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Structural transformation and the primacy of smallholder agriculture
December 05, 2012
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on the Sokwanele
This paper is
part of the Zimbabwe Land Series
- View index to Mandi Rukuni's articles here
- View index to Dale Dore's articles here
In this 7th instalment of 12, I start to look into the future. I
actually get more inspiration looking into the limitless possibilities
of the future. After all we cannot change history, but we can create
a new history. The Creator gifted us with time on this earth, not
to change 10 billion years of history, and certainly not to change
a decade of fast track land reform, but to move on in building productivity
and competitiveness. For land and agriculture and the drive into
a manufacturing and an urban-industrial society, I am going to argue
that the next stage of our transformation is based on smallholder
farming, especially A1 and Communal areas.
In Europe, the Americas, and more recently Asia, countries that
have successfully industrialized had to go through sustained agricultural
growth. Zimbabwe can't jump this stage of development. A third agricultural
revolution is the precursor to a second industrial revolution in
Zimbabwe. The first was large scale farms (1950-2000); the second
by smallholder farmers (1980-1990). An increase in agricultural
demand and productivity stimulates manufacturing and industrialization.
Agriculture will have to play a crucial role in re-building Zimbabwe's
manufacturing sector. Smallholder farms are the mainstay for spearheading
sustainable and inclusive economic growth because of the efficiency
and equity benefits and prospects for inclusive growth.
Role of agriculture in economic development
In this regard the roles of agriculture in Zimbabwe's growing economy
to both household and national food security and feeding the growing
urban industrial population;
raw materials to the manufacturing sector;
domestic capital through savings and investment;
an effective market for industrial products, as shown by the tobacco
- Earning FOREX
and improving balance of payments;
excess labour from agriculture into the growing industrial sector.
promote the economic transformation from an agrarian to an urban
industrial economy. Zimbabwe is expected to follow global experience,
which confirms that an economy transforms from an agrarian base
to an urban industrial economy through four stages: a) The majority
of the population is in agriculture and natural resource mobilisation;
b) Agriculture and mining become the backbone of economy as government
establishes infrastructure that links rural and urban economies
and a large proportion of the population is linked to the market
economy; c) Agriculture and mining become fully integrated into
the manufacturing sector and the majority move to urban-industrial
centres; d) Agriculture, Mining and Manufacturing all are part of
the industrial economy, which is less than 10% rural. The re-birth
of the manufacturing sector in Zimbabwe is therefore dependent on
its ability to re-establish direct links with large numbers of small-businesses
in the agriculture and mining sectors.
Challenges in restoring Zimbabwe's manufacturing sector
The advent of the GNU
and a multi-currency environment, combined with de-regulated markets,
has provided the best economic environment for agriculture in a
long time. By relaxing the import tariffs and restrictions, this
allowed Zimbabwe to regain food security. Yet the relaxations are
not well analysed and are poorly regulated thereby throttling and
quickly killing the viability of local farming. Zimbabwe is fast
becoming a South African supermarket. This would be fine if Zimbabwe
had no agricultural potential. To the contrary, Zimbabwe has enormous
agricultural potential and to unlock the potential this now requires
courageous and committed leadership in both Industry and Government.
The 2011 Manufacturing Sector Survey reveals that locally sourced
raw material supply declined by 8% from the second half of 2010
to the first half of 2011. The price of sourcing raw materials has
also increased significantly, with the cost of local raw materials
increasing by 7%, while that of imported raw materials increasing
by almost 100% in the same period. The 2008 Euro zone debt crisis
triggered a downward spiral in commodity demand and prices. This
had detrimental ripple effects on Zimbabwe's export sector as 93%
of Zimbabwe's exports are commodities.
Structural changes in the economy and the search for competitiveness
Zimbabwe has deindustrialised. The double edged sword is that the
manufacturing sector relies more on imports for raw material. Conversely,
Zimbabwe is exporting most of its raw material and losing value
and jobs to foreign countries which process. Why should Zimbabweans,
for instance, seek jobs in South Africa's textile industry, instead
of Zimbabwe working to overtake South Africa and Mauritius as a
textile hub? Exports of raw material now contribute half of GDP
up from 28%, while the share of primary exports is up 95% from 82%.
