ZIMBABWE – Farmers’ organizations in Zimbabwe have implored the Government to consider awarding wheat growers 100 percent of the producer price in foreign currency in order to safeguard value.
This comes on the backdrop of the Government announcing the final wheat marketing price of US$520, 25 per tonne payable in a split ratio of 75 percent in United States dollars and 25 percent in local currency.
According to them, the call for 100% USD payment intends to bridge the gap between the official bank and parallel market rates which is continuing to widen with input stockists demanding payment in forex.
Zimbabwe Farmers’ Union (ZFU) secretary general Mr. Paul Zakariya said: “The announced price represents US$390 and the balance of US$130 paid in the equivalent local currency.
He noted that, with the current interbank rate at around US$1 to $5 000 against the parallel market’s $7 000, this disadvantages the farmer as that amounts to a 30 percent prejudice.
The US$130 is actually $91, 00, therefore US$390 plus US$91 will result in the final price of US$481 instead of US$520.” Mr. Zakariya said, adding that the price was only fair for the productive farmer yielding above 4. 5 tonnes per hectare.
Dr. Shadreck Makombe, Zimbabwe Commercial Farmers’ Union (ZCFU) president concurred, saying 100 percent foreign currency payment was what farmers would have preferred.
“Given the current economic situation, we acknowledge and appreciate the 75 and 25 percent payment split method proposed by the Government. However, we would want 100 percent to be paid in foreign currency like what is happening with other cash crops,” he stated.
Recently, Dr. Reneth Mano, Stockfeed Manufacturers Association of Zimbabwe (SMAZ) executive administrator urged the Government not to put the wheat producer price above US$450 to contain the local bread price of around US$1 per loaf.
Thus, the Government should consider pegging the minimum guaranteed producer price for strictly premium wheat at no more than US$450 per tonne with a premium of US$30 over import parity price as an incentive for domestic production.
Dr. Mano said at 70 percent conversion factor any domestic wheat price above US$450 per tonne would make the country’s flour very expensive at US$650 necessitating imports of at least 40 percent of the cheaper wheat from the Black Sea region.