Call for conducive environment in primary agric

RYAN CHIGOCHE

Government should create a conducive environment that enables more private sector players to  participate in the funding of  primary agriculture in the country, an agriculture association has said.

The Food Crop Contractors Association of Zimbabwe chairman, Graeme Murdoch, also urged government to break the monopoly being enjoyed by the State owned Grain Marketing Board (GMB), which is the country’s sole buyer and marketer of grain. He said GMB should compete with private players.

“The private sector should be more involved in the funding of primary agriculture. The reality right now is  as the private sector, we are sitting back due to the various constraints we are facing giving the government which is the main funder an unfair advantage.

“It’s important that we reverse that process and re-encourage the private sector to play a greater role in the funding of  primary agriculture should they be enabled,” Murdoch said.

He added: “As a result, we are calling for the government to address the matter of single marketing especially for grain which is only done through the GMB. We want government to level the playing field so that private contractors can participate in primary agriculture funding.’’

At the moment, Murdoch said there were considerable number of challenges slowing down private sector participation in agriculture funding.

These include constrained access to cost-effective capital, current conventional banking structures like single client lending limits, lack of access to credit insurance which limits or slows the on-boarding process of expanding farmer portfolios, as it is primarily now about relationship financing.

In addition access to the RBZ auction for significant quantities of inputs is limited, especially in the current season where international fertiliser prices skyrocketed by nearly 50%.

Chief among the challenges has been the punitive interest rates, ranging between 12% and 18%  when a contractor borrows in United States dollars and 60 to 80% if one borrows in the local currency.

The Zimbabwe Commercial Farmers Union President Shadreck Makombe said the high interest rates were hurting the private contractors.

“The private contractors somehow are being short changed. They go to the market looking for money but, that money is expensive as interest rates are  very high.

This has resulted in few takers,” Makombe said.