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Paul Zakariya

Elita Chikwati Agriculture Reporter
Farmers’ preparations for the forthcoming farming season have been thrown into disarray after commercial banks yesterday announced prohibitive conditions that render the $1 billion facility inaccessible to many.

Banks recently unveiled a $1 billion package that was set to benefit crop and livestock farmers for the 2015-16 agricultural season.

However, the banks announced yesterday that only farmers with collateral in the form of assets outside their farms such as title deeds for houses and business premises would be considered.

Another requirement set was that farmers should have a stop-order facility to make it easier for the banks to recoup their money when farmers sell their produce or possess evidence that they had produce held at local warehouses.

Tobacco is the only crop where farmers sell and pay their debts through a stop order facility, while other farmers, especially those who produce cereals, would have difficulties accessing the money because the Grain Marketing Board does not pay on time.

Bankers Association of Zimbabwe chief executive Mr Sijabuliso Biyam, yesterday confirmed the stringent lending terms.

He, however, said banks were willing to fund agriculture but had to recover their money so that the funding keeps revolving to benefit more farmers.

He said the situation could have been better if there was a warehouse receipt system to prove that the farmer had value stored somewhere to be used as collateral.

However, the warehouse system does not exist in the meantime.

A warehouse receipt system enables farmers to deposit farm produce, usually grains or tobacco, in exchange for a warehouse receipt.

The receipt is then issued by warehouse operators as evidence that specified commodities of stated quantity, quality and value have been deposited at a particular location.

The receipt can be used as security for loans.

“Farmers will have to apply for the loans from individual banks and these have different requirements. Some farmers who accessed loans before have diverted the funds and failed to pay back. This is the reason why we have non-performing loans.

“The stop-order system enables banks to recover their money easily. People who have registered with auction floors access resources better. Any farmer can make arrangements for a stop-order facility with his or her buyer so that the money is deducted,” he said.

Mr Biyam said the stop-order facility would benefit farmers in cases where they did not settle the debts after selling their crops as the banks may fund them the following season based on the existence of an orderly marketing system.

“Farmers who sell their produce through proper outlets will not have problems setting up a stop order system. We want to help farmers but they should also help us. It is unfortunate that the Grain Marketing Board no longer has a stop-order facility. The existence of a stop-order facility makes life easier for everybody,” he said.

He said some farmers with good credentials had already started benefiting from the $1billion facility.

“Some farmers have created a good rapport with their banks and collateral becomes a sideline issue. People should just learn to follow proper channels of doing things. For instance, many people are getting retrenched and will go into small and medium enterprises where they should have an orderly marketing system to remain in business,” he said.

The Zimbabwe Farmers’ Union director Mr Paul Zakariya, said tobacco growers would benefit from the fund and not grain and livestock farmers.

“The chances of grain and livestock farmers benefiting from the fund are very slim. The conditions outside the stop-order system are also prohibitive. Banks have continued to demand collateral, which is an asset outside the farm. Few farmers have title deeds to secure the loans and this is a limiting factor. It is a requirement by the Reserve Bank of Zimbabwe that all commercial banks should put collateral in the form of title deeds.

“For those few who will access the loans, the cost of borrowing remains high. While we applaud the move to reduce interest rates, our local lending costs remain unviable. Anything above 18 percent is not viable for agriculture,” he said.

Zimbabwe Commercial Farmers’ Union president Mr Wonder Chabikwa, said the stop-order system was only ideal for tobacco and cotton farmers who had an orderly marketing system in place.

“Most farmers who produce maize sell to middlemen. Even if they sell to GMB, the stop-order facility is no longer functional and this means the money will only be accessed by tobacco growers only,” he said.

“We appeal to Government to put in place the warehouse receipt system so farmers can use it as collateral. At the moment, few farmers will be able to access the fund from banks,” he said.

Government has said the country needs $1,7 billion to fund this year’s agricultural season.

President Mugabe through the Presidential Wellwishers Inputs Support Scheme, has over the years become the only reliable provider of farming inputs for poor farmers.