Farmers demand full US dollar payments

LIVINGSTONE MARUFU

Zimbabwe’s grain farmers are advocating for the government to settle payments entirely in United States dollars (USD) within one week of delivery, Business Times can report.

This demand comes as part of a broader effort by farmers to protect their earnings from the volatility of local currency fluctuations and to sustain their agricultural activities.

This call follows the Grain Marketing Board’s (GMB) recent announcement of the grain producer price, set at US$ 335.14 per tonne.

While farmers have welcomed this competitive pricing, they have expressed concerns about the government’s commitment to full US dollar payments.

Although the government has previously promised to pay in US dollars, it has paid a certain portion of the proceeds in local currency, which has sparked dissatisfaction among farmers.

A survey conducted by Business Times revealed that while farmers are generally positive about the announced price, they are concerned about payment delays and the partial use of local currency in the payment structure.

Farmers argue that most of their operational expenses, such as purchasing seeds, fertilizers, and chemicals, are denominated in US dollars. As such, receiving partial payment in local currency creates challenges, especially when the value of the local currency is prone to rapid depreciation.

Shamva-based farmer Patrick Chiruka shared his frustration with the payment structure, stating :“What we want is to receive the full US$ 335.14 per tonne on time. Receiving part of the payment in local currency makes it difficult for us to plan our next steps. The government must honor its commitment to paying in US dollars.”

In a similar vein, Goromonzi-based farmer Alfred Nyarambi expressed that he has no use for local currency, adding:“All my inputs are purchased in US dollars. Paying me in local currency undermines the entire payment process, especially with the prevailing exchange rate volatility.”

Despite the challenges surrounding the payment structure, agricultural experts have praised the newly announced maize price as competitive on the global market.

Edward Dune, an agriculturist and former executive of the Zimbabwe National Farmers Union, highlighted the importance of a fair price for farmers. “The new maize price is a welcome development as it is in line with global market standards. However, to ensure that farmers continue to sell their grain to the formal market, the government must ensure timely and full payments in US dollars,” Dune emphasized.

Analysts argue that higher grain prices, coupled with full US dollar payments, would incentivize farmers to deliver their grain to the GMB instead of opting for informal markets, where prices may be lower or less stable. In the context of reduced foreign currency reserves, ensuring that grain deliveries are channelled through formal markets would be an important step toward increasing the national grain supply and enhancing food security.

Although the government had initially committed to paying farmers in US dollars, the reality has been mixed. Several farmers reported receiving only a portion of their payment in US dollars, with the remainder being paid in local currency. This payment structure has created a sense of uncertainty and frustration among producers, who are already facing high input costs and economic instability.

Analysts believe that this mixed payment approach undermines the government’s efforts to stabilize the agricultural sector.

“The uncertainty around payment modalities is counterproductive. Farmers need clarity and consistency in payment terms, especially when dealing with costs that are largely US dollars-denominated,” said one agricultural expert.

Despite the government’s assurances, the delay in full US dollar payments has led to growing skepticism among farmers regarding the GMB’s ability to meet its commitments.

 

This skepticism could reduce farmers’ willingness to deliver grain to the GMB in future seasons, undermining national grain reserves and potentially leading to further reliance on costly imports.

Maize, as Zimbabwe’s staple grain, is of crucial importance to the country’s economy. The availability of affordable maize directly affects the cost of living, as it influences food prices, particularly the cost of mealie meal, a core dietary staple, as well as beer, a significant part of the local economy. The impact of maize availability extends beyond the agricultural sector, influencing inflation and the broader economic landscape.

Agricultural experts believe that if Zimbabwe’s grain farmers receive adequate and timely payments in US dollars, it would stabilize the price of maize and potentially reduce food inflation. With a bumper harvest expected due to favorable weather conditions, the country is targeting an annual grain production of 3 million tonnes, exceeding the annual demand of 2.2 million tonnes. This surplus would reduce the need for costly maize imports, thereby conserving foreign currency reserves and improving the nation’s trade balance.

The shift toward local maize production has the potential to reduce Zimbabwe’s dependency on foreign imports, particularly in light of improved rainfall patterns and the government’s push for self-sufficiency. A more stable and predictable payment structure for farmers could further enhance local maize production, contributing to the overall economic stability.

However, analysts caution that this potential can only be realized if farmers receive the incentives they require. “The government must address the issues of late payments and partial payments in local currency if it intends to boost national grain production and reduce import dependency,” said an industry expert.

Zimbabwe’s maize farmers face a dual challenge: rising production costs, including the high cost of US dollars-denominated inputs, and the erratic availability of local currency. As a result, farmers require a stable and reliable payment structure to protect their earnings and ensure the continued viability of their operations.

In addition to the payment concerns, farmers are calling for improved access to financing.

Many producers struggle to obtain affordable credit, which is essential for purchasing inputs and upgrading equipment. The inability to access loans with favorable terms only adds to the financial burden that farmers face.

Agricultural experts suggest that the government should consider introducing financing programs tailored to the needs of small-scale and commercial farmers alike.

These programs could provide favorable credit terms to help farmers manage input costs and invest in modern farming practices. Furthermore, ensuring access to affordable financing would enable farmers to ramp up production and contribute more effectively to the national grain supply.

For Zimbabwe’s grain farmers, the key to increasing production and reducing reliance on imports lies in the consistency and reliability of government policies.

This includes honoring commitments to pay in US dollars, ensuring that payments are made in a timely and predictable manner, and addressing the financing needs of the agricultural sector.

As the government targets a bumper maize harvest of 3 million tonnes, stakeholders in the agricultural sector argue that meeting farmers’ demands for full and timely USD payments will be essential in achieving these objectives.

By creating a more favorable environment for grain production, Zimbabwe can not only improve its food security but also contribute to broader economic stability.

However, without addressing the payment structure and providing adequate support to farmers, the country risks undermining its agricultural sector and perpetuating its dependence on costly imports.

While the government’s commitment to supporting maize producers is a step in the right direction, farmers remain cautious and are calling for concrete action to ensure that payments are fully made in US dollars, promptly, and without the inclusion of local currency. Only then can the sector flourish, contributing to both national food security and broader economic growth.

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