US embassy cable - 03HARARE1995

UNCLAS SECTION 01 OF 05 HARARE 001995 
 
SIPDIS 
 
AID FOR DCHA/FFP LANDIS, CRUMBLY, MUTAMBA, PETERSEN 
DCHA/OFDA FOR PRATT, BARTON, KHANDAGLE, MENGHETTI, 
BORNS, MARX, HALMRAST-SANCHEZ, MCCONNELL 
AFR/SA FOR FLEURET, COPSON, FORT, BAKER, MACNAIRN 
STATE/AF FOR RAYNOR, DELISI 
PRETORIA FOR DIJKERMAN, HELM, DISKIN, HALE 
NAIROBI FOR SMITH, RILEY 
LILONGWE FOR RUBEY, SINK 
LUSAKA FOR GUNTHER, NIELSON 
MAPUTO FOR POLAND, BLISS 
MASERU FOR AMB LOFTIS 
MBABANE FOR KENNA 
GABORONE FOR THOMAS, MULLINS AND DORMAN 
ROME FOR FODAG FOR LAVELLE, DAVIS 
 
E.O. 12958: N/A 
TAGS: EAID, PREL, US, ZI 
SUBJECT: Zimbabwe's Food Crises Set to Continue in the Face 
of Bleak Production Prospects for the Coming Agricultural 
Season 
 
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SUMMARY 
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1. As a result of the continuing severe economic decline, 
particularly in the crippled agricultural sector, the food 
crisis in Zimbabwe is expected to continue into the 2004/05 
marketing year.  Projections for Zimbabwe's 2003/2004 
agricultural season are bleak, largely due to worsening 
input supply and financing constraints.  All major 
agricultural sub-sectors are expected to continue their 
decline, even if the weather is favorable.  In addition to 
the critical foreign and local currency constraints, 
serious shortages of seed, fertilizer, crop and livestock 
chemicals, fuel, and agricultural equipment and spare parts 
all point towards another sub-standard harvest in the 
2003/04 season with continuing significant production 
deficits, food gaps and international assistance 
requirements.  End Summary. 
 
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AGRICULTURAL PROJECTIONS 
------------------------ 
 
2. The United Nations estimates a 20 percent decline in the 
Zimbabwean economy during the year 2003.  This projected 
contraction is largely attributable to the demise of the 
commercial agricultural sector -- the mainstay of the 
country's economy -- through the compulsory acquisition of 
farmland under the government's disastrous "fast-track" 
program.  As a result, the Commercial Farmers Union (CFU) 
estimates a further 52 percent contraction in agricultural 
output (in real terms) from the commercial sector during 
the 2003/2004 season to approximately 15 percent of its 
previous historic levels.  In addition, farm expropriations 
continue unabated, suggesting the possibility of an even 
more dismal performance than that projected here. 
 
3. Although "fast-track" has increased the production 
potential of Zimbabwe's smallholder agricultural sector, 
the serious input constraints discussed below are expected 
to prevent this sector from realizing this potential 
anytime soon and filling the gap left by the demise of the 
commercial sector. 
 
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SEED 
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4. While different sources provide varying estimates of 
seed availability, all sources indicate a serious shortfall 
as the planting season approaches.  The Zimbabwe Seed 
Traders Association and "Seed Co" Company estimates range 
from 21,650 MT to 23,275 MT for hybrid maize seed 
(excluding possible imports), and 1,500 MT to 4,800 MT for 
open pollinated maize varieties (OPV) during the 2003/2004 
agricultural season. Aggregate maximum estimates for both 
hybrid and OPV commercial maize seed amount to 28,075 MT, 
compared to an annual estimated requirement of 
approximately 50,000 MT.  [Note:  Although higher seed 
requirements have been cited, i.e., 60,000 MT, most 
knowledgeable experts believe that 50,000 MT is the maximum 
amount of seed that could possibly be planted during the 
coming season (covering an area of 2 million hectares at a 
"normal" planting rate of 25 kg/hectare) for the variety of 
reasons elaborated below.  End Note.]  This implies an 
estimated maize seed shortfall of 21,925 MT (40+ percent) 
for the upcoming agricultural season.   Preliminary 
estimates of seed shortfalls for other crops are: sorghum 
(1,350 MT), pearl millet (1,460 MT), finger millet (1,000 
MT), sugar beans (2,420MT) and groundnuts (59,900 MT). 
 
5. These seed shortfalls are primarily attributable to farm 
disruptions, which have put many experienced seed producers 
out of production, insufficient production from novice 
producers, and a lack of seed carryover stocks from the 
previous season (including approximately 17,000 MT of seed 
not accounted for from government's haphazard crop input 
scheme).  At present, approximately 5,000 hectares remain 
under seed cultivation by 37 experienced producers, down 
from the 12,000 hectares of seed maize previously 
cultivated by 84 experienced producers attached to Seed-Co 
Company, which has an 85 percent market share.  In 
addition, the future of these 37 remaining farmers is 
uncertain, as farm acquisitions/disruptions continue. 
 
