Govt maize subsidy boon for economy • . . . saves $300m in grain import costs • Experts dismiss $120m budget deficit claims

MAIZESydney Kawadza Senior Reporter
STAKEHOLDERS have dismissed reports that Government efforts to subsidise maize productivity through programmes such as Command Agriculture could increase the budget deficit by $120 million.

Reuters originated the story that was carried by some sections of the media over the weekend.

Government is paying farmers $390 a tonne for maize delivered to the Grain Marketing Board (GMB), while millers would in turn buy 800 000 tonnes of maize from the State for $194 million this season.

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This translates to a subsidised price of $242,50 per tonne for the millers.

Analysts say the $120million subsidy cannot be equated to the over $300 million Government saves on grain imports, courtesy of the special import substitution programme, Command Agriculture.

Grain Millers Association of Zimbabwe chairman Mr Tafadzwa Musarara concurred saying there was nothing untoward with the subsidy.

He said Government was also delivering on its constitutional mandate to provide food for citizens.

“First and foremost, food is a right, especially staple food. Secondly, you should understand that Section 15 of our Constitution puts a mandate to our Government to ensure food security for everyone, for every Zimbabwean, whether, he or she is disabled, hardworking or not, lazy or not,” he said.

Mr Musarara said Government did the same during drought seasons.

“How much food was given to the people as free food or food relief? And if it’s a cost, then, are you going to argue that Government spent nearly US$300 million to feed the people.

“There is nothing extra-ordinary to what Government has done. It’s practiced in many countries,” he said.

The subsidies, he said, could be in the form of interest-free loans or price bonuses funded through the fiscus to ensure farming becomes viable.

“If you can’t produce food for the people, its either you buy or you grow,” he said.

“If Government did not do that, it means they would have imported the food from outside the country to give the people for free while turning able-bodied people into charity cases.”

Mr Musarara further argued that there was no need to put a profit and loss measure on Government delivering on its people’s rights.

He said subsidies would ensure Government arrests inflation which could be triggered by higher maize prices for the millers.

“If we are to take the $390 as coming from farmers, we reduce the price of maize-meal, the price of stockfeeds and by extension prices of milk, price of beef, chicken pork and all that is fed from maize which could probably rise by 40 percent.

“Food itself contributes 30 percent into the national inflation basket and if we don’t arrest these then we will have higher inflation.”

Mr Musarara said maize prizes had a domino effect on all prices as it is a bigger commodity to the national economic matrix.

The European Union and United Kingdom subsidise production through the Common Agricultural Policy (CAP) which covers farming, environmental measures, rural development and the policies that control how Europe trades with other countries.

The bloc spends 40 percent of its budget on CAP while the UK spends about 4 billion pounds of taxpayer’s money on agriculture annually on the policy.

The money is spent on propping up systems of farming that are bad for the environment and for farmers.

This is also expected to help shift UK and EU agriculture to more extensive, low-input farming that provides jobs in rural communities and safe, healthy food for the citizens.

The Zambian government last year used subsidies to pay farmers US$220 per tonne while local millers bought it for US$140.

“That means their Government bought the maize at a higher price from their farmers while selling at a lower price to the millers,” he said.

Sociology lecturer at the Women’s University in Africa, Dr Innocent Mahiya said subsidies are common practice across the world.

“All the countries which have managed to register successes in agriculture, behind, there is Government subsidy. If you look at America, if you look at some countries in Europe, you will realise that the success of their agriculture has emanated from government support which are literally subsidies,” he said.

Dr Mahiya said for years, there was a funding gap in the agricultural sector especially for communal farmers.

“For instance, if you read literature, you will realise that communal and small-scale farmers are the people who actually feed the nation because they have an interest in the production of the staple food, which is maize, in our country.

“Our commercial farmers are busy producing cash crops which generate a lot of money. So, you will realise that these communal farmers have not been supported sufficiently by the Government and they have not been sufficiently producing for the nation,” he said.

He questioned why there was no probe on the cost of importing maize in cases of deficits.

“I would like to challenge the economists to say, ok, if our farmers are not subsidised, whether through Command Agriculture or any other government initiative. What would be the cost of importing the maize?”

Tanzanian-based analyst Mr Tafadzwa Mugwadi reiterated that it was the mandate of Government to subsidise such basic productive sectors to achieve food self-sufficiency.

“Anyone who is against such a noble initiative is regrettably living and oriented in the past where disastrous policies such as the International Monetary Fund-driven economic structural adjustment programme (ESAP) which forbade Government spending on basics, were celebrated.

“More so, in its electoral manifesto which eventually transformed into the Zim-Asset policy programme, Government swore to ensure total food self-sufficiency for the people under the Food and Nutrition cluster,” he said.

He said the people who celebrated Zimbabwe’s food woes feel humiliated by the success of such Government programmes.

“The world over, even in view of the contemporary G20 summit, there are violent demonstrations against anti-liberal, anti-austerity measures because such will be characteristic of anti-people policies such as ESAP,” he said.

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  • kutototo

    In short you are saying that the government is buying maize from farmers as $390 per tonne and selling it at $147.50 per tonne to millers, way below the regional average price of $240 per tonne, ummm parohwa bag apooo. On the other hand simple logic dictates that if you provide a subsidy of $120 million dollars which was not provided for in the budget you end up with an increase of $120 million on your budget deficit, I don’t know why your analysts are failing to get this.

  • Maverick Entrepreneur

    If I am a miller I will buy the maize at 242 per tonne then sale it back to GMB at 390 per tonne and will do it over and over again. One truck richibuda paGMB nechibage rongobuda panze I transfer the maize into another truck and go back as farmer and sale my maize back to the same entity. It is surely more profitable than incurring overheads for milling and wait for masales ehupfu.