Command agriculture and the politics of subsidies

Command agriculture – a major, private-sector-backed subsidy programme implemented by the Government of Zimbabwe – has been hailed as a massive success, especially following the huge maize harvest reaped this year (see last week’s post). President Mugabe recently described command agriculture as ‘beautiful’.  The programme, led by the Vice President, Emerson Mnangagwa, with the ministry of agriculture and support from the armed services, involved the delivery of fertiliser (along with seed and fuel) to farmers in higher potential areas, and especially with larger land areas (targeting 2000 farmers with 200 ha or more of arable land) and irrigation facilities. Sakunda Holdings (and others) backed the scheme reputedly to the tune of $160m, and government implemented it on the ground, requiring those receiving the package to repay by delivering an ambitious five tonnes of maize per hectare funded to the Grain Marketing Board (GMB).

The command agriculture programme is being repeated again this coming season; this time with even more ambitious targets, and again with backing of Sakunda. Apparently 45,000 have registered and high crop outputs are expected. While much of the hype is wildly unrealistic, the programme has become core to an increasingly centralised approach to agricultural planning and development in Zimbabwe, as advocated by the VP. There are now ‘command’ approaches mooted for livestock, fisheries, wildlife and more. Given the VP’s background, these all follow the model of Chinese central planning, executed with military logistics and support. Hailed by the Chinese ambassador, it has been an enormous operation, taking up the energies and time of extension workers and apparently up to 1000 members of the army across the country.

The programme has not surprisingly come under intense scrutiny, and has become embroiled in the on-going soap opera of internal ZANU-PF political machinations, with a lively media spat between Higher Education minister Jonathan Moyo (of the G40 faction – and apparently a direct beneficiary), who denounced command agriculture, and the Lacoste faction who vigorously back the programme. The commander of the defence forces gave a robust defence too. Given the scale and ambition of the programme, there have been ‘leakages’ – and some high-profile cases of those abusing the system – and the delivery was not always smooth, with many not receiving the full package on time.

But despite everything – and significantly because of the excellent rains – the programme seemingly delivered. I cannot find reliable data that details how much of the 2.15 million tonnes of maize produced in the 2016-17 season (as well as improved soya production too) is attributable to command agriculture (some say 1 million tonnes), nor any results of detailed economic evaluations, but the basic point is that if you throw inputs (notably nitrogen fertiliser) at improved seed in well prepared soil, and there’s good rainfall, increased outputs will result. There is no agronomic surprise there. But with the GMB buying maize at $390 per tonne, way above world prices, and questions about how the financing works, there are clear concerns. The big question is of course, how sustainable is this approach for the longer term – economically and politically?

How sustainable?

This is the concern raised by economists and other policy analysts, including the IMF. There are precedents of course. This is not the first time Zimbabwe has embarked on massive agricultural subsidy programmes. Indeed the successful origins of white commercial agriculture in the country were built on huge subsidies from the state. Is this just a well-timed kick-start to the struggling A2 farms, which have lagged behind due to lack of financing, allowing them to find their own feet, as white farmers did before? In the 1980s and 90s, there were regular fertiliser subsidy (or cheap credit) programmes aimed at boosting communal area agriculture, resulting in a short-lived ‘green revolution’ in the country. In the 2000s, subsidy programmes – from Taguta to the mechanisation progammes led by the Reserve Bank – were attempts at spurring growth in the sector following land reform, but failed due to poor implementation, patronage and corruption.

More widely in the region, Malawi had a period of intensive investment in (mostly) maize production through the FISP (Fertiliser Input Subsidy Programme). This produced a significant growth in production, with Malawi becoming a regional exporter of maize. The same occurred in Zambia, through a range of programmes across successive governments. All of these subsidy programmes however became fiscally unsustainable, and while producing food and reducing import bills became very, very expensive, taking up significant proportions of national expenditure (with opportunity costs elsewhere – in schools, health services, road building and on). A bad rainfall year (or even a middling one) may unravel things quickly, loading more onto an already crippling national debt.

