The Reserve Bank of Zimbabwe (RBZ) has called upon the government to come up with an agricultural master plan encompassing the entire production value chain in order to increase productivity on farms.
The central bank said there was need to adopt a holistic programme to avoid the current “piecemeal approach.”
According to the RBZ the plan should cover critical aspects affecting agriculture including, security of tenure, agricultural financing, distribution mechanisms, agriculture marketing and pricing.
It should also tackle contract farming, loan recoveries, dispute resolution mechanisms and State’s role in rural community agriculture production.
Presenting his mid-term monetary policy statement recently RBZ governor Gideon Gono said security of tenure for land acquired under the historic land reform programme was critical to ensure long-term agricultural planning and access to financing.
“Under the current scenario, land has no value and is considered as dead capital, since it cannot be used as collateral,” Gono said.
“In this regard, we urge the government to ensure that the 99-year leases are market valued, registrable and executable, so as to enable farmers to use them as collateral against bank financing.”
He said security of tenure would ensure there were no disruptions to farming activities through re-allocations, multiple ownerships, fresh occupations and other disturbances related to ownership disputes.
The central bank governor said all efforts should be made to ensure the land is put to maximum productive potential.
“In this regard, we call upon the relevant authorities in the government to double their efforts in financing the agricultural sector, through support activities such as research and development, input and chemical schemes, farm mechanisation enhancement and provision of extension services.
“While recognising efforts of local banks to prioritise the agricultural sector for funding, along with other productive sectors of the economy, we continue to encourage banks to support innovative schemes such as contract farming, revolving financing schemes, and to provide guarantees in order to enable farmers to access offshore financing.”
Gono said given farming is a business, like all other forms of businesses, taxation of profitable farmers, particularly in A2 and commercial farming categories, should be stepped up in order to generate financial resources that could be ploughed back into the agricultural sector.
He added that contract farming had the potential to increase overall agricultural output if properly implemented within an agreed national framework.
“In line with limits placed on multiple farm ownership, government should also come up with maximum farm sizes to ensure that all land is fully utilised, and that equitable distribution of land is achieved,” he said.
“This also increases the number of beneficiaries of the land reform programme, particularly if the one-man-one-farm policy is adhered to and enforced.”
The central bank said it notes with concern, the obtaining situation where food processing companies and middle-men traders of agricultural produce were excelling at the expense of farmers on the ground.
Gono said if the situation is left unattended there would be a gradual shift by farmers to cash crops only such as tobacco, where they have a more direct control of their marketing.
“Such patterns would leave the country seriously exposed to food insecurity, at a time when global food prices are on an upward trend,” he said.
“In this regard, monetary authorities call for a review of the marketing and pricing mechanisms for food crops, so as to ensure farmers get a fair compensation for their produce, and that there is continuity in the production of all agricultural crops”.
He said budgetary allocations for agriculture should take cognisance of the different product and seasonal cycles in agriculture, so as to cater for the different financing and support needs for the winter and summer crops.
Gono noted that several beneficiaries of the land reform program lack financial resources to undertake meaningful agricultural activities adding that repossession of the land would negate one of the objectives of the programme.
“While more medium to long-term financing mechanisms for such farmers are being worked out by the government, the central bank recommends the farmers in this category be allowed to lease part of their land over a period not exceeding five years, where they can receive rentals from interested and well equipped lesee farmers,” said Gono.
“To protect land owners from unfair practices under this arrangement, the proposed lease agreements could be registered at the nearest district or provincial offices, in which the farmers are located.”