Govt sets grain producer prices

Anxious Masuka

GOVERNMENT has opened up self-financed grain and cotton produce for purchase by contractors and private players for the 2022/23 farming season, and has proposed a price of US$335 per metric tonne (MT) for maize and traditional grains purchased at the Grain Marketing Board (GMB).

For soya bean and sunflower, it set prices at US$597, 59/MT and US$687,23/MT, respectively.

This was said yesterday by Lands and Agriculture minister Anxious Masuka in Harare in a joint statement with Finance minister Mthuli Ncube.

Masuka and Ncube said they had set the maize and traditional grains producer price at US$335/MT as part of efforts to ensure viability in farming and to incentivise grain production.

GMB and the Cotton Company of Zimbabwe, Masuka said, would only purchase strategic commodities financed under the Presidential Inputs programme as well as by self-financed farmers, while GMB may also purchase grains from contractors.

“All contractors including the Food Crop Contractors Association, CBZ Bank, AFC Bank are obligated to buy back contracted crops at market prices,” he said.

“Self-financed farmers will sell to the best advantage of the market or to GMB and Cottco. GMB will provide commercial warehouse receipt services  heavy duty bins to grain contractors. Government will issue a statutory instrument that mandates private players to provide returns on storage grains to be able to track national stocks of maize and other grains,” he said.

The marketing and pricing system proposed is said to be consistent with achieving food and fibre security and macro-economic stability.

There are four categories of farmers: farmers financed under Climate Proofed Presidential Input Scheme (Pfumvudza/Intwasa), self-financed farmers, National Enhanced Agriculture Productivity Scheme financed farmers supported by AFC and CBZ and farmers financed by private contractors.

The ministers said the price determination was based on the approved pricing policy which uses a standardised maize production model, cost-plus pricing model, an average yield level of 5,5MT/hectare and a 15% margin above break-even price.

The average yield for commercial maize was 3,68MT per hectare in the 2020/21 and 3,89MT per hectare in the 2021/22 season.

From the model, the total cost of producing a hectare of maize is US$1 602,20 and the break-even price is US$291,31.

The import parity price for maize and traditional grains is US$330 to US$458 per metric tonne, respectively.

The major cost factor is fertilizer taking up about 48,6% of the total cost per hectare.

The total cost of producing a hectare of soya bean is US$1 299,11 while break-even price is US$519,64. The model uses a yield assumption of 2,5MT per hectare. The major cost is fertilizer at 28,6%.

The import parity price for soya bean ranges from US$690 to US$744/MT.

The price determination for sunflower is based on a 15% margin on the marketing price for soya bean to hedge sunflower farmers against yield differentials.

“Sunflower is a key oil seed crop that can catalyse rural development for the attainment of Vision 2030 as this is a smallholder crop suitable for the dry regions. It is, therefore, appropriate to sufficiently incentivise farmers to produce sunflower, while targeting to save US$200 million spent annually on crude oil imports and producing surplus for the export market,” Masuka said.

On cotton, the 2022/23 pre-planting producer prices are US$0,40/kg for grade D cotton, US$0,41 for grade C cotton, US$0,43/kg for grade B and US$0,46 for grade A cotton.

Farmers have been getting 75% of their payment in United States dollars and the balance in local currency following the declaration of cotton as an export crop by the central bank.

Related Topics