Subsidies and politics

Subsidies are always political. They are ways of directing political power and patronage to particular groups, who those in power want the support of. In the 1980s, it was the communal areas, who had backed the liberation war, with the political compact being that rural people (and their votes) needed securing. In the 2000s, it was the new resettlement farmers (notably A1 smallholders) who required support, as they were the base that ZANU-PF had to rely on in a succession of contested elections.

Today, while an economic-technocratic position of commercial boosting production is well articulated, the focus is on larger, more connected A2 farmers who are being favoured. As the core of the middle class, professional, business and security service elite who benefited from such land, but had not been using it effectively, securing their support politically, and ensuring greater economic viability of A2 farms (while securing food for the nation) had become a political imperative. And given the positioning of the VP and the ED/Lacoste faction, very much in line with a political dynamic unfolding now.

A more strategic view?

As with the support of emerging white settler agriculture by the colonial government of Rhodesia in the 1930s and 40s, this may be seen in the future as a successful investment. Long-term commitment by states to transformation – through innovation and core support – is increasingly seen as essential in any economic strategy. Gone are the days of the Washington Consensus when subsidy was always a dirty word.

But a wider strategic debate about such investment (including more broadly finance and credit in agriculture) and approaches to exit is needed, separating it from the complex machinations of intra-party politics and faction fighting. As with Zambia and Malawi (and India and so many other countries besides where electoral politics is heavily reliant on a rural vote), extricating the state from subsidy addiction is tough. Phasing out a fuel or fertiliser subsidy can result in protests, and an electoral backlash. Patronage and dependency relationships get set up, and peoples’ political careers and parties’ fortunes, become tied up with subsidies.

Zimbabwe urgently needs a more thorough-going debate about what type of subsidies make sense for rebuilding agriculture, avoiding the ideological knee-jerk that all subsidies are bad, but at the same time countering the tendency of patronage lock-in that subsidy programmes, tied to political cycles, always generate.

This post was written by Ian Scoones and appeared on Zimbabweland

Will white farmers in Zambia feed Zimbabwe?

 

The El Niño drought has hit southern Africa hard. Malawi, Mozambique, Zimbabwe and seven provinces in South Africa have announced emergencies. Coming on the back of a bad season last year, the food situation across the region is dire. Large volumes of food will have to be imported into drought-affected areas, with a regional deficit of 7.3 MT reported. News reports – including one from the Southern Daily that was widely circulated – point to white farmers who fled from land reform in Zimbabwe and now farming in Zambia as the saviours. Is this really the case or, as ever, is it a bit more complicated?

Who is producing Zambia’s food?

As discussed last week, the figures on how much food is needed and where is confused, but the latest on Zimbabwe suggest that up to 4.1 million people will need food aid before the end of the consumption season. While the estimates may be problematic, even adding a large margin of error, the bottom-line is that food must be imported into Zimbabwe in large quantities. The nearest source is Zambia, where good rainfall produced a harvest higher than predicted at 2.8m tonnes (not 3.3m as the Southern Daily reported, which confusingly took figures from 2014 and reported as if this year).

Who then is producing all this maize in Zambia? One of the oft-repeated narratives has been that the food being supplied to Zimbabwe now is being produced by white farmers who were evicted from Zimbabwe during the land reform. In a 2004 piece by Jan Lamprecht on the blatantly racist, white-supremacist site AfricaCrisis.org gloated that white farmers outcompeted 150,000 peasants in Zambia. Even President Mugabe seemed to have been swayed by the propaganda, commenting on the success of former large-scale commercial farmers from Zimbabwe at a rally. This was the narrative too of the error-filled Southern Daily piece (that was sent to me at least four times when it came out, with commentaries not dissimilar to that on AfricanCrisis.org). The evicted-farmers-save –Zimbabwe narrative is prevalent, but is it true?

