed seed was
widely available, if not necessarily affordable.




6. While availability of seed has improved, many farmers say they
cannot afford to buy as much as they used to. Seed companies told
econ specialist that supplies were sufficient this year. But
small-scale farmers in Masvingo and Midlands Provinces reported
that high prices kept them from buying enough seed. Some farmers
reported that a 10-kilogram bag of maize seed sold for US$28 while
the GMB advertised a subsidized price of US$9. But the GMB could

HARARE 00000120 002 OF 002


not muster financing to provide large amounts of seed at that
price.




7. Both the CFU and ZFU report that there is a shortage of
ammonium nitrate fertilizer due to problems bedeviling Sable
Chemicals, the only domestic producer. According to the company's
management, Sable cannot afford to pay for the electricity it needs
to sustain production of ammonia through electrolysis. Sable is
Zimbabwe's single largest consumer of electricity. The company
recently negotiated reduced rates with the state-owned power
monopoly. Sable planned to supplement its output with imported
finished products. The firm requires financing for
re-capitalization, but this is unlikely to materialize in the
foreseeable future.




8. The farmers' unions also report that fertilizer prices have
fallen by 50 percent from last year's levels, in line with the
regional trend. Despite this, small-scale farmers in Masvingo and
Midlands Provinces told econ specialist that they could not afford
to buy fertilizer at the prevailing price of US$33 per 50-kilogram
bag. Small-scale farmers generally were unable to find fertilizer
at the GMB's subsidized price of US$6 per bag. Their frustration
was magnified by GOZ officials who claimed that banks would extend
credit against collateral in the form of livestock or the so-called
"offer letters" that re-allocate land seized from commercial
farmers. But no banks would in fact do so.



Comment




9. Zimbabwe's maize harvest should be about the same as last
year, but conditions are different. The weather has been less
favorable, and the GOZ has not been able to provide the customary
subsidies. And so far, the private sector has been slow to pick up
the slack where GOZ-financed services have ceased. The exception
is tobacco. With most of the large-scale producers having been put
out of business by farm invasions, the tobacco buyers are
increasingly looking to small-scale producers, whom they support by
advancing seed and fertilizer and providing extension services.
Such outgrower schemes have already transformed Zimbabwe's tobacco
economy, and they may be the future for other crops as well.
Productivity is markedly lower than it was for the commercial
farmers, but outgrower schemes arguably distribute cash incomes to
a much wider range of rural households. Whatever the future of
agriculture in Zimbabwe, it will be different from the past.
RAY