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Cottco seeks $800m to pay farmers – NewsDay

By Tanyaradzwa Nhari
COTTCO Holdings Limited is looking to unlock $800 million to clear outstanding dues to farmers as costs driven by the parallel market continue to impact on the company’s revenue.

In a trading update for the third quarter ended December 31, 2021, Cottco acting company secretary Jacqueline Dube said the company was looking to complete the payment of farmers, having already paid out $3 billion.

“While Cottco was able to pay farmers $3 billion from funding raised during the season, the company is looking to unlock a further $800 million to clear outstanding dues to farmers after the payment of the outstanding 2020 subsidy by government,” she said in the trading update.

Dube revealed that in order to ensure that cotton farming remains viable, the government had committed an additional $22 per kilogramme delivered by farmers as a subsidy payment.

“The total subsidy for 2021 is $2,53 billion and $500 million was released and paid to farmers during the period under review. The balance is anticipated shortly from Treasury,” she said.

Dube said the third quarter signified the end of Cottco’s buying season with the final intake standing at 116 052 metric tonnes compared to 82 479 metric tonnes in 2020.

She said that while the marginal movement in the interbank rate was a welcome development, local costs which increased as a result of movement on the parallel rate continued to squeeze the company’s margins.

Cottco’ ginning schedule, she said, was delayed by power availability with 93% of the seed cotton intake having been ginned by December 31, 2021. Production is now set to end this month.

“Zimbabwean hand-picked cotton is in high demand and the company’s order book exceeds production volumes,” Dube said.

She said the company was publishing quarterly trading updates pending the imminent finalisation of the outstanding external audits

Dube said the late onset of rains had resulted in a sizeable crop being established one to two months later than normal.

‘Depending on the length of the season and available heat units, this could affect the maturity and fibre length of the output. Cottco’s ground staff is working with farmers in order to achieve the best possible results under the circumstances,” she said.

“The adoption of precision agriculture under the Cotton Pfumvudza/Intwasa programme is also expected to improve the
outlook.”

Dube added that the company was reviewing projects for value addition and increased use of technology in its processes to enhance operational efficiencies,

Cottco Holdings Limited is the largest cotton producing company in the country, with an 80% market share.

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agriculture

Government commissions crop insurance project – DailyNews – DailyNews

THE government and its partners have set aside over US$1million under the Area Yield Index Crop Insurance pilot project for 30 000 farmers who received Pfumvudza inputs this agriculture season.

In a statement yesterday, ministry of Agriculture permanent secretary, John Bhasera , said that climate financing would increase farmers’ resilience against negative impacts of erratic weather patterns.

“The piloting of the Area Yield Index Crop Insurance will this season be undertaken in Rushinga and Mwenezi Districts covering about 30,000 smallholder farmers under the Pfumvudza programme for a sum insured of over one million US$”.

“In-order to be able to verify usefulness, relevance and have proof of concept for the Area Yield Index Crop Insurance, we are  starting this agricultural season with a pilot exercise with financial support from a highly committed development partner called Mercy Corps.

“Pula Advisors GmbH (Pula) has been contracted by Mercy Corps’ AgriFin Digital Farmer to provide technical assistance for the design and implementation of a comprehensive Area yield index insurance on the inputs distributed under the Pfumvudza initiative in Zimbabwe,” Bhasera said.

The secretary said thes programme will later accommodate more farmers as the initiative will protect Pfumvudza beneficiaries’ crops.

“Mercy Corps’ AgriFin Digital Farmer is a two-year, $5 million initiative that aims to support the expansion of high-impact, digitally-enabled services to at least one million farmers and to expand the services to a further five million smallholder farmers in partnership with Gates and Bayer foundation. This expansion effort will be delivered by growing ecosystems of diverse service providers and building farmer income, productivity and resilience by 50 percent”

“The task team chaired by the Agricultural Finance Corporation  comprises the ministry and relevant stakeholders is being technically advised by Pula Advisors and they have so far green-ticked a number of key elements and are ready to roll the trial run during this agricultural production season covering farmers under the Pfumvudza/Intwasa programme,” Bhasera explained further.

He said while the Presidential Input Scheme was climate proofed, farmers were still vulnerable to climate change hence the insurance to reduce crop loss.

“The ministry has upgraded its agricultural transformation strategic options basket by bringing in a crop insurance product pioneered in the region. The inclusion of the Area Yield Index Crop Insurance in the basket of inputs for Pfumvudza/Intwasa smallholder farming beneficiaries under the technical guidance of Pula Advisors is meant to protect the farmers from the heavy impact of climate change.

