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Editorial Comment: Millers must invest in bread value chain

13 Dec, 2018 - 00:12 0 Views
Editorial Comment: Millers must invest in bread value chain

The Herald

There is no doubt that wheat is the second most important cereal crop after maize in the national food basket of Zimbabwe and national leadership, farmers and companies should prioritise its availability.

Since the country is in overdrive for import substitution, producing wheat locally is likely to result in huge foreign currency savings that can be rerouted to other priorities in the economy.

The national annual wheat/flour requirement has remained at about 350 000 tonnes and over the years, Zimbabwe has been producing less than a quarter of this. One can imagine the amount of savings if Zimbabwean farmers could produce the import deficit locally.

Unfortunately, that is not the case and there are many reasons why Zimbabwe continues to spend millions in foreign currency to import the commodity.

Bread and other products are, however, sold to Zimbabweans at exorbitant prices despite the bakers getting foreign currency from the Reserve Bank of Zimbabwe.

Briefing journalists on Tuesday after a Cabinet meeting in Harare, Government spokesperson and Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa said the wheat producer price for the 2018-2019 agricultural marketing season had been raised to US$630 per tonne, from US$500.

However, questions are being asked whether continuous review of the producer price of wheat can incentivise the farmers to produce enough or more needs to be done.

There is another school of thought that it is difficult to grow wheat suitable for bread-making under Zimbabwean climatic and weather conditions, but if Government insists on substituting the imported wheat, then regions where climate is possible to produce hard wheat should be found.

The exciting news is a local seed company has done extensive studies and concluded it is viable to produce bread-making wheat in Zimbabwe and in the process save millions in foreign currency.

Government has done its part by constantly reviewing prices for farmers’ businesses to remain viable and we think it is time for the private sector to play ball.

The seed house claims return per dollar invested for wheat by farmers, everything being equal, is about $2-$3 under high productivity levels. After investing about $2 000/ha, a farmer can receive a total income of about $4 000 (at eight tonnes/ha and $500/tonne before the price review).

To a serious farmer, eight or more tonnes of wheat per hectare is real business that should not be missed.

Moving forward, given that wheat can be grown profitably in Zimbabwe, we feel the penchant for foreign currency by millers to import wheat should end.

It’s time millers take control of bread-making value chains and invest in processes leading to the final product.

Failing to control value chains and eliminate unnecessary middlemen is likely to see unscrupulous people benefiting through speculative interventions and arbitrage, much to the disadvantage of the final consumer.

The following proposals by the Government to ensure sustainable production of wheat should be taken seriously by the private sector to avoid them being crybabies asking for foreign currency from Government on monthly basis.

1) That grain millers and bakers be facilitated to venture into wheat production for their specific needs.

Government can facilitate that the millers and bakers be given land to grow their own wheat in recommended regions until a time local farmers fully take charge and are able to produce the commodity at lower price.

There is nothing wrong in milling companies and bakers  using their agronomy sections to spearhead the growing of wheat.

2) That appropriate schemes be instituted to encourage farmers to venture into wheat production and that a programme be undertaken to systematically address the high cost of locally produced fertilisers and other inputs to render local products competitive.

We are of the view that subsidies should not be extended at the marketing level of the crop, but at production level through the provision of cheap fertilisers, seed, chemicals, water and electricity.

By so doing farmers should be able to produce more per hectare, enjoy economies of scale and benefit from the sale of more units than price per unit.

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