Irrigation and Hybridized Land Tenure: Increasing Zimbabwe's Food Security

"In the Lord's Prayer, the first petition is for daily bread. No one can worship God or love his neighbor on an empty stomach."

—  Woodrow Wilson

According to a report that was recently published by an NGO called the Food and Nutrition Council, 25% of Zimbabwe's rural households can be classified as "food insecure". Otherwise put, between 2013 and 2014, close to 2,206,924 Zimbabweans (~ 17% of Zimbabwe's population) will require some form of food aid. This figure represents a 32% year-on-year increase in the number of Zimbabwe's "food insecure".

Clearly, Zimbabwe's food security situation is deteriorating.

Generally, food insecurity is the precursor of societal turbulence; it drives communities to the brink of chaos. History is replete with numerous examples of placid societies that were morphed, by hunger pains, into screaming banshees.

In this post, I will identify some of the root causes of Zimbabwe's food insecurity. They can be summed-up as follows: erratic rainfall (& poor irrigation infrastructure); unviable grain prices, and; land tenure that impedes farmers from realizing economies of scale.

Further, I will argue that farming cooperatives can be employed to enhance the cost-benefit equation of growing food crops like maize.

From the outset, I have to point out that most of what I will say has been said before (e.g.), albeit in a  sweeping manner. Otherwise put, what I will say has been previously articulated in a manner which is divorced from supporting data, analyses and computations.

In this post, I will embellish the recommendations that have been made by others with data, analyses and computations. My goal is to present an evidence-based discussion that will: 1) Further-illuminate the drivers of Zimbabwe's food insecurity, and; 2) Outline a plausible solution to Zimbabwe's food woes.

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...Zimbabwe's Food Situation

Illustration 1 sums-up Zimbabwe's food situation:

Illustration 1 (click on illustration to zoom in) Adapted From: ZimVac, 2013

Illustration 1, above, demonstrates the following key points:

1. The heart of Zimbabwe's diet is maize/corn. It is the "source material" of sadza, a thick polenta-like porridge that features prominently in Zimbabwean cuisine. As Illustration 1 demonstrates, Zimbabweans consume close to 2.2 million tonnes of maize annually.
2. Zimbabwe's production of maize fell from 1.4 million tonnes, in 2011, to just over 900,000 tonnes, in 2012. This translates to a 35.71% decrease in Zimbabwe's production of maize. And, it implies that Zimbabwe had a deficit of 1.3 million tonnes of maize in 2012. Generally, this grain deficit was supplemented by government-to-government imports of maize from South Africa and Zambia. Further, to address this crisis, aid organizations, like the World Food Programme (WFP), also dispensed food-aid-packages to vulnerable pockets of Zimbabwean society.
3. Historically, Zimbabwe produced, under irrigation, a 600,000 tonne annual buffer reserve of maize. In general, most of Zimbabwe's "legacy" irrigation infrastructure has fallen into a state of disrepair. This, in essence, has meant the loss of the-said buffer reserve. By some estimates, Zimbabwe requires a USD 3 billion capital infusion for the refurbishment of its irrigation infrastructure.

Generally, analysts assert that Zimbabwe's food insecurity is driven by; erratic rainfall, the country's power crisis and a shortage of funding, implements and expendable inputs. 

Intriguingly, an additional narrative is increasingly taking the center stage. It can be abbreviated as follows:

Zimbabwean farmers, especially the 146,000 new smallholder farmers, are increasingly using the lion's-share of their land to grow cash crops, like tobacco, and not food crops, like maize. [1]

A cursory look at Zimbabwe's agricultural data lends credence to this narrative.


...The Tobacco Story

Rising Production

Illustration 2, below, demonstrates Zimbabwe's output of tobacco from 2007:

Illustration 2 (click on illustration to zoom in) Adapted From: TIMB

From Illustration 2, above, it is evident that Zimbabwe's tobacco output has been on an uptrend since 2009. It has been increasing in-spite of the host of problems that are bedeviling Zimbabwe's agricultural sector:

Increasing Number of Growers & Falling Productivity

Illustration 3, below, demonstrates that the number of registered tobacco growers in Zimbabwe has been growing at an average annual rate of 31%:

Illustration 3 (click on illustration to zoom in) Adapted From: TIMB

According to Illustration 3, the number of tobacco growers registered its sharpest increase (61%) between 2011 and the 2012/2013 growing season.

