Author: TSA Press

According to a second crop and livestock assessment report released by the Ministry of Agriculture, the estimated maize production stands at 776 635 tonnes, which is 54% less than the 1 700 702 tonnes obtained during the 2017/18 season.

In addition to false season starts in some parts of the country, long dry spells in January and February also negatively affected the planted crop.

“Cereal production is 851 844 tonnes against a national cereal requirement of 1 754 225 tonnes for human consumption,” reads the report.

The poor harvest will leave most families without adequate food supplies. The country requires at least 1,8m tonnes of maize per season.

Out of the 60 administrative rural districts in the country, 11 (18%) have enough cereal to last until the next harvest and the rest (49 districts) will last between 2 and 11 months.

Meanwhile the country is also expecting a 26% drop in tobacco output to 185 725 tonnes, while cotton is expected to drop by 49% to 66,564 tonnes.

In what reveals the rapid deterioration of the southern African nation’s economy, the data reflects a steep jump of 22 percent from the previous month’s 75.86 percent. On a monthly basis, prices rose by 12.54 percent in May compared to 5.52 percent in April.

The latest figures are the highest since the introduction of multi-currency use in 2009, on the back of the hyperinflation period and the 2008 global financial crisis. The financial crisis saw Zimbabwe’s peak month of inflation surge to around 79.6 billion percent month-on-month and 89.7 sextillion percent year-on-year.

The data from ZimStat were arrived at with a new inflation calculation method known as the Consumer Price Index (CPI), under which the Classification of Individual Consumption by Purpose (COICOP) calculation methodology is used. The new approach classifies individual consumption expenditures incurred by households, non-profit institutions serving households and general government according to their purpose.

However, economists have criticised the new system used to arrive at the inflation figures. They are of the opinion that if the old calculation system was maintained, the inflation rate for the month would now be over 200 percent based on the recent spate of price increases. More so, they projected the inflation rate to close 2019 at over 250 percent, a figure that would leave the country on the brink of another hyper-inflationary period.

Zimbabwe’s inflation ranks second highest in the world , after Venezuela, while it is ahead of Sudan, Argentina, Iran, etc.

The country’s economic meltdown continues to escalate as shortages of foreign currency, electricity, medicines and fuel impede industrial activity.

The economy is expected to contract by 2.1 percent due to macroeconomic imbalances and a poor farming season, according to projections from the International Monetary Fund (IMF).

The funding will be used to purchase 19,000 tonnes of wheat bonded in Beira, Mozambique. That will cover the national flour requirements for the next two and a half weeks, said Tafadzwa Musarara, chairman of the group.

National Railways of Zimbabwe is in the process of loading the wheat, which will start arriving in the country next week.

“The situation is expected to improve the supply of flour starting next week,” Musarara said.

Earlier this week he said supplies had “drastically” declined and the nation faced bread shortages. A leading bakery had suspended operations, according to reports.

An additional 60,000 tonnes of wheat in Mozambique is under consignment and payment negotiations are under way with the central bank, Musarara said.

 File photo: Victims of floods in Mozambique seek cover 04 March 2000 from dust moved by a rescue helicopter at Chalucuane on the Limpopo river. EPA PHOTO POOL REUTERS/MIKE HUTCHINGS/MH-amd  Less

The subject of maize needs will soon dominate the headlines in Zimbabwe and, to a certain extent, Mozambique. These two countries are set to record poor maize harvests due to droughts which delayed plantings at the start of the 2019 season, and when it finally rained, it became rather excessive, as was witnessed during Cyclone Idai at the start of the year.

The United States Department of Agriculture (USDA) forecast Zimbabwe’s 2019 maize production at 800,000 tonnes, down by 53% from the previous year. This is not even half of what Zimbabwe consumes a year, which is roughly 2.0 million tonnes. So, there will surely be large volumes of imports throughout the 2019/20 period.

At least the authorities have grasped the urgency of the situation. The Zimbabwean Grain Marketing Board has recently issued a tender to buy 750,000 tonnes of maize, which will be the largest volume since 2016 when the country imported 1.4 million tonnes.

It is unclear, however, where Zimbabwe will get the maize supplies from as the likes of South Africa and Zambia, typically the region’s maize exporters, are expected to have tight supplies due to lower production in the 2018/19 production season. South Africa could have about 1.1 million tonnes for exports, but this will largely be destined for Botswana, Namibia, Lesotho and eSwatini.

The other important factor is that Zimbabwe will possibly be looking for white maize, which means that outside of the southern Africa region, the reliable white maize supplier could be Mexico, which will have about a million tonnes of maize for export markets in the 2019/20 marketing year, according to data from the USDA. Aside from white maize, there are a number of countries that can supply the region, with the most likely ones being Brazil, Argentina, Ukraine and the United States.

