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Contract wheat farming suspended due to domestic market failures

Oliver Kazunga, Senior Business Reporter
THE Grain Millers Association of Zimbabwe (GMAZ) has withdrawn from the Memorandum of Understanding with the National Bakers Association (NBA) citing weak enforcement of agreed quotas.

The move has also forced the suspension of contract wheat farming due to domestic market failure as businesses favour imports.

The two parties signed an MoU last year under which the baking industry was meant to procure 75 percent of its flour requirements locally with a view to foster growth of the milling sector.

In a written document to NBA president Givemore Mesoemvura, GMAZ chairman Tafadzwa Musarara said millers had with immediate effect withdrawn from the MoU.

“We regret to advise that the GMAZ has with immediate effect withdrawn from the MoU entered with your organisation,” reads part of the document dated November 20, 2015.

“This is due to . . . the weakening of currencies in the region has seen foreign flour landed prices dropping significantly from $33 per 50 kilogrammes to circa $28 per 50kg bag against local price of $32 per 50kg.

“Local bakers have now resorted to procuring 100 percent of their flour requirements from flour importers,” he said.

Musarara also said their withdrawal was also due to the fact that the MoU has been weak on the enforcement of the agreed quotas as evidenced by a drop of local flour sales from about 14,000 tonnes per month to around 6,000 tonnes per month.

“The NBA has failed to take the initiative to make regular inspection.

“It has now become very unprofitable venture for millers to continue contracting the local winter wheat, but lose market share to foreign flour products,” he said.

As a result, Musarara said their members were now stuck with locally grown wheat as they were unable to offload it on the local market.

“Accordingly, we also advise that we’ve decided to suspend winter wheat contract farming, which we were obligated to do by the MoU,” said Musarara.

Speaking by telephone from Harare yesterday, Mesoemvura confirmed the withdrawal from the MoU by the GMAZ.

“Yes, we received communication to that effect. However, we’re still to meet and discuss the matter so, we will only comment after we’ve met with the millers,” he said.

Over the years, wheat production in the country has plummeted due to power outages and high cost of production. Less than 30,000 tonnes were harvested last year against a national requirement of 400,000 tonnes.

According to official data, about a decade ago, local wheat producers used to harvest close to 260,000 tonnes from about 65,000 hectares with the balance of 40,000 tonnes of the grain being imported.