“The Pfumvudza programme is based on climate-proof production to certain extent, according to the results of the 2021 crop and livestock assessment report by the ministry. The average maize yield for farmers under Pfumvudza was higher than for non-Pfumvudza farmers .There is scope in understanding and acting against climate change and its potential impact.

“Smallholder farmers in Zimbabwe are increasingly exposed to systemic climate change risks such as droughts, dry spells, delayed seasons, floods, hailstorms, pests, diseases and many more,” Bhasera said.

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Duty-free boost for Zimbabwe agriculture – The Zimbabwe Mail

John Deere tractor



The Zimbabwe Revenue Authority (Zimra) has listed import duty and Value Added Tax (VAT)-free agricultural equipment while the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development has introduced a crop insurance product for Pfumvudza/Intwasa beneficiaries as the Government continues to implement a cocktail of measures to boost agricultural production.

Zimra this week said machinery such as manure spreaders, fertiliser distributors, hay balers, combine harvesters, machines for sorting eggs, machines for preparing animal feed, tractors and poultry incubators would be imported duty and VAT-free.

Stakeholders hailed the move as critical to transforming the agricultural sector for economic growth and prosperity.

Zimra said importers were required to engage clearing agents registered with the tax collector.

“The goods are treated as commercial importations. Clearance is to be done through a bill of entry and a tax clearance certificate is needed in order to be exempted from payment of presumptive tax. Failure to produce such attracts a presumptive tax of 10 percent of the value for duty purposes,” said Zimra.

The decision was greatly welcomed by farmers who said it supported their efforts to grow the agricultural sector by easing the means of production and lowering the burden on most farmers who desperately needed modern equipment and technology.

Mrs Martha Macheke from Banket said it gave relief to those who were importing machinery aimed at improving farming.

“Value addition as well as mechanisation are both critical for us to be sustainable. This type of equipment industrialises and modernises our agriculture through innovation development.

“Mechanisation, for example, leads to precision farming which maximises efficiencies, lowers post-harvest losses, and increases the profits that a farmer can make,” she said.

Another farmer from Raffingora, Mr Tendai Masocha said the scrapping of duty on some equipment would enable them to access machinery at a lower cost and boost the mechanisation programme.

“It has been expensive for farmers to buy machinery, but without duty, it becomes affordable. This is a good move, especially on machinery,’ he said.

Mr Albert Mumanikidzwa of Chinhoyi echoed similar sentiments.

“Our challenge is that sometimes we do not have access to foreign currency. Hopefully, we will have easy access to foreign currency so that we can import machinery and boost production and alleviate poverty,” he said.

The Government had been making huge efforts to revive the agriculture sector by incentivising the importation of machinery.

On the other hand, the area yield index crop insurance, which will be technically directed by Pula Advisors, is meant to protect Pfumvudza farmers from heavy impact of climate change vagaries.

Beginning in the 2021/22 agricultural  season, the Ministry will implement a pilot exercise with financial support from development partner, Mercy Corps Zimbabwe.

Pula Advisors has been contracted by Mercy Corps’ AgriFin Digital Farmer (ADF) to provide technical assistance for the design and implementation of a comprehensive area yield index insurance on the inputs distributed under the Pfumvudza initiative in Zimbabwe.

Mercy Corps’ AgriFin Digital Farmer (ADF) is a two-year, $5 million initiative that aims to support the expansion of high-impact, digitally-enabled services to at least one million farmers and to expand the services to a further five million smallholder farmers in partnership with Gates and Bayer foundation.


The expansion efforts will be delivered by growing ecosystems of diverse service providers and building farmer income, productivity and resilience by 50 percent while reaching 40 percent women.

Permanent Secretary in the Ministry of Agriculture, Dr John Basera said the ministry established a team chaired by the Agricultural Finance Corporation (AFC) Insurance to collectively model out piloting of the Area Yield Index Crop Insurance.

“The task team, which comprises the ministry and relevant stakeholders, is being technically advised by Pula Advisors and they have so far green-ticked a number of key elements and are ready to roll the trial run during this 2021/22 agricultural production season covering farmers under the Pfumvudza/Intwasa Programme,” he said.

“The piloting of the area yield index crop insurance will this season be undertaken in Rushinga and Mwenezi Districts covering about 30 000 smallholder farmers under the Pfumvudza programme for a sum insured of over USD1 million.

“Recognizing the value likely to be created, the Ministry commits itself to fully supporting the associated activities and has activated its structures and institutions to ensure the piloting exercise is a success,” he said.

Dr Basera commended FBC Insurance (Pvt) Ltd for coming on board as the insurer for the pilot exercise.