Certainly there are some former commercial farmers now farming in Zambia – in such places as Mkushi block. Mkushi has attracted South Africans, Tanzanians, British and Zimbabweans, and is a focus for large-scale agriculture in the centre of the country.  Estimates suggest there are perhaps 750 white Zimbabwean farmers in Zambia, rising from 400 following land reform in 2000. External finances, such as through Agrivision Africa supported by the IFC, has allowed the capitalisation of commercial operations, and farms there produce a mix of crops, ranging from soya to maize to beef and dairy. Many commercial agricultural enterprises in places like Mkushi are highly productive, and currently very profitable. In part this results from skill and investment, but also the combination of recent periods of good rainfall and supplementary irrigation capacity that has improved production.

Maize being exported to Zimbabwe in part comes from such farms, but it’s actually – and contrary to the simplistic narrative – primarily grown on smallholder producers across the country. Maize production – and so the ability to export – has been massively supported by a highly-subsidised input support programme over a number of years. For example, in 2011 the Government of Zambia spent US$184 million on 182k MT of fertiliser and 9k MT of hybrid maize seed. This amounted to 0.8% of GDP then, and 30% of total agricultural expenditure. This is an enormous investment and, as in Malawi before, it has boosted maize production massively, but probably unsustainably. Today smallholders in Zambia produce around 2.5m tonnes annually, while large-scale producers 300k tonnes in a good year, like this past one.

In other words, the maize export story from Zambia is driven not by valiant white farmers of the much-promoted narrative (although they of course contribute) but mostly by the efforts of smallholders (including of course black Zimbabwean migrants who came during the Federation era, and have been important producers in central Zambia since then). But in fact the big story too is the role of massive (and fiscally untenable) subsidies from the Zambian state (and its aid donor allies), and big questions as to whether this will continue under the new political dispensation.

White farmers in Africa: mixed fortunes

White commercial farming in Zambia, as Zimbabwe before, and in experiences from Nigeria and Mozambique too, has been one of mixed fortunes. The lack of infrastructure, limited state support and poor finance and other support systems, made many farmers complain bitterly about their new settings. They had been successful farmers in Zimbabwe in the context of a massively supportive environment, with huge subsidies and state support, consistent from the 1950s at least until the 90s. This is not the case in Zambia – or Nigeria and Mozambique. Commercial farming in Zimbabwe was not always an independent, heroic effort by whites in the face of adversity. Of course there is always skill, hard work and entrepreneurial acuity in the mix, but state support, infrastructure and public investment was also part of the picture.

However, despite the challenges – and many gave up – some former farmers from Zimbabwe have become highly successful in Zambia. Considerable private resources from other businesses (some still in Zimbabwe) have been invested to make these farms going concerns, and now in the context of favourable exchange conditions and high demand, they are definitely contributing to the feeding of the region. But there is also other food entering circulation from a range of sources, most notably from smallholders in Zambia, and, as discussed last week, from production not captured by standard crop surveys and livelihood assessments in Zimbabwe itself.

A regional approach?

SADC and COMESA have always tried to take a regional approach to food security, with the expectation that at different times different countries or regions will feed others. An approach to open borders and trade should, ideally, allow low-cost food to move from places of surplus to those of deficit.

Supply of maize from surplus areas in Zambia to the Zimbabwean market has been restricted, however. Controversial restrictions on exports have helped drive the trade underground. Despite the formal limits, there is much that is travelling across the border illegally. The allure of the US dollar in the Zimbabwean economy is attracting much speculative trading activity, including in food (as well as other commodities). With a declining Zambian kwacha due to the collapse in mineral commodity prices, selling food to Zimbabwe in US dollars is an attractive prospect, and formal restrictions are very often circumvented. This of course adds to the liquidity problems and cash crisis in the Zimbabwean economy, as the dollars end up in Zambia, even if food is provided. This cross-border currency exchange politics is creating potentially large problems, especially as the US dollar increases in value against other regional currencies.

