CFU raises red flag on farmers’ debt

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.

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9 Comments

  1. The politicians and well connected owe loads of money which may not have been channelled into agriculture and now want financial reprieve to borrow again purportedly for agriculture. All this is said under the guise of pursuing a people oriented policy – food security for beloved Zimbabwe. Mari dziri mumabhangi ndedze povo yamurikupa 2 bags fertilizer and 5 kg seed. The same unfortunate povo with no status and wealth to flaunt about do not qualify for these loans.

    1. @Godho- Right, you are..many of the fellows with ten farms used them to rob the Reserve Bank with the largesse pouring from thee used to buy fancy cars, increse the harem and get houses in the northern surbubs. This may explain why houses in these areas have trippled in value in the past 10years. These guys will fight the land audit with everything they have and thats not just idle waffle! The loans will like their Electricity bills will be written off..so you see these guys will not pay for anything, theres is just to receive and you tell me there is another heaven outside this paradise?

  2. Loans should only finance their purpose in anticipation of profits.lf an agricultural loan is diverted,agriculture is compromised.

  3. People are now getting used to this scrapping of bills and its spoiling them. Look at the Harare scenario where water bills were zeroed but again people are not paying the liitle they are billed. Manje zvoitwa sei?

  4. Sine the government cannot print the US$ it is not possible to forgive debtors!! Unless the forgiver forks out and reimburses the Banks. Banks do not print money however they take a calculated risk to lend money to farmers and other business persons. Once a certain threshold of debt becomes unpaid the bank can fold and there will not be any Bank. Even the Government cannot afford to lend or guarantee bad debtors. most of our new farmers do not have the skills required to succeed in farming. farming is a long term business activity which requires enormous capitol.

    Commercial farming requires entrepreneurship just like any other business. Government should be there to provide a conducive working environment including respect and protection of private property

    Without a conducive environment persons with capitol black yellow or white will not come forward to invest in farming.

    To ensure maize production the DMD should be empowered to pay viable prices timeously. Less politicking is also needed to avoid the futile patronizing

  5. the level of madness and lack of common sense in this government is alarming.let me give you basic lessons teurai 1.Banks do not grow or print money they get that money from depositors and investors who seek profit and interest. these investors include pension fund managers and stock brokers and depositors who all including investors are ordinary zimbabweans. 2. Banks when they give loans they expect and want the lender to be successfull in their venture of choice including farming and at the end of the day banks and lending institutions are friends to farming and other ventures 3. the relationship between a bank and the farmer is mutual.THEREFORE if a bank does not get what the farmer owes pensions will not be paid,i will not get what i deposited in the bank.the banker will be jobless.the farmer will not improve on his capacity as the relationship between him and the bank will be broken.farming sector will lose capacity.teurai ropa funga dzidza kufunga

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  7. Musoni Zungunde

    Did the Government say they want to scrap the debts or they would want to freeze the loans for this season? How many top Government officials have farms compared to the total number of Zimbabweans who also benefited from the Land Distribution? Is not the Government supposed to bail its citizens when they feel help is needed? According to stats from last season, was drought not part of the reason why most farmers failed to repay their loans! come on Zimbabweans, give a farmer the slack here. I don’t think the learned bankers would go into this blindfolded and besides, if they don’t go back into the fields with the heavily indebted farmer, where would they recover their debts? A farmer feeds from the soil. President Mugabe will not allow a Zimbabwean to lose his home because of debt. So lets think. These farmers are our farmers.

  8. Well said Musoni, even Obama bailed out the American auto industry because it was that important.

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