Re-building key value chains into competitiveness
Zimbabwe has gone backwards to being a Factor (raw material) Driven
Economy. Zimbabwe has to graduate to an Efficiency (high productivity)
Driven Economy. Zimbabweans are hard workers but fast losing this
quality. We have to work as hard, and even harder than the Asians.
Hard work and efficiency will lead us into an Innovation ("ideas
as capital") (Driven Economy). Industry has now to work with
the farmers in analysing and developing these value chains. Agriculture
on its own has lost the capacity to drive the value chains. It follows
therefore that Industry has to work with emerging commodity syndicates
and commodity associations in driving the value chains so that where
possible, local farmers supply local manufacturing competitively.
Workforce development for a modern Zimbabwean food system
In planning economic development over several decades ahead, the
demographics suggest that Zimbabwe's urban population is growing
at a faster pace and is estimated to reach 50% urban by 2035, that
is in 20-odd years time. The second dynamic is that today's youth
is moving out of agriculture and prefers manufacturing and service
industries. This has implications for skills requirements. The increasing
urban population will mean an increase in the demand for processed
foods and high value foods such as dairy, meat, fresh fruits and
vegetables. By investing in these value chains now, and by transforming
training and skilling programmes to shift from primary production
to processing, packaging, distribution and so on, Zimbabwe will
need to create more jobs and higher labour productivity and incomes.
To date, public institutions do most skills training. In future
there is need for investing more in business sector skills training
and development as we expand the skills base for the youth into
manufacturing: distribution, packaging and the processing economy.
Small farms offer greatest opportunity
The effect of the Fast Track Land Reform Programme was to transform
the agrarian sector, with the majority of former large farms now
subdivided into small (A1) and medium/large sized (A2) farms. Both
small and large farms can be highly productive given the right investment
and skill. For now the value-chains I am proposing will largely
be based on the small farms as already experienced with tobacco
and cotton. This has now to be extended to horticulture, poultry,
dairy, soybean, beef, and many other commodities driven by farmer
commodity groups and cooperatives. There is even greater need for
innovative financing solutions beyond traditional credit to smallholders.
Government and donors have to consider "catalytic" financing,
as well as other forms of patient money such as venture capital
and equity investments into small and medium sized agribusinesses.
Getting agriculture moving again: "when agriculture sneezes,
manufacturing catches pneumonia"
Performance of Zimbabwe's agriculture so far
National 2011 statistics indicate that maize output has increased
by 9%, tobacco output by 44%, finger millet by 34% groundnuts by
24% and soya beans by 20%. Of the total agricultural output, communal
farmers accounted for the largest share of 43%, while large commercial
and A2 farmers accounted for 4% and 20% respectively. The balance
of 33% is attributable to A1 farmers who contributed 24%, old resettled
farmers who contributed 5% and small-scale commercial farmers and
peri-urban farming activities contributing 2% each. Small farms
are therefore becoming a new force to reckon with. However, there
are commodity-specific issues that I believe require a value chain
strategy is we are to catalyse sustainable growth of the small farm
There is need to invest into the 7 major prime mover investments
which succeeded in the past in promoting large scale agriculture
in the colonial period and smallholder agriculture in the first
decade of independence as follows:
- Land development
investments: land tenure security; access to long term finance;
- New technology:
produced by public and private investments in agricultural research.
- Human capital:
professional, managerial and technical skills from investments
in schools, agricultural colleges, on-the-job training.
- Rural finance:
for seasonal, medium-term and long term investments.
and physical capital: Biological capital- genetic and husbandry
improvements of crops and livestock, and forests. Physical capital
- and investments in dams, irrigation, roads, grain storage, etc.