As much research shows, trade restrictions damage investment and can undermine food security. An open trading regime by contrast, it is argued, is efficient and economic, and offsets risks, which because of differential patterns of rainfall and the widespread reliance on rainfed production makes sense. Ensuring that there is regional surplus and efficient movement will offset the requirements for shipping from elsewhere in the world, which is slow and expensive. In this respect if Zambia feeds Zimbabwe, Malawi and Mozambique this year (and maybe South Africa too), this is fine, and the reverse may be the case at other times.

This post was written by Ian Scoones and appeared on Zimbabweland

 

Policy options for African soils: learning lessons for future action

Everyone is agreed that one of the central components of achieving an ‘African Green Revolution’ is to tackle the widespread soil fertility constraints in African agriculture. To this end, AGRA – the Alliance for a Green Revolution in Africa – launched a major ‘Soil Health’ programme aimed at 4.1 million farmers across Africa, with the Bill and Melinda Gates Foundation committing $198 million to the effort. The Abuja declaration, following on from the African Fertilizer Summit of 2006 set the scene for major investments in boosting fertilizer supplies. CAADP – the Comprehensive African Agricultural Developent Programme – has been active in supporting the follow up to the summit, particularly through it work on improving markets and trade. Other initiatives abound – the Millennium Villages programme, Sasakawa-Global 2000, the activities of the Association for Better Land Husbandry, among many others. All see soil fertility as central, although the suggested solutions and policy requirements are very different.

But what are the policy frameworks that really will increase soil fertility in ways that will boost production in sustainable ways; where the benefits of the interventions are widely distributed, meeting broader aims of equitable, broad-based development? Here there is much less precision and an urgent need for a concrete debate.

What would a framework for policy and implementation look like? This is much more contested. A variety of ‘models’ – often with rather implicit policy assumptions – are being, or have been, tested. These include (among many others, and different permutations):

A technology package approach: state led extension delivery– high input demonstration plots linked to a programme of extension and credit support to encourage uptake of a technically recommended package (usually associated with improved seeds). This has been standard fare of most agriculture departments for years, but with limited impact – as the evaluations of the World Bank’s Training and Visit system showed. SG-2000 developed a more focused approach in the 1990s, with variable success, in part because the input levels recommended were very high (and expensive – up to 150kg/ha), and so often inappropriate to agro-ecological and socio-economic circumstances. Other ‘package approaches’ have focused on agroforestry, conservation tillage and other technologies, but up-take and wider impact has been patchy.

Universal subsidies, price control and state support for input supply – the state-led subsidy approach of the 1970s and 80s involved highly controlled fertiliser markets and price control/subsidy. These systems were largely overseen by large parastatal organisations which offered pan-territorial pricing and supply through distributed depot networks, often linked to credit schemes often with poor pay-back records. Subsidy programmes were initiated in response to major oil/gas price hikes in the 1970s and persisted at huge cost to the state until economic liberalisation policies were introduced from the 1980s. They have been widely criticised, although positive outcomes have been realised, such as in Malawi, but at great cost to the exchequer and with high risks of intensifying patronage.

‘Smart’ subsidies and voucher schemes: facilitating market mechanisms – this approach has been tested widely, resulting in substantial boosts in aggregate production of maize, particularly in the good rainy seasons. This resulted in decreased food prices, benefiting not only producers but also consumers (many of the rural poor), and hopefully triggering an upward spiral of investment and labour generation. Questions over long term financial sustainability have been raised, given the high costs of imported fertiliser, and the potentials for leakage and poor targeting in the voucher system.

Village level demonstration and extension: area based integrated development – this approach is at the heart of the Millennium Villages Programme, and has been a feature of integrated rural development programmes of different sorts for decades. The programme, for example, offers subsidised fertiliser and shows its effect through demonstration plots. This has resulted in significant increases in fertiliser use and substantial yield growth, claimed to be up to three times previous levels.

