GMB dampens bumper harvest joy
Suspected corruption and collapsing systems at the Grain Marketing Board (GMB) are driving farmers to sell their maize produce on the black market, amid fears gains from the “good” 2016-2017 farming season will soon be lost.
By Nkosana Dlamini
Agriculture, Mechanisation and Irrigation Development minister Joseph Made recently said farmers harvested more than two million metric tonnes (mt) of maize, well above the $1,5 million mt required every year.
The farmers, naturally, are supposed to be smiling all the way to the bank, but that is not so.
They have to battle with a worsening cash crisis that makes it difficult to withdraw their money from the banks after selling their crop and many are opting to sell on the black market for quick money.
But that is not all. They have to contend with festering corruption at the GMB.
Fresh reports indicate that officials at the GMB — to which some 70% of Zimbabwe’s rural population that depends on agriculture for livelihood looks up to for salvation — are conniving with dealers to con them.
A good number of farmers have not been able to properly dry their maize and, anxious to beat poverty, are rushing their produce to the grain utility for sale.
And unscrupulous GMB employees — some of them senior — are turning the farmers away and instigating dealers to buy the maize on the spot at low prices, only for them to return to the depots with the same grain almost instantly and making a killing in the process.
The reports also indicate that in some cases, good grade maize is being turned away too, so that the farmers are forced to sell to the prowling dealers who give the GMB employees kickbacks.
The GMB is a typical case of the more than 70 State-owned agencies or parastatals where bad corporate governance provides opportunities for looting by both public and private individuals.
Government’s insistence on a skewed pricing regime is among the questionable policy measures and practices that are providing fertile breeding ground for persistent corruption at the board.
Under section 26 of the Grain Marketing Act, the GMB’s core functions and duties are to buy and sell, provide storage, handling and processing facilities for and maintain stocks of cereal products on behalf of the government.
That means the board is a mere custodian of government cereals even though, under a 1996 arrangement, it can run its own commercial arm whose proceeds are entirely GMB’s.
Over the years, there has been strong criticism of the GMB pricing system, but, against all odds, it has maintained a maize producer price that currently stands at $390 per tonne while selling the same quantities to millers at less than $200.
The import price also remains lower, at $240.
According to a Zimbabwe Farmers’ Union (ZFU) update, the local producer price of maize, which government insists is a result of high local production costs that stand at $1 000 per hectare, far exceeds what international markets offer.
The ZFU said the maize price on the international market has kept constant between $150 and $250 per tonne since June 2014.
The $1 000 figure looks inflated, though and has not been backed by empirical evidence.
The GMB has in the past defended maize producer price increases, arguing they were a response to pleas from farmer unions and individual farmers.
The issue of maize prices demonstrates inconsistencies and contradictions in government policy.
Late last February, Made told Parliament that the producer price would remain at last season’s $390.
But his counterpart, Finance minister Patrick Chinamasa, presented the 2016 mid-term fiscal policy in September last year and suggested that the GMB maize floor price would be aligned with import prices.
He acknowledged that the high producer prices for cereals were draining the fiscus at a time government was faced with an acute liquidity crunch as it struggles to generate revenue.
“The high [maize] prices are constraining the fiscus, while the intended beneficiaries and the desired outcome of boosting grains production are not being achieved…I therefore propose that we gradually converge the GMB floor price with the import parity market price from the 2016 /17 agricultural marketing season, mindful of the necessity of guaranteeing viability of our farmers,” he said.
He acknowledged that the awkward pricing regime was creating a chance for unscrupulous dealers to cheat farmers.
“The high prices being offered by the GMB are creating opportunities for arbitrage, with middlemen buying from farmers at $240 and reselling to the parastatal at $390,” he said.
Observers have argued that this practice among dealers is a largely unheralded form of corruption because they take advantage of poor farmers’ desperation for ready cash to rob them by buying their grain at unsustainable prices, leaving them worse off.
But the implications of the bad cereal producer price go beyond ripping off the farmers.
Besides also burdening taxpayers through a subsidy, an agronomist, Chrispen Sukume, said the current pricing model opens up avenues for the smuggling of maize for resale at the GMB.
“How do you guard against the inflow of maize from outside the country where the prices are much, much lower?” he said.
Sukume hinted that the ruling elites were also enriching themselves through the current pricing regime, a trend that could explain why it has persisted.
In an earlier interview for an investigative story on GMB corruption that The Standard ran in collaboration with Information for Development (IDT) in April, ex-Finance minister Tendai Biti rapped bad corporate governance by the board.
“GMB is a looting machine for senior government officials,” he said. “The fat cats are conniving with dubious traders to make big money.”
He cited a trend whereby dealers were buying spoilt maize from GMB depots and colluding with the board’s senior personnel to mix it with good grades and returning to sell it at almost twice the price, sometimes within hours.
Willias Madzimure, a former senior GMB employee and ex-lawmaker who headed the African Parliamentary Network Against Corruption said the Zanu PF government was maintaining close control of GMB so as to loot from it.
The former Kambuzuma legislator said the GMB pricing regime ran contrary to earlier plans for the commercialisation of the loss-making entity to make it viable.
Commercialising GMB looks farfetched as the Zanu PF party has often drawn grain from it to buy voters, according to a 2016 Zimbabwe Human Rights Commission report, in addition to stuffing it with its supporters and foot soldiers.
He concurred with Biti.
“This [bad corporate governance] is opening up the system to fraud whereby someone comes to GMB, buys maize, repackages takes it somewhere and returns later to sell the same at an inflated price,” Madzimure said.
“With such a dispensation, it means any person can start their milling company today and make money through that alone without even having a farm.”
The GMB management culture has been condemned as toxic and this has been worsened by an equally disinterested executive, which has abandoned its roles of monitoring the parastatal.
MDC-T spokesperson, Obert Gutu does not see an end to the abuse of the cereal pricing structure any time soon and maintains that the high prices are not meant to benefit the poor.
“They [ruling elite] have artificially upped the prices of cereals not because they are concerned about the poor. They are doing this because they want to line their pockets,” he said.
“What they are doing defies market forces and is nonsensical. It’s highly unlikely that they will reduce the prices and, as they do this, they are further running down the parastatal.”
At a recent outreach seminar organised by IDT in conjunction with the Chitungwiza Residents Trust (Chitrest), smallholder farmers in rural Seke did not hide their frustration with GMB.
“We strongly urge the government to change the way things are being done at GMB. We are suffering because of the corruption that has become so common there,” one of the farmers David Dzama.
“We are kept in the dark about a lot of things, especially the way prices and payments are handled.”
The board has in recent years been struggling to pay farmers on time and the high producer prices government has maintained have been cited as a contributing factor.