VINCENT MHENE IN GWERU
Farmers are feeling the pinch of high inflation amid revelations the majority of them are struggling to keep their farms afloat.
Zimbabwe’s annual inflation stood at 192% in June from 132% in May.
As part of efforts to deal with the problem, Finance and Economic Development Minister, Mthuli Ncube and the Reserve Bank of Zimbabwe governor, John Mangudya pronounced measures including legislating the multi-currency system and hiking interest rates to 200% from 80%, among other interventions to slow inflation.
“Every time we price our produce, the next thing is that inflation sweeps it out. The result is that the agreed price becomes nothing owing to inflation,” Abdul Nyathi, the president of the Zimbabwe Farmers Union, said.
The president of the Zimbabwe Commercial Farmers Union president, Shadreck Makombe, concurred saying: “Inflation has become a big issue. Farmers are feeling the heat and might fail to repay the loans.”
He also said the cost of borrowing was one of the major challenges confronting farmers in Zimbabwe.
An official with the Ministry of Agriculture, Lands, Water, Fisheries, and Rural Development said that some farmers this winter had been dropped from the National Enhanced Agriculture Productivity Scheme (NEAPS) – a scheme financed through loans from the CBZ bank – for defaulting on loan payments.
Speaking on 98.4FM, a sister radio station to Business Times, Midlands Acting Provincial Director Agricultural and Rural Development Services Medlinah Magwenzi said many farmers failed to pay back loans acquired from CBZ hence they were not eligible to be re-contracted.
“Some of our farmers did not plant because they were not contracted due to their debt to CBZ funding programme. We give you inputs so that you produce and pay back for us to sponsor you again.”
Magwenzi added: “Our major problem is that farmers are not paying back the loans and because of this it ends up being difficult for CBZ to continue supporting us with loans. Many of our farmers are like that and we are appealing to farmers to pay back loans so that we can supply them inputs and for CBZ to sustain the programme.”
But bankers say the rising inflation should be an advantage for farmers since the value of the principal amount would have waned when they pay back loans.
Bankers Association of Zimbabwe CEO, Fanwell Mutogo, said: “Inflation does not affect the capacity of borrowers to repay their loans, if anything inflation enables borrowers of local currency to meet their commitments because the value of what they have borrowed is deteriorating in an inflationary environment.”
The government has tried to cushion farmers from the inflationary environment by paying them partly in the United States dollars, which is a relatively stable currency.
The Cabinet on Tuesday last week said a total of ZWL$500m and US$2m had been paid to farmers for grain delivered to the Grain Marketing Board.
As of 7 July 2022, the GMB had 454 277 metric tonnes of maize and traditional grains in stock, including stocks carried over from the previous season, according to the cabinet.