Home » Business » Bread Crisis Looms

ZIMBABWE is likely to reap one of its worst ever harvest of wheat this season, with estimates indicating the country could get a yield of 10 000 tonnes of wheat, or just a week’s worth of national demand. This production level represents a further slump from 24 700 tonnes of wheat harvested last year — an unhappy case for a country whose wheat output continues to plummet despite calls by government to increase productivity on the country’s farmlands and stem a haemorrhage in the economy.

Zimbabwe’s wheat production had soared to 325 000 tonnes before a land redistribution programme in 2000 disrupted farming activities. But it had been gradually falling ever since. Estimates from official sources indicated this week that the country could produce between 10 000 and 12 000 tonnes. The 10 000 to 12 000 tonnes expected this year is enough for one week’s supply of flour for bread. This means Zimbabwe would have to import at least 440 000 tonnes to meet the shortfall in national demand, forking out close to US$220 million for wheat imports at an import parity price of US$468 to US$500 per tonne.

This will take the country’s food import bill to over US$500 million, considering that Zimbabwe is already grappling with maize shortages. Two scenarios are likely to emerge out of this. Firstly, depending on where the country will source its imported wheat, there is a possibility that its landing cost could precipitate an increase in the price of bread. Currently, a loaf of standard bread costs US$1. Secondly, there could be scarcity of the commodity on the domestic market because of millers’ inability to secure sufficient quantities of wheat from external sources.

This comes at a time when the liquidity crunch in the economy, which ditched its own currency in favour of a hard currency regime in 2009 to escape a hyperinflationary scourge, badly needs to increase its stock of foreign currency to boost the ailing economy. But the wheat imports, which could have been avoided by ramping up production on the farms, mean that the country will have to export its limited stock of foreign currency, draining liquidity from the economy.

The current producer price offered by the Grain Marketing Board (GMB) is at US$466 per tonne, while some private buyers are offering US$440 per tonne of wheat. Last year, private buyers offered farmers between US$400 and US$450 per tonne, although farmers argued that considering the import parity price, a tonne should have been fetching US$500. Although the country has never produced enough wheat to meet national requirements, farmers used to produce in the region of 250 000 to 325 000 tonnes.

Bureaucratic setbacks, such as continued disturbances on farms, lack of funding to purchase seed and fertiliser, high costs of production and frequent power cuts of up to 18 hours a day, have all contributed to a drastic reduction in the planted hectarage. Wheat production decline was first noted in 2002 when output fell to 186 500 tonnes it has gradually declined to 564 550 tonnes in 2007 and 25 550 tonnes in 2008 at the height of hyperinflation.

After dollarisation, agriculture was the only sector that showed signs of recovery, yet food production is in decline. Last year, government figures showed that wheat production was at 24 700 tonnes, from 32 500 tonnes in 2012. Despite government’s assurance at the start of the planting season, the fall in wheat prospects reflects on the government’s failure to mobilise inputs and cheap lines of credit for farmers.

Agricultural expert, Charles Dhewa, said farmers had abandoned wheat farming and were now focussing on horticulture because of the high costs involved in wheat production “Wheat production requires consistent power supply for irrigation. Kariba, our main source of power, has not been able to produce enough power and the power station is always undergoing renovations. Most of the farmers who used to produce wheat have now resorted to horticulture -cabbages, potatoes, etc,” Dhewa said.

He added that huge imports of flour, both through formal and informal channels, had taken away the incentive for local wheat production. “South Africa and other countries are actually dumping wheat flour in Zimbabwe or porous borders are actually exacerbating this situation,” said Dhewa.

“It’s not even clear how much wheat we are consuming as a country due to policy makers’ lack of precise figures and statistics. If we no longer have a competitive aantage in producing wheat, it may be a good idea to import wheat while directing resources to what we can competitively produce. However, if we can prove that the cost of production is far lower than importing, we have to refurbish our infrastructure so that we produce our own wheat as well as for export,” Dhewa said.

For the 2014 winter season, farmers planted 6 000 hectares of wheat, compared to 10 000 hectares last year. At peak, about 65 000 hectares of wheat were planted. Dhewa remarked: “Just as smallholder farmers have taken over tobacco production, smallholders should be capacitated to venture into commercial wheat production provided the GMB and private buyers can offer good prices.”

“On the other hand, it’s no longer viable to focus on one crop like wheat. While policy makers and the media are worried about reviving wheat production, ordinary people have devised coping mechanisms. There are huge efforts to substitute wheat flour with sweet potato in bread. eMkambo ( an organisation that provides feasible solutions for the sustainability of agribusiness) has already assisted Gokwe farmers who have switched from cotton to sweet potatoes with a reliable market,” Dhewa added.

Commercial Farmers Union president Charles Taffs said the production crisis was not just about the wheat sector but the entire economy. “There are a whole lot of issues involved but it should be noted that wheat is irrigation and without irrigation there is no wheat. There is need for long term investment security and at the moment there is no such security in the country,” Taffs said.

It costs US$1 200 to grow a hectare of wheat in Zimbabwe against US$230 in Ukraine, US$580 in Russia and US$600 in Australia. “The whole value chain in wheat production is expensive to the extent that it is cheaper to land flour from Mexico than to buy local wheat,” Taffs added.

Source : Financial Gazette