Ministry chief director, strategic policy planning and business development Mr Clemence Bwenje said the pilot exercise would be exciting as it was premised on the objective of providing proof of concept, showing the benefits, costs, relevance and possibility of scaling out the area yield index crop Insurance next season.

“The evaluation to be produced by the task team will be instrumental in informing policy to the farming community, stakeholders and Government as it will highlight on the quality and scalability of the insurance product,” he said.

Mr Bwenje emphasized that the overaching impact of rolling out such insurance products was to sustainably and affordably protect smallholder farmers from key agricultural risks through the use of insured inputs, which in turn encouraged better farming practices, raised yields while providing compensation (payouts) to support farmer resilience when losses occurred.

“The assurance is that the project will be highly technology and data-driven, enhancing Government’s delivery capabilities and introducing innovations in digital insurance to the sector.

“Insurance in agriculture has been the missing link also given its ability to create opportunities for agricultural investments”, Mr Bwenje said.

Pula Advisors, regional manager for Anglophone Africa, Ms Cynthia Tapera,  said the area yield index crop insurance would  insure farmers’ harvest.

“It is an insurance cover that insures farmers against a pre-set historical benchmark. The perils covered in this product are windstorm, frost, excessive rainfall, heatwave, hail,  floods, drought, pests and diseases. The pilot will focus on the maize value chain.

“Climate change is upon the whole world and the results are clear for everyone to see. The damaging impact is felt by the smallholder communities with no other sources of income other than agriculture,” she said.

Smallholder farmers in Zimbabwe are increasingly exposed to systemic climate change risks such as droughts, dry spells, delayed seasons, floods, hailstorms, pests, diseases and many more hence the need for insurance service.- Herald


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Zimbabwe's operating environment remains vulnerable – The Zimbabwe Mail




HARARE – Zimbabwe’s operating environment remains vulnerable to both internal and external shocks that may have negative impact on key economic enablers, according to Fitch Solutions, a leading global economic research firm.

The research company in a summary report on Zimbabwe Country Risk, said the country remains vulnerable to factors such as adverse weather conditions that can impact agriculture and electricity supply, commodity price shocks, supply chain bottlenecks, still-low industrial productivity and hard currency shortages.

“While efforts to liberalise the currency regime are easing liquidity challenges and inflation gradually, policy uncertainty, risk of social unrest and the impact of capital controls continue to dampen sentiment,” said the company.

It added that businesses operating in the country will also face rigid labour market regulations, drawn-out legal disputes and onerous taxes particularly in the mining sector.

The mining sector has been paying workers in both local and foreign currency, resulting in challenges in taxation related issues.

The country’s economy is projected to grow 5,5 percent in 2022 underpinned by higher output in mining, manufacturing, agriculture, construction as well as the tourism sector.

However, the industry and mining sector has since warned that continued power cuts could derail first quarter 2022 targets due to lost production time, which will have a bearing on growth.

The Zimbabwe Electricity Supply Authority (ZESA) recently announced that there will be increased load shedding due to maintenance works at Kariba Hydro Power Station, one of its power generating
sites with capacity to produce 1 050 Megawatts.

Chamber of Mines of Zimbabwe president, Isaac Kwesu, said the increase in load shedding has a greater impact on the production side of the mining sector.


“Many businesses have reverted to alternative power sources such as fuel-powered generators which have become even more expensive to operate given the increase in global oil prices that has rippled to the local US-dollar pump prices due to power supply failures,” he said.

The Confederation of Zimbabwe Industries (CZI), has often highlighted that the issue of power has remained a cause for concern hence the industrial lobby group continues to engage the power utility on the issue.

That said, Fitch noted that Zimbabwe has significant human capital and vast resource potential that could drive economic development, contingent on the implementation of policies that support legal, fiscal and monetary policy reforms.

“This will be a long-term project intrinsically tied to improved governance and transparency, increased investment openness and meaningful re-engagement with multilateral lenders and the international community in the years ahead,” reads part of the report.

The research firm, in its recent report, also highlighted that Zimbabwe’s current account surplus is expected to narrow to 1,4 percent of Gross Domestic Product (GDP) in 2022 from 2,4 percent in 2021 as demand for consumer and industrial imports strengthens amid an uptick in economic activity.

Fitch Solutions, which is part of reputable global credit rating agency Fitch Ratings, said while the secondary income surplus will remain substantial given ongoing aid inflows, this will be outweighed by widening deficits in the services and primary income accounts as the tourism sector stages only a weak recovery, and profit remittances by mining companies rise.

The research firm said demand for consumer and capital imports will remain solid as inflation slows further, thus supporting spending power, and construction activity rises as the Government invests in infrastructure. – Business Weekly


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