Govt announces final wheat price . . . farmers want 100pc forex
FARMERS’ organisations yesterday implored Government to consider awarding wheat growers 100 percent of the producer price in foreign currency, arguing that the gap between the official bank and parallel market rates was continuing to widen with input stockists demanding payment in forex.
This comes on the backdrop of the Government announcing the final wheat marketing price of US$520, 25 per tonne payable in a split ratio of 75 percent in United States dollars and 25 percent in local currency. Earlier in the year Government announced a pre-planting wheat producer price of US$520 per tonne.
Zimbabwe Farmers’ Union (ZFU) secretary general Mr Paul Zakariya said: “The announced price represents US$390 and the balance of US$130 paid in the equivalent local currency. With the current interbank rate at around US$1 to $5 000 against the parallel market’s $7 000, this disadvantages the farmer as that amounts to a 30 percent prejudice. The US$130 is actually $91, 00, therefore US$390 plus US$91 will result in the final price of US$481 instead of US$520.”
Mr Zakariya added that the US$481 price was at the moment only fair for the productive farmer yielding above 4, 5 tonnes per hectare.
“It was going to be more fulfilling for wheat farmers to be paid 100 percent of the earnings in United States dollars in order to safeguard value. We encourage the off-taker to pay in full and on time,” Mr Zakariya pointed.
Zimbabwe Commercial Farmers’ Union (ZCFU) president Dr Shadreck Makombe concurred, saying 100 percent foreign currency payment was what farmers would have preferred.
“Given the current economic situation, we acknowledge and appreciate the 75 and 25 percent payment split method proposed by Government. However, we would want 100 percent to be paid in foreign currency like what is happening with other cash crops,” the ZCFU president said.
Dr Makombe added that self-financed farmers had the choice of sending their produce to the Zimbabwe Mercantile Exchange (ZMX) exchange, millers or to any other buyer as long as they are not contracted.
He added that Government’s price would act as a guideline.
Meanwhile, Stockfeed Manufacturers Association of Zimbabwe (SMAZ) executive administrator Dr Reneth Mano recently commented that wheat import parity price was around US$420 per tonne and urged the Government not to put the wheat producer price above US$450 to contain the local bread price around US$1 per loaf.
“Zimbabwe imported supplementary premium grade wheat from the Black Sea region through the port of Beira which will land in Harare at US$400 to US$420 per tonne. Thus, the Government should consider pegging the minimum guaranteed producer price for strictly premium wheat at no more than US$450 per tonne with a premium of US$30 over import parity price as an incentive for domestic production,” Dr Mano said.
Dr Mano said at 70 percent conversion factor any domestic wheat price above US$450 per tonne would make the country’s flour very expensive at US$650 necessitating imports of at least 40 percent of the cheaper wheat from Black Sea region in order to keep bread prices affordable at no more than US$1 per loaf.
The September 22 quoted prices for Johannesburg Stock Exchange (JSE)/South African Futures Exchange (SAFEX) Futures Grain Market Contracts for deliveries in October 2023 through December 2024 show that the average free on board (FOB) in South Africa (SA) was US$344 for the period October to December this year.
“If the country is to import from SA it will land in the country at around US$460 per tonne. SA is net importer of premium wheat from Black Sea region (Russia, Ukraine, Lithuania).
This year the country is expecting a record-breaking wheat harvest of over 420 000 tonnes from last year’s 375 000 after it registered a 11 percent rise in area planted from 80 885 hectares to 90 192.