By Ndafadza Madanha
MIXED reactions have characterized the new producer prices for various crops announced by government yesterday.
Government set the producer price for maize & small grains at RTGS$726 per metric tonne, soyabean RTGS$918 and cotton RTGS$1950.
Further government approved a 38.5% subsidy to millers in order to prevent increases in the retail prices.
Zimbabwe Farmers Union (ZFU) director Paul Zakariya said it was too early for them to make pronouncements on the new prices as they are assessing impact on the various farming groups.
He said most analysts viewed farmers as a generic group yet they could be split into communal, small scale commercial and commercial farmers.
“What we actually doing is going back and looking at our crop budgets and assessing if it makes sense for the farmers.
The mistake most make is they look at farmers as a generic group but we are looking at them as communal, small scale commercial and commercial. What the new prices mean to the various farmers depending on size is different.
Ideally production cost should be recovered and a farmer should be left with a margin to return to the field. Hopefully by the end of day tomorrow we shall have completed our assessments and make informed positions”
However, renowned agricultural economist Peter Gambara writing on the micro blogging site Twitter said the news prices will not allow the farmer to return to the field.
“The cost of production is now RTGS$4,286/ha & at a yield level of 5t/ha, that means RTGS$85724/tonne. Give farmers a 30% return, & the produce price should be around $1,100/tonne. In a drought year like this, they deserved even more. Only desperate ones will deliver to GMB.
Also the world maize price is at US$166.74, which translates to RTGS$630.80, before one ships it from say Mexico. Add the cost of shipping, it will land here at way above RTGS$726.00/tonne. It’s not the fault of farmers that Gvt triggered price increases of inputs in Oct 2018.
Third way is to say last year’s producer price of $390/tonne was in US$ and therefore if we multiply that by the official exchange rate of 1:3, it means the producer price should now be RTGS$1,170/tonne. If Telone/Delta used the same reasoning, the why shouldn’t we use it now?”
Gambara said the 38.5 subsidy extended to millers should have gone to the farmers to cushion them against the rising cost of production that came about through the monetetary and fiscal pronouncements.
“And who benefits from a 38.5% ($280/t) maize subsidy to Millers? Assuming GMB buys 1.5 million tonne, that translates to RTGS $420 million & which could have been channeled towards the farmer to access cheap fertilizers, chemicals & seed thru the manufacturing/seed companies.”