The inter-ministerial committee on commercial financing of agriculture says Grain Marketing Board (GMB) must reform and should settle its debts to farmers using proceeds from sale of grain it is holding.
Chairperson of the committee, who is also the Deputy Prime minister (DPM) Arthur Mutambara on Monday said the government would authorize GMB to offload grain at current import parity prices of around $240 per tonne.
This implies the government would provide a subsidy of $45 for every tonne.
“Major reforms are required at GMB. While the strategic grain reserves must be maintained, grain must circulate,” said Mutambara.
“GMB must be able to continuously buy and sell grain. This will ensure that the SGR is maintained with fresh grain. As a general reform beyond repayment, GMB must operate as a commercially viable and efficient institution.
“If GMB cannot be quickly reformed, another commercial institution must be appointed or structured to develop and execute the farmer stop-order repayment system.”
Mutambara said a reformed GMB must be a local miller’s preferred seller of grain and farmer’s preferred buyer of grain.
He said if GMB disposed 200 000 tonnes of maize at $240 it would realise $48 million, making it possible for the cash-strapped institution to repay $21 million it owes farmers, provide liquidity for transportation logistics and cash required to promptly pay for new grain deliveries.
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The DPM said there was a need to put in place long-term funding mechanism to “avoid fire-fighting and crisis management” in financing agriculture.
“A process for the development of a long-term and comprehensive agriculture policy, including the funding thereof, must be structured, discussed and adopted,” said Mutambara.
The government on Monday launched a $100 million Agricultural Marketing Authority Bill to assist in funding the procurement of inputs for the 2011/2012 farming season.
Of the $100 million, $56,2 million would support farmers’ input requirements; $21 million will be allocated to GMB; $4,5 million will be set aside to kick start seed and fertiliser production by companies.
An additional $18,6 million would be channelled towards clearing liabilities to seed and fertiliser firms that have not been paid under government-backed schemes.
