THE Commercial Farmers’ Union (CFU) has warned that Zimbabwe’s agriculture may be starved of long-term capital should the government force local banks to freeze debt owed by farmers to financial institutions.
Report by Victoria Mtomba
The farmer organisation said government should instead concentrate on providing security of tenure to ensure that the sector reclaimed its position as the mainstay of the economy. Mining is currently the main driver of the economy.
In an interview, CFU president Charles Taffs said the scraping of the debts may increase bad debts that will affect banks further.
“Freezing of debt will be a temporary solution on the farmers’ financial problems. It is likely to create future cash flow problems for farmers in the long run as they will be under pressure to pay accumulated debts as well as current ones. It also reduces the creditworthiness of farmers. On a global scale, it will adversely affect the future funding prospects in agriculture as potential financiers may see it as an unattractive industry,” Taffs said.
“Instead, the government needs to work on providing security of tenure to all classes of farmers as it is an essential condition for the meaningful participation of private capital in financing agriculture on a sustainable basis.”
CFU calls came at a time when Vice-President Joice Mujuru said the government intended to engage banks with a view to freezing debts owed by farmers to enable them to access funding for the 2013/14 cropping season.
According to statistics from the Finance ministry, $2 billion was required for the sector to perform. Government, according to recent reports, has availed $720 million for agriculture.
Taffs said the greater proportion of the funds benefits small scale farmers and communal farmers and does not meet the financial needs of commercial farmers.
The CFU boss said most of the farmers were ready for the season, however, the main problem remained as lack of working capital.