- Farmer support
institutions: such as in marketing, credit, research, e xtension,
economic policy environment: political support for agriculture
over the long haul.
has shown that no single prime mover, such as new technology or
higher prices, can by itself increase agricultural production and
sustain it over time. The challenge is to mobilize public and private
investments in all seven as a policy package over a period of decades.
Structural transformation issues
There is need for inclusive growth and to avoid agricultural growth
without jobs and poverty reduction. We have to increase total factor
productivity: labour, land, capital, and technology. A leaf can
be borrowed from Asian examples of structural transformation in
Thailand, China and India. These countries adopted a small farm
model in the process of economic transformation.
The need for software and mindset change
The delay and/or inability to re-establish vibrant agricultural
and manufacturing sectors in Zimbabwe are a symptom of intellectual
and spiritual poverty rather than material poverty. Zimbabwe has
the potential to accelerate from a resource/factor driven economy
to an efficiency driven economy and this starts with re-building
the agricultural and manufacturing sectors and linking agriculture
and mining more directly to manufacturing. Zimbabwe, for instance,
produces cotton. Yet in the region, Mauritius, a country that does
not produce cotton, is the regional textile giant! So why Mauritius?
Because they transmute the material poverty in cotton, to 'brain-works'
of technology and efficient manufacturing that makes it possible
for them to import raw materials and still be a textile giant. Even
if Zimbabwe's cotton production is still low productivity, that
is no excuse for not having a vibrant and efficient ginning and
textile manufacturing industry that can be built through the old
Zimbabwean virtues of hard work, education, good management and
high productivity. The idea of analyzing and investing strategically
in the various agriculture-manufacturing value chains is now the
main strategy that Zimbabwe can use in getting industry to drive
a supply response from its agricultural sector. Time has come for
manufacturers to tell farmers, Ministry of Agriculture, Ministry
of Industry and Commerce, and Ministry of Finance that enough is
enough, why should we as manufactures have to import raw materials,
thereby worsening our balance of payment and exporting jobs to foreign
countries? Time has come to take one value chain after another and
re-identify those agricultural commodities such as soybean, maize,
sorghum, beef, milk, pigs poultry and others, that have inherent
comparative advantage but now require a sober trade and import policy.
Farmers and industry now have to take the war to Government as a
whole (agriculture, trade, industry, finance, f! oreign affairs
and so on), and not take partisan positions, and demand sufficient
protection for our farmers from unfair trade practices and violation
of rules of origin and other impediments to viability and competitiveness.
Moreover Zimbabwe's highly literate population has potential for
labour productivity and efficiency that can be translated to manufacturing
efficiency and jobs for our bulging young population.
It is clear that an inclusive growth based on a value-chain approach
and targeting the eventual establishment of an efficiency-driven
economy is a way to transform the subsistent farmer into a successful
business person who is fully integrated into the market economy.
We must teach, coach, mentor and impart the characteristics of successful
business people into our communities. These include enthusiasm,
ambition; the discipline of getting things done; confidence, self-belief
and self-reliance; boldness and the resilience of being grounded;
and the ability to learn fast and adapt to change. The spirit of
entrepreneurship is basically the ability to see opportunities where
others do not; to have the guts to act; confidence to do things
that have never been done before; and the inspiration to innovate
and be creative. Zimbabweans today have to change from dependency
on government, donors, churches and NGOs. Our smallholder farmers
and youngsters now need to re-discover that material poverty will
be overcome by confidence, intellectual rigour and hard work.
The third agricultural revolution is the successor to a second industrial
revolution. Smallholder farmers are the key to the third agricultural
revolution in Zimbabwe. There is need therefore to rebuild agricultural
production capacity. Key to achieve this is a revamping of the agro-chemical
industry. Diversifying into cash and commercial commodities is obligatory,
and so is the need to innovatively target value-chains and high-end
markets. If we can add value locally and own the farm-to-supermarket
value chains, we have set the tone for a strong relationship between
agriculture and manufacturing and their potential to contribute
to an efficiency driven economy.
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