Mealie-meal subsidy: Short-term solution to food crisis?

Edmore Mwandiringana, George T. Mudimu and Freedom Mazwi

Introduction

In recent years and more specifically 2019, there has been more brutal for the suffering masses in Zimbabwe, with month-on-month inflation reaching a dramatic 38.7%. Compounding these economic pressures are adverse weather conditions characterised by low rainfall and the Cyclone Idai catastrophe, which stifled maize output in the past two agricultural seasons. There is no doubt that Zimbabwe is in a crisis of unimaginable proportions. During the 2017-2018 agriculture seasons, farm production dwindled from a production target of 2,1 million tonnes to 1,65 million tonnes and 0,75 million tonnes respectively (FAO, 2019). To make the situation worse, the Total Consumption Poverty Line (TCPL) stood at Z$3 200 in October 2019 against an average income of Z$1 200 to
Z$1 500 (about US$44 to US$74) for the same period. Against this backdrop, the state has been rolling out a maize and mealie meal subsidy programme targeting capitalist-oriented grain millers with the hope that this would alleviate the suffering of the population through a supposed trickle-down effect. This subsidy is a response to strong complaints from the generality of Zimbabweans who bear the brunt of the high prices of maize. As part of this subsidy package, the price of a 10kg bag of mealie meal now costs Z$50 instead of Z$101. This piece represents an attempt to examine the implications of subsidising capitalists rather than directing the support to the peasantry, at the same time, proffering policy alternatives to the government of Zimbabwe.

Subsidies and the peasantry
Current evidence shows there has been limited state support in the form of subsidies to the peasantry (communal and resettled) in the past five years. However, there are two state-supported programmes — namely Command Agriculture and the Presidential Inputs Scheme. These have been touted and broadly viewed as state subsidies, but these cannot be regarded as input subsidies. We consider input subsidies to be income transfers from the state to the poor (Doward and Chirwa, 2011). With reference to the Presidential Inputs Scheme, this is more of a humanitarian scheme with empirical evidence from our study sites indicating that this scheme is at times only open for the most vulnerable groups in society, thereby disenfranchising other needy social groups. As for Command Agriculture, existing scientific studies note that this is a state-assisted contract scheme and not an inputs subsidy programme as largely portrayed in the mainstream media. For example, the scheme levies commercial interest rates of 12-15% per annum for the loans advanced to farmers. Under typical subsidy programmes such as the Farmer Input Support Programme (FISP) in Zambia, the farmers raise only 25% of the total inputs costs and the balance of 75% is provided by the state from its agriculture budget and no refunds to the state are made by the peasantry. The FISP directly benefits the peasantry.

Although, we fully agree that the current maize and mealie-meal subsidy programme is necessary, given the recent droughts, we also posit that the state needs to be more proactive in its approach if it is to avert structural hunger year in, year out. To date, the state had utilised an unbudgeted Z$180 million in December 2019 and has earmarked Z$2.16 billion (US$133 million) towards maize-meal subsidies for the 2020 fiscal year (Reuters, 2019). Such a huge amount is being channelled to structures that we perceive are part of the systematic perennial food shortages in Zimbabwe.

Food shortages in the Zimbabwean context are a result of natural causes (droughts and plant diseases) and also man-made. Humanity has limited control on the natural causes; efforts to address the natural hazards such as droughts include water harvesting and deep borehole and other water harvesting facilities. All these require investments, and now, the minimal irrigation infrastructure owned by the peasantry, who constitute the majority of the grain producers, is in a deplorable state, with studies pointing that, the peasantry owns 20% of irrigation infrastructure. Thus, a long-term solution to the food crisis would entail addressing the roots of the crisis, which is low production. A huge chunk of the amount devoted to the maize subsidy could be more useful if it were to be devoted to the development of irrigation facilities and the development of drought-resistant crops. It is prudent to note that in the 2020 National Budget, only 4% of the total budget was directed towards agriculture. This figure is far less than the 10% agreed under the Maputo Declaration. The Maputo Declaration encourages governments to allocate at least 10% of their national budgets towards rural agriculture. Therefore, at the moment, the state seems to be putting more effort towards firefighting than really averting real hunger, which is systematic. We perceive that even in the presence of the maize subsidy, if production and productivity on family farms is not attended to, the hunger will persist and so will the state lose more strategic battles as a result of the current “maize subsidy tactics”. At the same conjecture, we are tempted to think harder on who are the real beneficiaries of the maize subsidy, how did they procure the maize and at what prices? Existing evidence points to that the state-controlled Grain Marketing Board (GMB) in June 2019 reviewed the maize producer price from Z$726 per tonne to Z$1 400 per tonne. This, the GMB argued, was to avoid side marketing by the farmers, which by then had become rampant.

The side marketing offers better prices. After increasing the maize producer price and procuring the maize from the peasantry, the GMB started selling the same maize to millers at Z$4 000 per tonne, in the process making a killing of $2 600 without any value addition to the maize. Therefore, one may be forgiven to argue that the increase in maize meal prices is artificial.

Road ahead
We foresee a man-made food crisis as the “subsidy actors” hold the state to ransom as they try to gain from the subsidy programme. This could hold more water given the current dirty fights among the private millers as they jostle to be included in subsidy games. But more worrisome, is the disempowerment of the peasantry by the mercantilist tendency in the maize and mealie meal subsidy game. Hence, we argue that the maize industry is at a crossroads and history has taught us that in the event of a crisis, speculators abound. Zimbabwe has been down this road before, food shortages and hoarding have already been reported by many news outlets (both state and privately-owned). In light of this, it could be prudent for the state to rethink and re-examine if the current model of delivering the maize subsidy is an effective and efficient panacea to Zimbabwe’s food crisis or a keg to light a systematic food crisis. At the same, this is the golden moment for the peasantry to (re)form and (re)organise competent producer groups that can dismantle the speculators and “founded associations” that are at the apex of the mercantilist grain millers. These founded associations who are dominating and distorting the value chain do not have horizontal relationships with the peasantry and the poor urban consumers who are the deserving beneficiaries of the maize subsidy programme.

Article originally appeared in the:https://www.thestandard.co.zw/2020/01/12/mealie-meal-subsidy-short-term-solution-food-crisis/

Published by peasantscorner

We are interested in peasant activities that provide a counter- narrative to hegemonic forces in the current neoliberal epoch.

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