ZIMBABWE – Zimbabwe has announced the liberalization of its grain trade, opening doors for increased private sector participation in a significant move towards enhancing food security.
The move was revealed by Graeme Murdoch, chairman of the Food Crop Contractors Association (FCCA), stating that the private sector will fund three-quarters of Zimbabwe’s wheat crop this year, playing a growing role in the agriculture sector.
The announcement comes after the recent move by the government to allow the Zimbabwe Mercantile Exchange (ZMX) to begin trading maize on the commodities market, ending the monopoly of the state-owned Grain Marketing Board (GMB) as the sole purchaser of maize and wheat.
FCCA consortium of local private players made up of commodity traders, off-takers, and millers who have been funding the production of crops since 2020.
According to Zawya, Murdoch revealed that About 76% of the planned 2023 wheat hectarage would be funded by the private sector, including the country’s biggest bank CBZ Holdings (CBZ-ZI), and the state-owned AFC Commercial Bank.
He added that the balance will be funded directly by the government through its various input support schemes as well as some self-financing farmers.
The move follows that, Zimbabwe has frequently struggled to feed itself since 2000, when then-president Robert Mugabe championed the seizure of white-owned farms to resettle landless Blacks.
However, after a record-breaking harvest of 375,131 tonnes of wheat in 2022, the government is targeting 408,000 tonnes this year.
The government data shows that in 2022, private firms under the FCCA spent $62.7 million to fund the production of 209,138 tonnes of maize, about 9% of this year’s total maize harvest of 2.3 million tonnes.
As a result, food production plummeted due to the exodus of skilled farmers and a lack of funding for those newly resettled.
The country also underwent through production crisis following the conversion of most farms into state land leaving the cash-strapped government struggling as the biggest funder of food crops.
However, sources report that President Emmerson Mnangagwa, who replaced Mugabe in a 2017 coup, has gradually opened the door for the private sector, including banks, to fund the production of staples such as maize, wheat, and soybeans.
“The reality is that as the environment becomes more liberalized, and the government makes every effort to essentially crowd in the private sector, which they have done more and more both in terms of the financing and regulation, we see more and more involvement of the private sector in primary agriculture,” said Murdoch”.