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(HERALD) Effects of sanctions on agriculture

Effects of sanctions on agriculture
Sunday, 13 March 2011 00:01 Agriculture
By Emilia Zindi

WHILE a lot has been said about the effects of sanctions on some sectors of the economy, not much focus has been placed on how the illegal embargo has adversely affected the agricultural sector which has been described as one of the cornerstones of Zimbabwe’s economic recovery.

Stakeholders in the sector met in Harare last week to discuss the effects of the illegal Western sanctions and agreed to send a strong message to the perpetrators that without the removal of the blockade, the Zimbabwean population is likely to continue suffering as almost every industry depends on agriculture.

Far from the claim that sanctions in Zimbabwe are ring-fenced and targeted at a few individuals, the reality on the ground is that the tight grip of the declared and undeclared sanctions is being felt throughout the entire economy, with the farming sector not being spared.

Zimbabwe Commercial Farmers’ Union president Mr Donald Khumalo said the Western-imposed sanctions on Zimbabwe had a negative impact on the key sector which had been unable to secure lines of credit for recapitalisation.

“Zimbabwe needs to import raw materials to manufacture fertiliser as well as import chemicals for use in the sector. This has not been the case since the imposition of the illegal sanctions in 2001,’’ he said.

He said that during the Zimbabwe dollar era, the country could not mobilise enough foreign currency to import raw materials to manufacture fertiliser, resulting in a shortage of the product on the market.

This naturally led to an increase in prices of the commodity on the local market, leading to high cost of production on the farms.

“This could be evidenced in the 2008/09 season where a bag of compound D fertiliser was selling for US$55. Our farmers therefore could not compete on the international market owing to high production costs,’’ said Mr Khumalo.

He said when the country moved to the multi-currency economy at the beginning of 2009, there was no money to recapitalise all sectors of the economy, including key ones such as agriculture.

The country could not secure off-shore funding to resuscitate agriculture owing of the sanctions.

Major international banks began demanding a 10 percent premium on all Zimbabwe-destined loans. Some demanded letters of guarantee or credit before releasing goods to Zimbabwe with a lot of agricultural equipment suppliers being reluctant to release their products to Zimbabwe.

“The agriculture sector has therefore not been able to recapitalise and a lot of our farmers are still using old technology, tractors and equipment to the detriment of production,’’ he said.

Some programmes aimed at enhancing forestry extension services, development of agricultural policy, marketing information systems, supporting irrigation schemes, the provision of training to smallholder farmers, and direct support to farming households to assist them in income-generating activities, were also suspended as a result of the sanctions.

Sanctions had also deprived Zimbabwe of established European markets for floriculture and horticulture products.

Previously, farmers exported flowers to the Netherlands as well as horticultural produce to the United Kingdom markets which have since been closed due to the illegal sanctions.

Political analyst and farmer Cde Alexander Kanengoni said the major impediment to the recovery of the sector was a lack of lines of credit.

He said some financial institutions operating locally but headquartered in the West did not even want to be associated with the agriculture sector.

“Some of the banks which were known to be land banks during the colonial era have totally refused to finance agriculture despite the huge reserves they hold in their institutions. They are doing so in line with calls from their masters not to fund farming operations,’’ said Cde Kanengoni.

He said production costs for local farmers had continued escalating owing to the high cost of inputs such as seed and fertiliser.

Regionally, Zimbabwe last year had the highest fertiliser prices at an average of US$30 per 50kg bag compared to US$7 in South Africa and Malawi.

“Our farmers are failing to break even because they are getting their inputs at high prices while they realise nothing at the end of the selling season,’’ he said.

While the mechanisation programme launched by the Reserve Bank came as a relief to farmers, the equipment was inadequate as only a total of 5 000 tractors were released out of the sector’s requirement of 50 000.

“Had it not been for this mechanisation programme, all farming activities we see now would have totally collapsed as under normal circumstances, equipment replacement is done after every five years,’’ said Cde Kanengoni.

He said many farmers were failing to utilise the land because the conditions under which the sector is operating are not favourable.

“As long as the sanctions continue, there is no way we expect farmers to perform miracles. In fact, it is unfair to assess the productivity of farmers under the illegal sanctions instead of emphasising of how best the sector can be assisted,’’ he said.

In a report, the Reserve Bank said multinational financial institutions including the International Monetary Fund (IMF) and the World Bank were not playing their role of ensuring international financial stability through the provision of bridging finance to countries experiencing balance of payment (BOP) pressures.

It was evident that the institutions had strayed from their core mandate under political pressure.

Before the watershed land reforms in Zimbabwe, the world was silent about the unsustainable and racially skewed ownership and distribution of national wealth.

“Sanctions against Zimbabwe and indeed any other country are a declaration of war on a sovereign state, which puts the economy under siege, with debilitating downstream effects on the vulnerable groups and civilians at large,’’ reads part of the Reserve Bank report.

The economic warfare against defenceless countries manifests itself through the cancellation of life- supporting projects, humanitarian assistance and infrastructural development support which exacerbates the plight of the impoverished.

It is now very clear that economic sanctions against Zimbabwe and other affected countries have resulted in deteriorating standards of living, with per capita incomes being reduced to a mockery.

Apart from the negative impact on agriculture, the declared and undeclared sanctions have claimed the lives of innocent children and the physically handicapped through denial of medical equipment, drugs and food.

The Reserve Bank report says sanctions have traditionally been applied against certain countries to achieve desired political and economic outcomes.

These encompass the imposition of embargoes, trade and financial restrictions and diplomatic isolation.

In recent years, the coverage of sanctions has widened to include other elements that were not directly linked to trade and commerce such as culture and sports.

The report says the economic sanctions entail the withdrawal, or threat of withdrawal of trade and financial relations, including technical co-operation.

Sanctions had limited the country’s exports and restricted its imports through an array of trade barriers.

South Africa, Iraq and the then Rhodesia are some of the countries that once had trade sanctions imposed on them as the international community sought to influence political change.

The Government has repeatedly pointed out that sanctions have denied Zimbabwe access to foreign lines of credit which ordinarily finance external trade.

The market for the country’s exports has also shrunk as export competitiveness has crumbled under adverse perceptions.

In addition, sanctions have attracted a high risk premium on the few available offshore lines of credit and have thus scared away alternative creditors.

In apparent support of the sanctions, some non-governmental organisations have stopped humanitarian operations in Zimbabwe since the enactment by the United States of the Zimbabwe Democracy and Economic Recovery Act of 2001.

The majority of NGOs that receive funding from Western governments have realigned their policies in consultation with their sponsors and they have either withdrawn their programmes or frozen further development assistance for Zimbabwe.

Donor funding has now been limited to humanitarian aid for health and social issues with most of the money going towards HIV and Aids programmes and so-called human rights advocacy, leaving out key areas such as the agricultural sector. -The Sunday Mail

Labels: AGRICULTURE, SANCTIONS, ZDERA

posted by MrK @ 2:00 AM