Pre-planting prices help farmers build confidence

Obert Chifamba

Agri-Insight

THE Grain Marketing Board (GMB) recently announced the pre-planting producer price for maize and other grains.

The  pre-planting price for maize and traditional grains is pegged at US$335 per tonne.

Many stakeholders I talked to were satisfied with the figures though they seemed to share a common sentiment, the timing of the announcement was a bit belated, and therefore did not contribute much to their planning processes.

Essentially, the announcement of a pre-planting producer provides farmers with pointers to the potential income they can expect from a crop before they even start planting.

They can make informed decisions about what to grow, how much to plant, and how to budget for their farming operations, thus encouraging them to invest in the necessary inputs and plan their planting strategies effectively.

This also gives them a sense of financial security way before the season advances.

The pre-plating price gives farmers motivation to either commit more or less land towards a particular crop if the price is favourable.

Although the eventual price may turn out to be even more or less than the initially announced figure due to various developments during the season, the fact remains that it would have allowed them to accurately estimate their costs and potential profits, which helps them plan their planting strategies and manage their finances effectively.

The price also helps farmers to make informed decisions on whether to invest in specific crops based on their profitability potential.

On the one hand, farmers can choose, which crops to cultivate based on the announced pre-planting prices, potentially maximising their income.

It is also a reality that a stable pre-planting price can enhance a farmer’s ability to secure loans from financial institutions to cover planting costs.

If properly communicated, the pre-planting price can build confidence in the market and encourage farmers to actively participate in production.

This gives credence to the farmers concerns.

Their sentiments make sense given that such an announcement has the potential to influence even the hectarage a farmer may later choose to commit to a particular crop.

It is a decision that allows the farmer to make accurate budgeting and resource allocation.

Some of the farmers I talked to feel they have missed out because they had committed not much land to some of the crops, for instance, under the traditional grain bracket although there are such factors as their natural agro-ecological region to take into account.

One other observation I made was that GMB did not announce the percentage ratios for both the US dollar and the local ZiG components, which leaves the farmers in yet another quandary.

The mere announcement of prices in US dollars leaves them wondering how much they will be pocketing for either currency or even jump to make their own conclusions.

Soon the country will be entering the 2025 tobacco marketing season and the crop’s producers are eagerly waiting to hear the dates and the retention percentage as well.

Like always, the run-up to that stage of the crop’s production process is punctuated by a little bit of everything ranging from huge expectations to high levels of anxiety on the part of farmers.

This is so because farmers will all be hoping for a better season than the previous one and so the one thing they will all be waiting to hear is the foreign currency versus local currency retention percentage.

In recent seasons, Government has moved to ensure that farmers get part of their earnings in hard currency and the other in local currency.

This came about after an appreciation of the fact that most of the service providers the farmers deal with throughout the season quote their services in United States dollars making it unviable for farmers to get their entire packages in local currency.

 At the moment, tobacco farmers are naturally waiting for the announcement of the dates set for the opening of the floors and the general modalities that will be used throughout the marketing season.

The most important piece of information they are all eagerly waiting to hear is the retention percentage for both currencies.

Of course if it were their call to make, they would all say 100 percent is the real deal but the dynamics in the economy do not allow that at the moment.

Tobacco is known to generate foreign currency for the country and during the marketing time, liquidity in the economy usually improves and many other sectors also benefit.

It does not require rocket science, therefore, for anyone to realise that the crop also has a big role in the recovery of other vital sectors that require the foreign currency component even if they do not generate it.

For now, all eyes are on the Reserve Bank of Zimbabwe (RBZ) to announce the retention percentages for both maize and tobacco, which will enable farmers to start working on possible budgets for the next season.

This is critical, especially for the self-financing group that does not rely on either contractors or the Government for crops like maize and traditional grains that are produced using resources under various support schemes.

This does not, however, mean that they do not need that information – they do because most of them also do some self-financing for other crops they produce to broaden streams of income.

The ‘farming as a business’ winds currently sweeping across the country have created businesspeople in farmers who now always want to optimise on existing opportunities or even create them where they do not manifest naturally.

Given such a scenario, it is important for the farmers to start planning even before the start of the marketing season, which is possible when they have a rough idea and estimations on possible earnings their produce may fetch.

Every farmer can use the quality of her leaf to estimate her possible earnings if there are no rude shocks awaiting to surprise her in the market.

If reports that global tobacco production has dropped a bit because of climate change challenges, then our farmers will have every reason to expect decent if not bumper earnings this time around, so a little forward-planning is not bad.

No one will dispute the fact that there is no planning that does not require the financial factor to be incorporated.

It now remains to be seen how the impending tobacco marketing season will turn out and may fairness mark the order of the day so that farmers get what is due to them after a season’s hard toil.