6. With the severe forex crisis as well as the difficulties 
involved in importing suitable seed stocks from other 
countries, it remains highly unlikely that much of this 
shortfall will be able to be met this season from either 
the GOZ or international assistance.  According to FAO, a 
total of 592,558 vulnerable households are targeted to 
receive international assistance in agriculture for the 
2003/2004 season.  Planned seed assistance to date includes 
maize seed sufficient to plant 171,974 hectares (4,300 MT), 
small grains' seed sufficient to plant 242,374 hectares 
(2,425 MT), and other crop seeds (e.g., beans, cowpea, 
groundnuts, vegetables) sufficient for 54,691 hectares 
(1,683 MT), implying total planned seed assistance to date 
could cover 469,029 hectares. 
 
7. In addition, seed prices have risen beyond affordable 
levels for most ordinary farmers.  According to the new 
seed prices announced by the Minister of Agriculture on 
September 17, a kilogram of maize seed that cost ZW$ 192 
last year now costs more than ten times that amount (ZW$ 
2,100/kg).  Access to seed may be further restricted by 
nationwide shortages of local currency notes to conduct 
local transactions (although the GOZ's recently issued 
bearer cheques may alleviate this problem), and increased 
transport costs. 
 
8. This diminished access to seed will force farmers to 
plant any available seed, including grain from the previous 
season.  Recycling hybrid grain seed leads to regression of 
the seed material with undesirable results, such as 
increased susceptibility to diseases and pests, more 
variable maturity dates and, most significantly, lower crop 
yields. 
 
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FERTILIZER 
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9. The shortage of foreign currency to source inputs and 
spare parts needed to boost production has led to a severe 
contraction of the domestic fertilizer industry.  About 40 
percent of blended fertilizers and about 50 percent of 
tobacco fertilizers have a direct imported component 
requiring foreign exchange.  The fertilizer industry 
estimates that the market has shrunk by about 40 percent 
since the advent of the government's 'fast track' land 
grab, with a similar estimated current production 
potential.  For example, Sable Chemicals is the sole 
producer of ammonium nitrate (AN) in Zimbabwe.  Under 
normal circumstances, the company produces 31,000 MT of AN 
per month; currently, the company is producing about 12,300 
MT. 
 
10. According to government estimates, national fertilizer 
requirements are more than one million MT per year.  At 
peak production in the latter half of the 1990s, the 
industry produced about 520,000 MT of fertilizer.  As a 
result of the capacity constraints noted above, production 
estimates for the coming season are about 340,000 MT. 
Accordingly, the UN estimates that there will be a 
fertilizer gap of approximately 550,000 MT during the 
2003/2004 cropping season.  As for seeds, these fertilizer 
shortages will be compounded by prohibitive prices -- the 
price of AN has increased almost 400% from last year, and 
the price of Compound D fertilizer has increased almost 
seven times (from ZW$ 74 to $ 726/kg).  These significant 
price increases will inevitably impact negatively on 
fertilizer use and crop yields. 
 
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TILLAGE 
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11. In the absence of sufficient draught power (decimated 
by foot and mouth disease and recent droughts), 
availability of fuel for timely land preparation is vital 
to the success of the cropping season.  In August, 
government introduced a dual pricing system for fuel.  The 
State-owned National Oil Company of Zimbabwe will continue 
to supply petrol and diesel to government departments and 
public transporters at 8 US cents/liter and 4 US 
cents/liter, respectively.  Whereas certain private 
companies are now allowed to import and sell their own fuel 
at prices ranging from US$ 0.30 to US$ 0.35 for both diesel 
and petrol.  It is not clear whether or not the 
agricultural sector will benefit from the special low 
prices afforded to the government and public transport 
sectors. 
 
12.  As a result of the fuel shortages and price increases, 
tillage costs have also risen to prohibitive levels for the 
average smallholder farmer.  At a cost of over ZW$ 
50,000/hectare, tillage is approximately double what it 
cost last year.  Therefore, even if sufficient farm 
machinery were available and operational, it will likely 
remain beyond the financial capacity of most smallholder 
producers to access.  [Note:  On September 25, government 
announced it was tendering for private tillage services to 
support smallholder (especially resettlement) farmers to 
prepare for the coming cropping season.  No figures were 
provided for the total budget allotment for this scheme. 
This is the first (and only) such government support scheme 
for this season announced to date - see "Production 
Finance" below.  End Note.] 
 
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PRODUCTION FINANCE 
------------------ 
 
13. The Zimbabwe Farmers Union (ZFU), a body that 
represents smallholder farmers, estimates that about ZW$ 
600 billion is required to support agricultural activities 
in the forthcoming season.  Government has announced plans 
to raise about ZW$ 100 billion for the agricultural input 
support program.  To date, as the planting season 
approaches, there is no evidence that anyone has benefited 
from this fund (with the exception of the tillage scheme 
noted above), nor are there indications as to when these 
funds will become available. 
 
