The increase in prices of farming inputs mainly seeds and fertilisers by over 300 percent in the past three weeks, came as a wakeup call to authorities that there is a need to have continuous environmental scanning — looking out on factors that might offset price equilibrium.
Yes, it is laudable that seed and fertiliser producers, finally agreed to reduce prices following Monday’s meeting with President Mnangagwa.
Addressing journalists after the Cabinet meeting on Tuesday, Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa confirmed the President’s meeting with the inputs manufacturers.
However, what is critical is not to celebrate the price reduction, but to interrogate why inputs were raised to such levels, ramification of such actions to the agriculture sector and how to deal with the lessons.
The nation demands answers why products whose major components are locally available responded to the black market foreign currency rates madness with authorities taking over three weeks to respond? The majority of seed companies in Zimbabwe without disclosing names, are major suppliers of Government’s Command Agriculture scheme and that alone means they produce for Government and maybe the export market.
We believe by enjoying economies of scale, they can still remain profitable by charging fair prices than the black market prices we saw being demanded this month. If Command Agriculture is not good business for the fertiliser and seed companies, do they want Government to source the materials from other markets in the future?
Seed and fertiliser producers agreed to reduce the prices of their commodities by nearly 50 percent, but those in farming business still insist the new prices are still out of reach and no one can run a viable business with such mark-ups.
Maize seed and fertiliser prices shot to unprecedented levels last week, with a 10kg pocket of maize seed being pegged at between $90 and $100 from around $30 while a 25kg bag was being sold at prices ranging from $170 to $251 up from around $70 last season.
The price of a 50kg bag of fertiliser had gone up to over $100 from around $28 and $35 prior year, meaning the 50 percent reduction is still unattainable.
What this means is only farmers receiving Government inputs can manage to conduct viable farming business and those self-financing should forget it, maybe should diversify to other ventures if they are to remain in business.
But this will be bad news for tobacco that is mainly grown under contract and self-financing as no command farming has been put in place for this sub-sector. What this means is there is a likelihood of many farmers abandoning the crop this farming season, while those under contract might run into loses as the bulk of their proceeds might be gobbled by inputs loan repayments, something that might be bad for the Reserve Bank of Zimbabwe Governor.
Government is on record that proceeds from tobacco sales are enough to buy enough fuel to keep the country running for 12 months and it is everyone’s guess what happens if Government allows this sector to die because of producers’ speculative tendencies.
If the producers agreed to reduce the prices by at least 50 percent and remain profitable, which is still high anyway, it therefore means their actions were bent on sabotaging the coming summer cropping season.
Going forward, Government should punish all companies that increased the prices of key inputs by removing them from the priority list supplying Command Agriculture inputs in the future. We demand that if companies have challenges, they should constructively engage Government and avoid wanton price increases that in turn erode market confidence leading to panic and speculative buying.
Inasmuch as Government should engage the business community, there comes a need to use some minimum persuasive force to ensure compliance and discipline in the country because when leadership speaks, people should listen.
The austerity measures ought to affect everyone because once they become selective the people might decline to support their implementation. Let’s all play ball to ensure a successful farming season to guarantee food security and foreign currency generation.