US embassy cable - 05HARARE212

C O N F I D E N T I A L HARARE 000212 
 
SIPDIS 
 
C O R R E C T E D COPY - ADDING DROPPED ADDEE'S 
 
AF/S FOR BNEULING 
 
NSC FOR SENIOR AFRICA DIRECTOR C. COURVELLE, D. TEITELBAUM 
 
TREASURY FOR OREN WYCHE-SHAW 
 
DEPT PLEASE PASS TO ALL EUROPEAN DIPLOMATIC POSTS COLLECTIVE 
 
ALSO PASS TO USAID FOR MARJORIE COPSON 
 
E.O. 12958: DECL: 12/31/2009 
TAGS: EAGR, PGOV, ZI, ECON, EINV, Agriculture, Land Reform 
SUBJECT: U.S. SEED PRODUCER YEARNS FOR BETTER TIMES 
 
Classified By: Ambassador Christopher Dell for reason 1.4 b/d 
 
1. (C) Summary:  U.S seed-producer Pioneer Hi-Bred 
International expects a disappointing commercial maize 
harvest in Zimbabwe this year, Financial Controller Simon 
Nyanhete told Econoff on Feb. 8.  Pioneer has enlisted 
hundreds of farmers resettled by the GOZ under fast-track 
land reform to grow maize seed, but with mixed results.  For 
the time-being, its Des Moines, Iowa headquarters is carrying 
the money-losing Zimbabwe subsidiary, hoping for better times 
ahead.  End summary. 
 
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Low Maize Crop Estimate 
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2. (C) Nyanhete said Pioneer did not know how much maize 
Zimbabwean farmers would produce this year, but he believed 
results would be far below the GOZ,s estimates of a 
2-million ton harvest.  Nyanhete cited the Grain Marketing 
Board (GMB)'s distribution of seeds to farmers after rains 
had begun in late November as a prime setback.  (N.B., The 
GMB buys and distributes all maize seed.)  From 
March-October, the GMB engaged in long and acrimonious 
negotiations with the four main seed companies over a 
wholesale price, Nyanhete said.  By the time they reached an 
agreement and farmers received their seed, they had missed 
the first rains and only got crops in the ground in 
late-December.   Nyanhete believes that the GMB's 
mismanagement of seeds and the farmers, late maize planting 
will knock 20-30 percent off potential output. 
 
3. (C) Nyanhete estimates the GOZ expropriated farms 
belonging to eighty percent of its former seed growers.  As a 
result, the company has recruited hundreds of resettled 
farmers to produce maize seed.  Results have been mixed, with 
seed output falling from 8-9 to 5 tons/hector since 2001. 
Nyanhete said his firm accepts only the most committed 
resettled farmers, and that its inspectors visit these 
farmers every other day to enforce quality control.   Whereas 
Pioneer had been providing former commercial farmers with 
minimal oversight and parent seeds, it supplies new farmers 
with training, constant supervision, fertilizer and other 
inputs.  The dispossessed whites have criticized Pioneer for 
working with farmers resettled on their properties.  However, 
Nyanhete said his company decided in 2002 it could not remain 
viable in Zimbabwe without enlisting land reform 
beneficiaries. 
 
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Supported by U.S. Head Office 
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4. (C) Still, Nyanhete conceded, business has been tough. 
U.S. competitor Monsanto took a different path, pulling out 
of Zimbabwe in 2002.  Pioneer's Zimbabwe subsidiary is only 
surviving thanks to the largess of its Des Moines 
headquarters, Nyanhete said.  The parent company provides 
chemicals and other inputs free-of-charge, since Pioneer has 
been unable to acquire sufficient foreign exchange through 
the Reserve Bank's auction system. 
 
5. (C) Because Pioneer now relies on less efficient seed 
growers and sells seed only to the GMB at a controlled price, 
Nyanhete said it is nearly impossible to break even. 
Furthermore, the GOZ has since 2002 prohibited Pioneer from 
exporting seed to neighboring countries, causing the firm to 
lose one-third of its client base and a potential source of 
foreign exchange.  Nonetheless, Nyanhete said Pioneer wants 
to remain active in Zimbabwe while waiting for more 
market-oriented policies and an agricultural rebound. 
 
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Comment 
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6. (C) In the wake of the GOZ's destructive fast-track land 
reform, U.S. agricultural firms have had to decide whether to 
walk or wait.  Monsanto and Pioneer made different business 
decisions - time will tell which chose the right course. 
DELL