US embassy cable - 02HARARE2122

UNCLAS HARARE 002122 
 
SIPDIS 
 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
LONDON FOR CGURNEY 
PARIS FOR CNEARY 
NAIROBI FOR PFLAUMER 
 
E.O. 12958: N/A 
TAGS: EAGR, EFIN, PGOV, ZI 
SUBJECT: DELTA CORPORATION:  FINANCING ITS OWN INTERESTS 
WHILE APPEARING BENEVOLENT 
 
 
1. Summary.  In a new development, local powerhouse Delta 
Corporation (which, coincidentally, owns several breweries) 
has reportedly announced a Zim $10 billion initiative 
(approximately US $14.5 million at the parallel rate) whereby 
it will loan inputs for the production of maize, sorghum and 
malting barley to selected farmers. However, while the 
publicity has cast Delta as a solid corporate citizen doing 
its part to uphold the GOZ's programs, Delta's self-interests 
are driving the deal.  End summary. 
 
2. According to published reports, Delta Corporation has 
announced a joint venture with the GOZ whereby Delta will 
loan the equivalent of Zim $10 billion over two growing 
seasons to farmers in the form of agricultural inputs.  These 
inputs will reportedly support the production of 70,000 
tonnes of maize, 60,000 tonnes of malting barley, and 20,000 
tonnes of sorghum annually.  While this has been met with 
great fanfare by Minister of Lands, Agriculture and 
Resettlement Joseph Made, as well as Minister for Information 
and Publicity Jonathan Moyo, as evidence of Delta's support 
of agrarian reforms, the details of the transaction give a 
different gloss. 
 
3. Delta subsidiaries include United Bottlers (Coca-Cola), 
National Breweries, and Chibuku, which produces the local 
opaque beer known as "shake-shake."  According to published 
accounts of the deal, the inputs and support provided by 
Delta "will be treated as loans to be netted off against 
final prices."   Delta further reserves the rights to manage 
the program and select which farmers will receive the loans. 
Additionally, while the farmers will forward all maize 
produced to the Grain Marketing Board (GMB), which by law 
controls all movements, sales and purchases of maize within 
the country, Delta has requested an "undertaking and 
guarantee" that for as long as maize remains a specified 
commodity under the control of the GMB, Delta will be 
guaranteed its quota -- with only the surplus to be 
distributed to other buyers.  If this deal takes place as 
agreed, Delta will thus have provided loans to selected 
farmers (with their loan repaid by skimming off the first cut 
from the produce) who will grow the agro inputs required for 
the operations of Delta's subsidiaries. 
 
4. Comment.  One local economist notes that this is actually 
an expansion of a previous program which Delta has been 
operating for the past 12-15 years.  Historically, Delta has 
preferred to grant malting barley, hops, and grain inputs to 
"captive farmers," who then provide inputs for Delta's 
various breweries.  According to this economist, the dollar 
value of the program has increased, but this has much more to 
do with inflation than with increased hectarage. 
Additionally, he believes that Delta is taking the 
opportunity to "make a virtue out of a necessity" by publicly 
announcing the program in this fashion.  While it is true 
that the increase of maize inputs is a new initiative, 
Delta's motivations are based much less on altruism and more 
on protecting its bottom line.  End comment. 
SULLIVAN