Illustration 4, below, shows the average weight of tobacco that was delivered by each grower between 2007 and 2012/2013:

Illustration 4 (click on illustration to zoom in) Adapted From: TIMB

As Illustration 4 demonstrates, the average weight of tobacco that was delivered by each grower fell from 2,500 kgs, in 2010, to 1,500 kgs in the 2012/2013 growing season (i.e. it fell by 67%).

Put together, Illustrations 3 and 4 imply that the increase in Zimbabwe's tobacco output is being driven by a growing number of tobacco farmers; i.e. it is not being driven by productivity enhancements at a constant number of farms.

Falling Average Revenues

Illustration 5, below, shows the average revenue that was earned by tobacco growers between 2007 and 2012/2013:

Illustration 5 (click on illustration to zoom in) Adapted From: TIMB

According to Illustration 5, the average revenue that was earned by each tobacco grower plummeted from a high of USD 8,900 in 2010 to USD 5,000 in 2012/13. During the time-period in question, the average auction price of tobacco increased from USD 2.71 per kg, in 2011, to USD 3.69 per kg in the 2012/13 growing season. Succinctly put: the average revenue that was earned by tobacco growers was on a downtrend, while the average auction price of tobacco was on an uptrend. 

Basically, the auction price of tobacco is the function of two things; the global demand of tobacco and the quality of the tobacco that growers deliver [2]. The China National Tobacco Company is one of the most prominent buy-side players in Zimbabwe tobacco auctions; it accounts for close to 50% of the demand. Thus, it is reasonable to argue that Chinese demand is the main driver of prices on Zimbabwean auctions. 

According to a Euromonitor International report, China's demand for tobacco is growing, albeit at a falling pace. Thus, it is reasonable to assert that the increase in Zimbabwe's auction prices was predominantly driven by growing Chinese demand (not across-the-board quality improvements that would command higher prices). [5]

***

To recap, the preceding analyses reveal the following:

• Zimbabwean tobacco sales have been on an uptrend since 2009.
• The number of registered tobacco farmers has been growing at an average rate of 31% since 2007.
• Between 2010 and 2013, the average weight of tobacco that was sold by each registered grower fell from 2,500 kgs to 1,500 kgs.
• The average revenue that was earned by each tobacco grower plummeted from a high of USD 8,900 in 2010 to USD 5,000 in 2012/13.

 Hence, one can make the following deduction:

The bulk of the increase in Zimbabwe's tobacco output is being driven by smallholder farmers who are shifting from farming food crops to farming tobacco. Many of these smallholder farmers have limited experience in growing tobacco; they are at an early point on the tobacco farming learning curve. Thus, their productivity is relatively low, and it is pulling down the average productivity of Zimbabwe's tobacco sector.

Generally, the majority of Zimbabwean smallholder farmers were the product of the country's fast-track land reform exercise. Their plots average 5 hectares in area, and, they can predominantly be classified as semi-subsistence farmers.

Zimbabwe's average yield of tobacco stands at approximately 2 tonnes per hectare. Therefore, it is reasonable to assert that the average Zimbabwean smallholder farmer uses at least 0.75 hectares of his/her land to grow tobacco (this translates to 15% of the average 5 hectare A1 plot) [3]. Generally, it costs USD 1,800 per hectare to grow tobacco. Therefore, it is reasonable to assert that the average A1 farmer who grew tobacco made an average profit of USD 3,200.00 or USD 533.33 a month (i.e. the amount that, according to Zimstat, a family of 5 would require to live a decent life). This figure is USD 233.00 higher than the average monthly salary of most Zimbabweans (which currently stands at USD 300.00 per month).

Ceteris paribus, the hectarage that the average smallholder farmer puts under tobacco is set to rise. Unfortunately, this may not bode well for Zimbabwe's food security.

...Why Zimbabwean farmers have practically no incentive farm maize

"Most of economics can be summarized in four words: 'People respond to incentives. The rest is commentary."

— Steven Landsburg

Zimbabwe's Food Security; Unpacking the data

Illustration 6, below, depicts the provincial picture of Zimbabwe's food insecurity:

Illustration 6 (click on illustration to zoom in) Adapted From: ZimVac

As Illustration 6 demonstrates:

• Eight out of ten of Zimbabwe's provinces urgently need some form of food aid.
• By and large, Zimbabwe's food insecurity stems from prolonged dryspells.

From Illustration 6, it is evident that Zimbabwe's food insecurity is largely driven by erratic rainfall patterns. Otherwise put, "water issues" are the predominant driver of the increase in the number of Zimbabwe's food insecure.

