Zimbabwe forecasts near-record maize harvest, but govt faces daunting Z$65bn grain purchase bill

FILE PHOTO: Resettled farmer Mike Madoro stores maize harvested on his six hectares of land near Chinhoyi (pic: REUTERS/Philimon Bulawayo)

Government expects this year’s maize harvest to be as high as 2.8 million tonnes, Cabinet said on Tuesday, a haul which would be the country’s second biggest ever.

Last year, the country harvested 908,000 tonnes of maize, leaving a shortfall of more than 1 million tonnes. The country has received above-normal rain during the 2020/21 summer cropping season. Zimbabwe’s biggest harvest on record was in 1984, when the country produced 2,952 tonnes of the staple grain. The post-land reform peak was 2,156 million tonnes from the 2016/17 season.

Announcing the forecast after its weekly meeting yesterday, Cabinet said it plans to purchase 1.8 million tonnes of the maize harvest and 200,000 tonnes of small grains, which would cost Z$65.2 billion (US$776 million).

Last December, the government set the producer prices of maize and small grains at Z$32,000 and Z$38,000 per tonne, respectively. The government’s grain prices are significantly higher than the import parity price.

The 2021 budget only set aside Z$8 billion for the strategic grain reserve and another Z$500 million for Silo Foods, a commercialised unit unbundled from the Grain Marketing Board (GMB) in 2019.

It is unclear how the government plans to fund the GMB’s grain purchases. 

“Cabinet was informed that although the Ministry is awaiting the results of the First Round of the Crops and Livestock Assessment later in March, 2021, for planning purposes an estimated national production of 2,5 to 2,8 million metric tonnes of maize an 360 000 metric tonnes of traditional grains has been based on the promising bumper harvest in 2021,” Cabinet said in a statement.

“On the basis of the afore-stated estimates, deliveries to the GMB are expected to be 2 million metric tonnes of cereals (that is, 1.8  million  metric tonnes of maize and 200 000 metric tonnes of traditional grains).”

Maize subsidies

Zimbabwe’s annual maize consumption is about 1.8 million tonnes of maize, with an additional 450,000 tonnes required for livestock, according to the government.

In 2020, the government was forced to delay plans to scrap the grain subsidy following a devastating drought and an economic crisis made worse by the COVID-19 pandemic.

Before that intervention, finance minister Mthuli Ncube had planned to ensure that the GMB sold grain to millers at market prices.

Should the government follow through on this and benchmark the GMB maize price to millers on a cost-recovery basis, this could make the staple grain expensive, compared to regional prices.

Zimbabwe plans to introduce an agriculture commodities exchange this year, which would end the GMB’s 20-year grain monopoly.

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