14. Support from private agri-businesses is also not 
guaranteed this growing season, following breach of 
contracts by smallholder farmers last season.  For example, 
Cotton Company of Zimbabwe (COTTCO) lost millions in 
potential revenue when the farmers to whom the company had 
advanced seed, fertilizer and chemical credits during the 
last cropping season by-passed the company and sold their 
cotton to new cotton companies that invested nothing in the 
growing of the crop.  As a result, COTTCO has since stopped 
its ZW$ 3 billion input assistance scheme.  Farmers will 
thus find it more difficult to raise the significantly 
increased amounts of money they need for the forthcoming 
season.  The ensuing cash shortages could result in many 
farmers being forced to rely on retained seed and low/no- 
fertilizer and/or tillage practices this season, resulting 
in reduced crop yields. 
 
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PROJECTED PERFORMANCE OF KEY AGRICULTURAL SECTORS 
--------------------------------------------- ---- 
 
15. Assuming favorable growing conditions [Note:  The 
Southern Africa Development Community official weather 
forecast predicts "average" rainfall for most parts of 
Zimbabwe for the 2003/04 season.  End Note.] and optimal 
seed use and yields, with estimated available commercial 
and retained seed stocks, Zimbabwe could theoretically 
produce sufficient maize to approach its national 
requirements next year (i.e., around 1.5 million MT, as 
opposed to a national human requirement of about 1.8 
million MT).  Such a scenario is highly improbable, 
however, as a result of the many serious input access and 
affordability constraints noted above.  Accordingly, most 
knowledgeable experts predict a maximum 2003/04 harvest of 
around 1 million MT (i.e., slightly above last year), 
leaving a maize deficit on the order of 800,000 MT for the 
2004/05 marketing year. 
 
16. Traditionally, the large-scale commercial irrigators 
produced more than 90 percent of the winter wheat crop. 
Because of the continuing disruptions on commercial farms, 
it is estimated that total wheat production this season 
will be only 90,000 MT down by about one third from that 
produced in the peak 2001 season, leaving a national 
shortfall of about 250,000 MT for this marketing year 
(i.e., November 2003 to October 2004). 
 
17. Tobacco has traditionally been a major foreign currency 
earner in Zimbabwe, accounting, on average, for more than 
40 percent of the total agricultural export earnings.  As a 
result of the land seizures, commercial production in 2003 
is estimated at no more than 80 million kg (from 232 
million kg in 2000).   Judging from the amount of seed sold 
and the scale of seed-bed preparation, estimates for 
tobacco production in 2003/2004 are no more than 15 to 20 
million kg.  In addition, it is projected that most of the 
tobacco crop will be rain-fed in the coming season, leading 
to additional declines in both quality and quantity (and 
additional losses of critical FX). 
 
18. Foot and mouth disease (FMD) is now reported across all 
provinces of the country, largely due to the unlawful 
movement of communal cattle across veterinary boundaries as 
a result of the land reform program.  The commercial cattle 
herd is estimated to be about 150,000 head, down from a 
pre-1980 peak of about 3 million head.  Due to the outbreak 
of FMD, it seems unlikely that Zimbabwe will be in a 
position to export beef to Europe in the near future, again 
severely affecting forex generations. 
 
19. Other Crops:  Soybean production in 2002/2003 was 
estimated at about 36,000 MT, a quarter of that produced in 
2001.  The outlook for 2003/2004 is similarly poor, 
depending largely on how many large-scale growers are 
permitted to grow a crop in the coming season.  Coffee 
production in 2003 is estimated at 5,500 MT (from a peak of 
10,000 MT in 1998), and falling, also due to the continuing 
eviction of large-scale producers.  Declines are also 
projected in wildlife, pigs and poultry, dairy, barley (21 
percent decline over previous year), and horticulture (32 
percent decline over the previous year). 
 
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CONCLUSION 
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20. Regardless of whether or not good rains fall in 
Zimbabwe, it appears that the country's food crisis is set 
to continue for some time to come.  Continuing (and 
increasing) foreign and local currency shortages, that 
limit the availability of critical agricultural inputs such 
as seed, fertilizer, farming machinery operations, repair 
and maintenance, fuel and finance, will result in reduced 
agricultural output.  Although it is still too early to 
accurately predict this coming season's harvest, all 
projections point to another sub-standard year, similar to 
last year's performance, with concomitant significant 
continuing production deficits, food gaps and international 
food assistance needs.  In addition, continuing contraction 
of key export products such as tobacco, horticultural 
products, wildlife and beef will translate into further 
foreign currency shortages, thus exacerbating input and 
production constraints (as well as government's ability to 
respond to the crisis through food imports).  Put simply, 
the country is in a vicious cycle in which deteriorating 
agricultural production is reducing its ability to supply 
inputs necessary to achieve any significant improvement in 
agricultural output.  As a result, the food crisis will 
continue into the 2004/05 marketing year, and quite 
possibly worsen, in the absence of a genuine effort to 
address the core political, economic and social problems 
the country faces in a realistic and constructive manner. 
The Mission will continue to provide updates on the coming 
agricultural season when/as new information becomes 
available.  Sullivan