In the case of Mozambique, the 2018/19 maize harvest could fall by 27% year-on-year to 1.8 million tonnes, which will be slightly lower than the annual consumption of 2.1 million tonnes. As a result, the imports could amount to 200,000 tonnes, which is double the typical import volume. In the past, South Africa, Malawi and Mexico were the key suppliers of maize to Mozambique, but this year things are unclear for similar reasons as the Zimbabwe situation.

For maize producers and users in South Africa, these factors will most probably add upward pressure on prices in the coming months when the demand from Zimbabwe and Zambia intensifies, especially in the case of white maize. The key driver of domestic maize prices in the past couple of weeks has largely been the spillover from higher Chicago maize prices which were underpinned by delayed plantings on the back of excessively wet weather conditions.

On June 18, 2019, domestic yellow and white maize spot prices were each at R2,834 per tonne, which is respectively, 33% and 39% higher than the corresponding period in 2018, and roughly at levels seen at the start of 2019. The prices could cool off from these levels if crop conditions improve in the US Midwest, but that could soon be offset by effects of the imminent southern Africa region’s maize demand. BM

The IMF has published inflation figures in various world countries since the beginning of 2019:

Venezuela – 905%. Since 2010, the country has been in the grip of an economic and political crisis that spins the inflation spiral. Accordingly, the country faces a shortage of food and medicine. Due to record inflation, hundreds of thousands of Venezuelans suffer from malnutrition, and millions of people fled to other countries. In June 2019, the Central Bank of Venezuela introduced new banknotes of 10,000, 20,000 and 50,000 Bolivars to make calculations more efficient and facilitate business transactions.

Venezuelan inflation. The cost of tomatoes – 5 million Bolivars

Zimbabwe – 73%. The key reason for inflation is the shortage of foreign currency, which caused large disparities in the exchange rate of the surrogate currency of Zimbabwe – bonds (“zollars”) to the US dollar. Zollars rate fall against foreign currency caused a rise in the price of key commodity items, such as sunflower oil and flour. The economic situation in the country is worsened by world high fuel prices, connected with the reformatting of the local oil market to the needs of Russian business.

In January 2019, the cost of fuel in Zimbabwe was the highest in the world.

Sudan – 49%. The local economy has not yet compensated for losses after the secession of South Sudan in 2011, which limited the proceeds from the sale of oil – the main item of Sudanese exports. The growth of debt dependence, lack of access to foreign borrowing, US sanctions – all this holds back the development of the country. The people’s revolution, which began in December 2018 (against the regime of ex-President Omar al-Bashir), finally paralyzed the Sudanese economy. Political instability, which has been going on for six months, makes the progressive development of the republic impossible, and the economic actions of the military junta are not effective.

Argentina – 43%. The issue of curbing inflation will be key in the presidential elections in this country in October 2019. Chronic inflation and the devaluation of the Argentine currency have consolidated the advantage of the dollar as a means of preserving value. Mandatory “pesoization” in January 2002 (when existing deposits and loans in dollars in the country’s banking sector were forcibly converted into pesos) provided only a temporary and artificial reduction in the domestic use of the US dollar. Savings rates are low, and a sizeable share of private savings is kept outside the country.

Iran – 37%. The restoration of the US sanctions regime and the growth of international tension around the country due to its disruptive foreign policy in the Gulf region caused the fall of Iranian GDP by 6%. Statements by the government of Rahbar Khamenei about full withdrawal from the “nuclear deal” increase inflationary pressure in an economy that is weakening.

South Sudan – 24%. The country bears the burden of the consequences of the civil war of 2013-2018, which undermined the economy. It is important to note that the volatility of oil prices affects the South Sudanese economy. The country is most dependent on oil exports in the world – almost 100% of exports. Last year, inflation has been decreasing due to relative internal political stabilization (in 2016, inflation was a record 83%).

Liberia – 22%. For the third year in a row, the country is experiencing a deficit of fiscal revenues in the budget, which forces the government to block it by issuing money. Broad dissatisfaction with the policy of the government of ex-footballer George Wea is growing.

Yemen – 20%. Since 2011, total internal political instability has reigned in the country, and since 2015, Saudi Arabia and the Allied states have begun an armed intervention against the Hussite regime. Permanent hostilities destroy the fragile local infrastructure and undermine the remnants of the economy.

Angola – 17%. Like many other countries – exporters of oil, Angola has suffered greatly from the fall in oil prices in 2014 and experienced a shortage of foreign currency, which has not been overcome to date. Inflation rose sharply in 2016 and reached 41.12% in December of the same year, but since then it has been slowly but surely falling.

Oil production in Angola fell to its lowest level in 10 years

Turkey – 17%. As you know, the lira fell by 40% against the dollar in the first months of 2018. The reasons were highinflation and a huge current account balance deficit in Turkey. Due to these factors, the Turkish economy remains very vulnerable to external shocks.

As a result, the USDA estimated that Zimbabwe will have to import about 1 million tonnes of corn in 2019-20 to meet domestic demand and maintain the mandated strategic grain reserve of 500,000 tonnes.