Illustration 7 shows the regions that experienced the greatest crop losses in the 2012/2013 agricultural season:

Illustration 7 (click on illustration to zoom in)

As Illustration 7 demonstrates, three (out of ten) Zimbabwean provinces experienced severe crop losses in the 2012/2013 agricultural season. They include Manicaland, Midlands and Masvingo provinces. In aggregate, they lost 387,416 hectares of maize (owing to erratic rainfall patterns). This translates to a loss of between 774,832 and 1,549,672 tonnes of maize.

Otherwise, put, if Zimbabwe had normal rainfall / well-developed irrigation infrastructure, the country would have produced between 1,674,832 and 2,449,672 tonnes of maize in the 2012/2013 agricultural season; i.e. the country would have had a grain deficit of around 525,168 tonnes in the worst-case scenario.

Illustration 8, below, depicts the number of people in Zimbabwe who require(d) food aid between 2009 and 2013:

Illustration 8 (click on illustration to zoom in) Adapted From: ZimVac

As Illustration 8 demonstrates, between 2009 and 2012, the number of Zimbabwean denizens who required food aid fell from 6 million to 1.8 million people. From 2012 to 2013, the number of people who were food insecure increased from 1.8 million to 2.2 million. This implies that 400,000 "new" people became food insecure between 2012 and 2013.

The Economics of farming maize

In Zimbabwe, the market of maize is regulated; the country has a centralized state buyer of maize called the Grain Marketing Board (GMB). Annually, the Government of Zimbabwe (GoZ) gazettes the producer price of maize, i.e. the price at which the GMB would buy maize from farmers. In theory, this is the price at which the GMB would purchase Zimbabwe's annual consumption of maize (i.e. 2.2 million tonnes of maize).

In the 2012/2013 agricultural season, the producer price of maize was USD 378.00 per tonne. Hence, this implies that the GoZ had earmarked USD 831,600,000.00 for the purchase of maize. [6]

At this producer price, which is USD 2.00 less than the A1 per tonne cost of producing maize, farmers were only willing to supply 20,000 tonnes of maize to the GMB [7]. Owing to the moribund state of Zimbabwe's grain storage infrastructure, 10,000 tonnes of this supply went bad. 

As I mentioned elsewhere, Zimbabwe's grain deficit (which was 1.4 million tonnes in 2012/2013) is predominantly addressed by government-to-government imports of maize from South Africa and Zambia. In 2013, close to 150,000 tonnes was imported under this arrangement at an average price of USD 460 per tonne.

The price, supply and demand information that was discussed above can be reduced in Table 1 as follows:

Table 1 Adapted From: Zimbabwe Commercial Farmers Union data

From the data points in Table 1, one can plot the supply and demand chart in Illustration 9, below:

Illustration 9 (click on illustration to zoom in)

Illustration 10, below, is an iteration of Illustration 9:

Illustration 10 (click on illustration to zoom in)

According to Illustration 10:

• The equilibrium price of maize in Zimbabwe, i.e. the price at which supply equals demand is approximately USD 520.00 per tonne. At this price, the GoZ can expect A1 farmers to, ceteris paribus, sell 1.1 million tonnes of maize to the GMB.
• At the export/import parity price, i.e. USD 460.00 per tonne, the GoZ of Zimbabwe can expect A1 farmers to, ceteris paribus, sell 600.000 tonnes of maize to the GMB.

The data in Illustration 10 ignore the cost of producing maize, and tell us nothing about the aggregate volume of maize that A1 farmers would produce or the volume of maize that A2 farmers would produce.

Why farmers have an implicit disincentive to farm maize

Generally, the cost of producing maize, at an A1 plot, under irrigation is USD 380.00 per tonne. If we assume an average yield of two tonnes per hectare, the profitability of farming maize can be computed as follows:

Table 2 (click on table to zoom in) Adapted From: Zimbabwe Commercial Farmers Union data

As Table 2 shows, the A1 farmer who produced 10 tonnes of maize would expect to make an aggregate profit of: USD 1,400.00 in a scenario where the GMB purchases maize at the equilibrium price.

Generally, it takes 6 months to "produce" maize. Thus, the profit that would accrue to the farmer translates to USD 233.00 per month. Generally, the average income of Zimbabweans is USD 300.00 per month. According to Zimstat, the average Zimbabwean family of five requires at least USD 534.00 per month to live at the poverty datum line.

Otherwise put, the computed income is less than the monthly average income of Zimbabweans and the Zimbabwean poverty datum line. Hence, it is reasonable to assert that an increase in the producer price of maize is unlikely to incentivize A1 farmers to grow more maize.