Bulk purchase, packaging and local manufacture: investments to deal with upstream supply constraints –

Many of the preceding options are reliant on mineral fertilizers in some shape or form. With high production costs due to energy costs (for nitrogen – although declining oil prices should see a shift in this pattern) and limits to easily accessible supplies (for phosphorus), fertilizers are set remain expensive, even relative to higher crop commodity prices. Local packaging and supply has proven successful in areas of high demand, such as Western Kenya through public-private partnership arrangements (e.g. FIPS-Africa), this has meant more appropriate products in packs which are affordable are supplied. To reduce input costs further larger scale interventions are envisaged by some, including bulk purchase of fertiliser for Africa with negotiated price reductions (e.g. the African Development Bank initiative and IFDC’s MIR project). Others have even more ambitious plans for local manufacture of fertilizers in Africa to increase supply and reduce prices, through aid-subsidised investment in plant development. The overall policy frameworks for these initiatives remain unclear, but remain important if appropriate blends/supplies are to get to farmers across diverse Africa farming systems.

Improving agro-dealer networks: making markets work. Improving market access through the support of agro-dealer networks helps to reduce price of inputs and can result in improved information flows and technical advice to farmers. A distributed private sector response to input supply can, however, quickly be undermined by inappropriate subsidies or project intervention. Agro-dealers usually operate on small margins and fluctuations in supply, demand and price can affect their ability to stay in business. Umbrella organisations that support small dealer operations can offset some risks and provide back-up. However, inevitably, most commercially viable operations are in relatively high resource endowment agricultural areas, supplying relatively richer farmers. The reach and poverty impact of private sector based solutions remains hotly debated.

Scaling up local success: project support for local level innovation systems – over many years numerous projects have been initiated that have supported local innovation capacity and the participatory development of technologies. Many of these have focused on managing soil and water resources. Some have proven one-off events with limited uptake; but others have spread widely with major positive impacts on farming livelihoods. How can such successes be replicated, and mainstreamed as part of agricultural development, becoming less reliant on unreliable project based support?

These ‘models’ are familiar to more general approaches to rural development and policy in Africa and beyond. There has been much experience across Africa of each – from the technology packages and extension approaches of the colonial era, revived in the 1970s through Training and Visit to the integrated, area based approaches of the 1960s and 70s to the project mode of the 80s and the market-led approaches of the post-adjustment and economic reform era.

What is interesting today is that all are being proposed and experimented with often in the same place at the same time; yet often with remarkably little reflection on past experiences and lessons. A hardnosed assessment of such lessons is vital in advance of any new initiatives emerging from the International Year of Soils, asking what works where, when and why – and for what?

Does anyone remember the much heralded Soil Fertility Initiative of the early 2000s? What happened to that? New initiatives must not suffer the same fate. Today, there is a political momentum for action generated by a global concern about rising food prices and lagging production. There is a renewed focus on agricultural development as a source of economic growth and poverty reduction, particularly in Africa. And there have been a variety of documented successes across Africa, ranging from the Malawi fertilizer story to local agro-ecological change in the Sahel, from which to draw. Together, these factors combine to a positive context for debating appropriate policy frameworks for soils in Africa.

Some important questions are raised, pertinent to Zimbabwe as elsewhere:

• How can a strategy that operates at scale take account of the diversity of agro-ecological and socio-economic circumstances on the ground?
•  Is inorganic fertilizer the best initial ‘entry point’ for an integrated soil fertility management approach? If so, what should a programme look like, bearing in mind past failures? If not, what should be done first?
• How can efficient use of fertilizer use be ensured, avoiding the danger of benefits being captured more by fertilizer manufacturers and traders than small scale farmers?
• Do subsidies have a role in ensuring input provision and, if so, what is meant by a ‘smart subsidy’? If not, what other incentives/investments make most sense?
• What happens when there is no market – or when market mechanisms don’t reach certain places or people?
• What is the role for the state – in managing, supporting, coordinating, regulating, financing – and which parts of the state need support to make this happen?
• What type of policy processes are required to ensure pro-poor outcomes and avoid capture by elites, commercial interests and others?
• What enabling conditions need to be in place (e.g. trade policy, infrastructure, investment)
• How should ‘success’ and ‘impact’ defined?

Some of these are addressed in the final blog in this series, coming next week.

This post was written by Ian Scoones and appeared first on Zimbabweland