“Countries that could supply Zimbabwe with corn include Tanzania, Mexico and limited amounts from South Africa,” the USDA said. “Zimbabwe’s policy on Genetically Engineered (GE) corn allows for imports if milled into flour under government supervision. Cultivation of GE corn is still prohibited.”

In 2018-19, Zimbabwe produced 1.7 million tonnes of corn, which was a 21% decrease from the prior year when it produced a 20-year high of 2.2 million tonnes.

Zimbabwe only imported an estimated 100,000 tonnes of corn in 2018-19, according to the USDA.

The USDA noted that in addition to climatic challenges, high prices and cash availability limited the purchases of inputs by most Zimbabwe farmers.

The country already is facing a crisis in wheat availability as stocks have drastically declined, according to a June 17 statement from the Grain Millers Association of Zimbabwe. Officials are concerned that this could lead to shortages of fresh bread.

The association said it is in contact with the Reserve of Zimbabwe to unlock wheat consignments that are in Beira and Harare.

“We are also constantly updating our key stakeholders who include bakers on the obtaining situation,” said Garikai Chaunza, media and public relations manager for the association. “We are also jointly working with the bakers in engaging the authorities on a number of issues that would improve bread supplies.”

Scarcity in foreign currency and insufficient imports to meet demand has many firms relying on the central bank to provide foreign currency, New Zimbabwe reported. This has negatively impacted manufacturing since many firms rely on imports for production.

The Standard reported that a leading bakery has suspended operations. Bread prices have gone up more than three times this year.

The government has blamed the situation on cartels, which it said have monopolies in the industry. Government officials have said the shortages are artificial.

Transport and Infrastructure Development Minister Joel Biggie Matiza, in a speech read on his behalf by his human resources director, Mr Andrew Murungweni, congratulated Mrs Moyo on her appointment and said he believed this was the first time in SARA’s 23 year history that it had a woman at its helm.

The Minister emphasised the importance of the region’s railways and their potential to improve the regional competitiveness of the Southern African Development Community (SADC), given their suitability for transporting the bulk products which characterised the region’s economies.

“The connectivity that exists among SADC railways provides opportunities for cooperation among the operators to provide cost effective and seamless rail transport services, as dictated by the SADC Protocol on Transport, Communications and Meteorology,” he said.

He said the demands on the economies of the region’s nations, as developing countries, required more than ever before efficient rail transport delivery systems.

Zimbabwe, he said, upholds the railway sector as a national and regionally strategic mode of transport, especially given its geographic position and the fact that most of the SADC regional railway corridors pass through Zimbabwe.

“We recognise that railways have the requisite design capacity to facilitate movement of the volumes of strategic cargo being transported and traded through all ports in the SADC region.

“We also recognise that industry impacts on the wholesale and retail pricing of our commodities, prices of manufacturing, agricultural and mining inputs, as well as on the competitiveness of our exports on the global market,” he said.

Emphasising the importance of regional integration, he said the ultimate objectives of SADC infrastructure development initiatives were to boost traffic and the carrying capacity of surface transport networks, reduce transport and communication costs and improve transport reliability and efficiency within the region.

However, he said the performance of railways had been a major concern for governments, customers and the general public.

Lack of capacity coupled with inefficiencies had contributed to a significant decline in the railways’ market share, to the detriment of regional economies.

“With efficient railway services, we expect our regional economies to enjoy benefits of reduced product prices to the consumer as well as an increased and reliable supply of production inputs for our economic sectors,” he said.

He added that these benefits would lead to increased export income from extractive sectors such as mining and enhanced regional market integration through uninterrupted logistical connectivity to coastal ports.

He acknowledged that the rail industry in the region suffered from a huge backlog in maintenance and rehabilitation of infrastructure as well as construction of new strategic links, which required significant capital investment.

“The mining developments, the growing agricultural market, the increasing trade of bulk retail and commercial products, amongst other reasons, create an increasing demand for efficient railway services,” he said.

He said SADC governments were aware of the capacity related challenges confronting railways, including ageing infrastructure and equipment, lack of funding for rail infrastructure, insufficient capacity to meet growing demand, theft and vandalism of railway infrastructure.

However, he said they were convinced railways could nevertheless do better with their current resources.

He said that going through the board meeting’s agenda, he considered the association’s real challenge was the disjointed regional railway operations.

“The interconnectivity of the regional railways can only be optimised as an opportunity for enhanced trade logistics, if we have harmonised operations,” he said, adding that the challenges that the board’s members, who represent railways throughout the region, faced were not insurmountable.

Answering a question on linking the region’s railways at a Press conference after the board meeting’s official opening, Mrs Moyo said the region’s railways were already linked physically and bilateral agreements existed allowing railway operators to operate on each other’s lines.

The different railways were also working on standardising operational systems and infrastructure.

The challenge was the delays in crossing from one jurisdiction to another. The association would like to see governments in the region coming up with a policy that would allow a seamless crossing of borders.

Post published in: Business