eBusiness Weekly
Enacy Mapakame
Agriculture production during the 2019/20 season is expected to remain subdued on the back of anticipated unfavourable weather conditions during the season, while high cost of inputs will also add a poser.
This is despite various Government support measures for the sector that oils the Zimbabwe economy.
Growth in the agriculture sector is mainly dependent on weather patterns and calls have been made by some stakeholders and industrialists for Government to put more efforts towards drought proofing the sector as well as cushioning it from other natural disasters such as tropical cyclones.
The Southern African Regional Climate Forum forecasts a normal to below normal rainfall patterns for Zimbabwe.
In their Zimbabwe 2020 Equity Strategy Report, brokerage firm IH Securities, sees the sector experiencing headwinds emanating from challenges such as unfavourable weather coupled with erratic power utilities, which already had a knock-on effect on cereals production last year.
“Improved performance in the agriculture sector is contingent on a desirable rainfall season, increased support towards rehabilitation and development of irrigation infrastructure to sustain agriculture activities, and an enabling economic environment.
“However, based on forecasts from the Southern African Regional Climate Forum, Zimbabwe is predicted to have normal to below normal rainfall patterns during the 2019/20 season, while electricity shortages and inflationary pressures are anticipated to persist.
“Therefore, we anticipate that production in the sector will remain relatively subdued in 2020, with predictions of an improved season in 2021,” said IH.
Already, the sector faces downside risks from the El Nino induced drought as well as Cyclone Idai, which hit some parts of the country during the 2018/19 season that caused loss of human lives, damage to road and energy infrastructure in some parts of Manicaland.
This caused disturbances to production and accessibility by companies operating in the areas affected, while crops were also damaged.
Farmers have bemoaned the increasing costs of inputs with companies like seed maker, Seed Co Limited reporting declines in sales volumes for the third quarter and nine months to December 31, 2019 as the market continued to battle waning disposable incomes together with unfavourable weather forecasts.
For Seed Co Limited, volumes fell 3 percent for the third quarter and 24 percent while for the nine months compared to same period in the prior year. The group anticipates full year volumes to be below prior year, painting a gloomy picture.
Additionally, indications are that Government reduced its seed uptake.
IH said: “We expect a reduction in maize production due to the drought and lower hectarage to be planted due to rising input costs.”
This comes as the country is already facing mealie meal shortages. The World Food Programme estimates that 4,1 million vulnerable people will need access to food aid in Zimbabwe as production significantly went down during the last farming season.
It is estimated that maize production fell to 777 000 tonnes from 1,8 million tonnes recorded in the prior season. This is against a national requirement of approximately 2,2 million tonnes of maize annually, for both human and animal consumption.
The obtaining power challenges and poor irrigation facilities saw wheat production fall 62 percent to 60 000 tonnes last year from 160 000 tonnes in 2018.
While the National Wheat Contract Farming committee aims to stimulate wheat production in a bid to acquire a minimum of 150 000 tonnes for the next three years, the prevailing economic challenges affecting the entire sector will dampen the prospects.
“Based on the current unconducive economic environment, which is characterised by rampant inflation, foreign currency shortages and below average rainfall, it is our view that production will decline to less than 60 000 tonnes during the 2020 season.
“Accredited to the poor harvest during the 2019 season, and against a national demand of 450k tonnes, over US$240 million will be utilised on wheat importation, while the Grain Millers Association has already purchased 30 000 tonnes of wheat from South Africa to minimise the wheat deficit,” said IH.
Last year, tobacco, which is the second single foreign currency earner after gold experienced an underwhelming season, falling by 44 percent, a trend likely to continue this year if the issue of pricing, liquidity and foreign currency retentions are not addressed. This will negatively affect export receipts.
Outside, these challenges, tobacco production remains promising for contracted farmers particularly those with irrigation.
Agriculture accounts for 33 percent of export revenue and is strongly export-oriented, with an export output ratio of 39,4 percent.
The sector accounts for an estimated 70 percent of the raw materials required in the manufacturing sector and as such plays a critical role to industry activity.