Further, if we postulate an implausible average yield of twelve tonnes per hectare, the profitability of farming maize under irrigation, on A1 farm can be computed as follows:

Table 3 (click on table to zoom in) Adapted From: Zimbabwe Commercial Farmers Union data

As Table 3 illustrates, the A1 farmer who produced 10 tonnes of maize would expect to make a profit of USD 8,400.00 in a scenario where the GMB purchases maize at the equilibrium price.

As I stated previously, it takes 6 months to "produce" maize. Thus, the profit that would accrue to the farmer translates to USD 1400.00 per month.

Evidently, the income from farming, at an average yield of twelve tonnes per hectare and a producer price of USD 520.00 per tonne, is greater than the monthly average income of Zimbabweans, and, it is also greater than the Zimbabwean poverty datum line. Thus, it is reasonable to assert that an increase in the producer price of maize would only incentivise A1 farmers to grow more maize if it is accompanied by radical productivity improvements. [8]

Hence, one can conclude that A1 farmers do not have much of an incentive to grow maize.

Incenting farmers to grow maize

Generally, A1 farms are 50 hectare plots that are parcelled into ten 5 hectare lots as follows:

Illustration 11 (click on illustration to zoom in)

Crop farming is about economies of scale; which cannot accrue to farmers when the land tenure is fragmented (as is shown in illustration 11).

To incent A1 farmers to grow more maize, the GoZ would have to "encourage" adjacent A1 farmers to form 50 to 100 hectare farming cooperatives, as is shown in Illustration 12, below:

Illustration 12 (click on illustration)

Generally, the cost of producing maize, on a large scale, under irrigation is approximately USD 1,500 per hectare. At an average yield of 12 tonnes per hectare, the profitability of the farming cooperative in Illustration 12 can be computed as follows:

Table 4 (click on table to zoom in) Adapted From: Zimbabwe Commercial Farmers Union data

As Table 4 shows, the farming cooperative in Illustration 12 can expect to make a profit of between USD 201,000 and USD 237,000, over a six month period [9].

This translates to an income of between USD 3,350 and USD 3,950 per farmer per month, which is over ten times the monthly income of the average Zimbabwean.

If this set-up doesn't incentivise the average Zimbabwean A1 farmer to grow maize, I don't know what will!

***

From the analyses in this post, it is evident that the following measures would need to be taken to bolster Zimbabwe's output of maize:

1. Build new irrigation infrastructure and refurbish the nation's "legacy" irrigation infrastructure. From the data, it is evident that the main cause of Zimbabwe's food insecurity is erratic rainfall. Thus, it is reasonable to assert that the input that the GoZ should provide is water.
2. Increase the producer price of maize to at least USD 520.00 to improve the cost-benefit equation of farming maize. This measure can be abandoned once Zimbabwe's commodity exchange becomes fully operational. When the Zimbabwean commodity exchange is fully operational, it would be prudent for the government of Zimbabwe "free" the market for maize.
3. Encourage A1 farmers to form farming cooperatives. This measure would allow maize farmers to gain economies of scale. And, it would greatly enhance the cost-benefit equation of growing maize.

[1] Tobacco and maize have overlapping planting/growing seasons. For small holder farmers, who own plots with an average area of 5 hectares, there is an implicit trade-off between growing maize and growing tobacco.
[2] I have deliberately excluded supply.
[3] This figure was computed using the following formula: Average weight of tobacco delivered by each registered grower divided by The average yield of tobacco per hectare (i.e.=  1,500/2,000).
[4] Generally, the quality of tobacco that is delivered is directly related to the availability of water and electricity. These key inputs are scarce, and their availability isn't improving. Thus, it is reasonable to assume that the quality of tobacco that was delivered has not registered any material improvement.
[5] I am assuming an average yield of  2 to 4 tonnes per hectare.
[6] Computed by multiplying the annual requirement of maize by the producer price.
[7] The per tonne cost of producing maize, under irrigation, at an A1 farm is USD 380.00.
[8] When Zimbabwe was still the breadbasket of Africa, only an elite few large scale farmers would produce maize at an average yield of 12 tonnes per hectare. It is highly unlikely that the average A1 farmer would produce maize at such a yield, unless they are using genetically modified seed - something that will not happen in Zimbabwe anytime soon.
[9] This profit estimate is for the range of scenarios where the GMB pays purchases maize at an amount between the import parity price and the equilibrium price (refer back to Illustration 10).