The minimum producer prices for Zimbabwean wheat have been raised 26 percent to $55 517,69 a tonne for ordinary grade, up from $43 778,84, and $66 621,22 a tonne for premium grade, up from $52 534,61, as the country heads towards a record harvest that will give close to 85 percent self-sufficiency.
With wheat stocks of 70 000 tonnes before harvest starts this week, Zimbabwe is now in a position to harvest enough wheat to carry it through, without further imports, to next year’s harvest.
The price adjustments cover the costs of inputs and production with an expected profit margin of 15 percent for the average farmer, this providing a reasonable return for wheat farmers and ensure they will be producing again next season.
The Cabinet approval of the new floor prices was announced by Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa after yesterday’s Cabinet meeting.
Farmers start harvesting this week and with adequate irrigation, uninterrupted power supplies for the irrigation, and the input support measures put in place by Government — a record crop is expected, bringing Zimbabwe close to 85 percent self-sufficiency and cutting imports significantly.
Minister Mutsvangwa said Cabinet approved the proposal of an upward review presented by Lands, Agriculture, Fisheries, Water and Rural Resettlement Minister Anxious Masuka, as the acting chairperson of the Cabinet Committee on Food Security and Nutrition.
“Zimbabwe is anticipating a volume of more than 300 000 tonnes of the cereal, against a national annual requirement of 360 000 tonnes.
“This is on the backdrop of the current national wheat stocks which stand at 70 000 tonnes, making Zimbabwe wheat self-sufficient for the first time since 2005,” she said.
“Following extensive consultations with various stakeholders, including farmers’ unions, Cabinet has approved an upward review of the wheat floor producer price to $55 517,69 per tonne for ordinary grade wheat at a 15 percent return on investment, and $66 621,22 per tonne for premium grade wheat during the 2021 marketing season.
“This will enable farmers to go back into production.”
She said the higher producer prices were necessitated by changes in input prices which in turn resulted in higher production costs.
“Farmers expect viability in their operations, and are grappling with cost increases in labour (51 percent); fertilisers, both Compound D and ammonium nitrate (27 percent); and tractors and equipment (144 percent).
“The input increases have a net effect of a 32 percent increase on the total variable cost per hectare.
“The net contribution of inputs to total wheat production costs in 2021 is as follows: Labour, 3,19 percent; seed, 5,14 percent; fertilisers, 26,15 percent; chemicals, 3,20 percent; and operations, 12,37 percent.
“The biggest driver of costs is the cost of borrowing which stands at 40 percent,” she said.
A viable producer price will incentivise farmers to deliver their wheat crop to the Grain Marketing Board. The GMB has made adequate preparations for the harvest. Additionally, Government will avail the requisite funds to pay for deliveries.
Harvesting of the wheat starts this week, and should be completed by the middle of next month. The current subsidy framework to millers will be maintained.
As with all crops under the Second Republic led by President Mnangagwa, Government put up a number of public and private financing arrangements for farmers.
Wheat was planted under the Presidential Inputs Scheme, National Enhanced Agricultural Productivity Scheme/Command/CBZ Agro-Yield and private sector finance.