HARARE – Government will maintain the $390 per tonne maize price under its Command Agriculture programme in the 2017/2018 agricultural season despite it being the highest in southern Africa.
Finance minister Patrick Chinamasa defended the price.
“You are quite right about raising opportunities for arbitrage, but we had to put in measures so that we minimise any opportunities for arbitrage,” he told delegates at the Institute of Chartered Accountants of Zimbabwe winter school in Victoria Falls last week.
“As we go forward, I promise, basically, the $390 per tonne for maize will be maintained for the current and for the 2017/2018 agricultural season, but we may need to start a debate on forms of subsidies.”
This comes as sustainability concerns have been raised, with the government’s Command Agriculture programme set to hike the country’s budget deficit by nearly $120 million if the Grain Marketing Board (GMB) continues paying farmers $390 a tonne for the maize.
Tafadzwa Musarara, chairperson of the Grain Millers Association of Zimbabwe (GMAZ), said his association was buying 800 000 tonnes of maize from the government for $194 million or $242, 50 per tonne.
At this price, the government is losing $147, 50 for every tonne of maize that it buys from the farmers and sells to the millers.
This comes as International Monetary Fund (IMF) deputy director of strategy, policy and review, Alfred Kammer, said the current funding model could not return Zimbabwe to its breadbasket status because of the fiscal implications of the Command Agriculture programme.
“Our analysis suggests that the current design of the programme creates significant fiscal risks and overall effectiveness could be improved by ensuring that the beneficiaries are those most in need,” he said.
“Excessive government spending, if continued, could exacerbate a cash scarcity, further jeopardise the external and financial sectors, and ultimately, fuel inflation in Zimbabwe.”
Government forecasts a growth of 21, 6 percent in the agriculture sector premised on the strong recovery in maize production which is expected to reach 2, 1 million tonnes from 0,5 million tonnes realised last year.
A good agriculture season implies reduced food import pressures which may help preserve foreign currency despite inflationary pressures on food prices.