Grain marketing explained

Word from the market with AMA

The country is gearing up for the 2022/2023 agricultural season. Harvesting of the 2022 winter wheat has also commenced for the early crop. It is all hands on deck to ensure yet another successful agricultural season.

Calls have been made by stakeholders for clarity on the marketing of grains and other oil seed products.

The purpose of this article is to provide a clear and concise guide on the marketing of grains in Zimbabwe to enable farmers, contractors and other stakeholders to make informed decisions. Basically, grains are crops such as maize, wheat, barley, sunflower and soyabean. The list also includes traditional grains such as finger millet, rapoko and sorghum.

It is important to note that maize, soya-bean, wheat and barley are controlled products in terms of the Grain Marketing (Control of Sale of Maize) Regulations, 2019 (Statutory Instrument 145 of 2019), the Grain Marketing (Control of Sale of SoyaBean) Regulations, 2021 (Statutory Instrument 97 of 2021) and the Grain Marketing (Control of Sale of Wheat and Barley) Regulations, 2021 (Statutory Instrument 188 of 2021), respectively.

The effect of these regulations is that certain restrictions apply on the marketing of the crops.

Essentially, permits are required to move these crops from one point to the other and there are also sale restrictions depending on the scheme of production.

Financing of production

The marketing of grains is based on the production scheme. The Government’s thrust is for heightened private players’participation in the production of agricultural products and in particular, grains. The current policy is that industrial players should finance at least 30 percent of their raw material requirements.

As an example, companies such as National Foods or Delta Beverages, which are into manufacturing, must ensure that they support the production of the necessary raw materials through contract farming arrangements. There are basically four forms of financing arrangements for grains production in Zimbabwe, namely, contract farming by private contractors; the Government-supported programme Pfumvudza/ Intwasa; the National Enhanced Agricultural Productivity Scheme (NEAPS), formerly known as Command Agriculture; and self-financed farmers.

In contract farming, private contractors enter into volume-based contracts with farmers, whereby inputs and the necessary extension services are supplied to the farmer. In return, the contractor will recover the investment from the yield.

The Pfumvudza/Intwasa scheme is a climate-proof initiative supported by the Government. NEAPS is mainly administered by CBZ Agro-Yield and the AFC Land and Development Bank. Self-financed farmers pay for their own production from free funds. These farmers are now categorised as contractors for marketing purposes and must, thus, register with the Agricultural Marketing Authority (AMA) as such.

Marketing of grains

Marketing of the grains produced under the above production schemes differs. All farmers who produce under the Pfumvudza/Intwasa scheme and NEAPS must deliver their produce to the Grain Marketing Board (GMB). Contracted farmers must deliver their produce to the respective contractors, in accordance with the terms and conditions agreed on in the contract.

Contractors must obtain grain movement permits from GMB. Self-financed farmers are allowed to market their produce freely, but must also obtain movement permits from the GMB.

To curb side-marketing, self-financed farmers are required to be cleared by Agricultural and Rural Development Advisory Services and AMA. This is done to check on other obligations they may have, either to the Government or private contractors, before movement permits are issued.

In terms of pricing, the Government announces prices for the grains that are delivered to the GMB. The pricing is on a cost-plus basis, whereby the cost of production is taken into account and a margin is added. In private contract arrangements, parties agree on an off-take pricing applicable, depending on certain variables such as type of crop and support level.

For this winter wheat season, contractors shall be issued with bulk permits by GMB based on yield or output from the registered data. The bulk permits are dispatched to various GMB depots, where goods dispatch vouchers are issued to individual trucks transporting the wheat.

AMA is calling on all contractors and self-financed farmers to register before the commencement of the 2022/2023 farming season. Registration is done online at www.ama.co.zw.

◆ This article was written by Peter Mudzimiri, AMA head of compliance and corporate secretary. Feedback cchiduku@ama.co.zw or WhatsApp +263781706212.