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Zimbabwe: Selected Issues and Statistical Appendix

Author(s):
International Monetary Fund
Published Date:
October 2005
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II. Land Reform, Agricultural Policies, and Outcomes11

A. Land Reform

14. In 2000, Zimbabwe initiated a Fast Track Land Reform Program (FTLRP) to redistribute land. The FTLRP redistributed over 80 percent of former commercial farmland, and the racial distribution of access to land has been radically changed. By end-2004, about 9,000 farms were listed for acquisition, but few farmers had been compensated and many farms remained unallocated to new settlers; some 5.7 million hectares were allocated to 130,438 households under the A1 (small-scale farming) scheme for smallholder farmers and 12,556 farmers were allocated about 1.9 million hectares under the A2 (large-scale farming) scheme12 for new commercial farmers.13

15. The execution of the land reform was accompanied by significant losses in production during the past four years. Agricultural output declined by 30 percent as the FTLRP has been accompanied by significant losses in the agricultural capital stock and in production, uneven distribution of land and infrastructure, the lack of security of tenure, and impoverishment of a large proportion of ex-farm workers. Government interventions in input, output, financial and foreign exchange markets were stepped up in an effort to deal with reduced farm profitability.

16. Large scale commercial farming has been effectively destroyed over the course of the last four years. As a result of the land reform, the number of large-scale farming units declined from 3,217 at the beginning of 2000 to about 250 partially-operational (at 40-60 percent of the maximum capacity) units as of 2005. As a result, the output of the commercial agricultural sector plummeted to 5-20 percent of the 2000 level across all four major crops.

17. Much of the on-farm infrastructure was removed, stolen, or vandalized in the process of taking over farms. Key machinery was moved by original owners to warehouses and/or sold, while much of what remained was looted or broke down. In addition, as about 80 percent of the original land owners have either left the country or stopped farming, the wealth of knowledge and skills, acquired over many years, has been severely depleted.

18. The land reform program displaced almost all of the highly specialized seed production farmers. The seed production capacity in Zimbabwe was created over many decades and effectively underpinned the success of the country’s farmers by catering to widely differing growing conditions. The seed that is currently being imported is mostly found to have been produced for climatic conditions and altitudes different from those in Zimbabwe, contributing to disappointing yields.

19. A number of key issues fundamental to the revival of the agricultural sector remain unresolved. Among these is a lack of consensus within the government on the direction of policies to be pursued. The outstanding issues include legal procedures, compensation to previous farm owners, security and transferability of property rights, and multiple claims of farm ownership.

20. The farm acquisition process has not been managed as stipulated in the Land Acquisition Act. At the start of the land reform, the sequence of the acquisition process according to the Land Acquisition Act was as follows: notice of the intent of acquisition (Section 5), decision of the court stipulating that land can be acquired (Section 7), and acquisition of land (Section 8). As many courts ruled in favor of farmers, the Act has been amended at the end of 2002 to allow acquisition of land to take place before legal authorization. Moreover, many of the judges who did not issue decisions in favor of land acquisition were dismissed or forced into early retirement, compromising the integrity of the judicial and legal process.

21. Compensation offered so far to individual farmers is far below market value, and the process of compensation has been highly non-transparent. The compensation value appears to consider only fixed assets—the government has stated that it would not compensate for the value of land—and at a value of only 10-15 percent of that derived by the Valuators Consortium, who are all registered Real Estate Valuators in Zimbabwe. Moreover, the compensation offers have so far been made to only about 25 percent of the total number of dispossessed farmers, and it is not clear how the selection process is taking place. Those offered compensation are generally being given a verbal quote as to the amount of such compensation, with little indication provided as to how the value has been determined. Payment in Zimbabwean dollars, and over a number of years, as is being proposed, will under the current high inflation environment significantly diminish the value of compensation being offered nearly worthless. About 1,500 former commercial farmers whose land has been acquired compulsorily by the government have taken their case for fair compensation to international arbitration.

22. The Government’s plan to replace title deeds with 99-year leases for all land seized under the land reform program appear unchanged, but little progress has been made on implementation. Most of the title deeds for 6,700 confiscated farms, covering about 11 million hectares, are still in the hands of the original owners, and it is not clear how the transfer of property rights will take place, especially since the issue of compensation is not resolved. It appears that the government is considering legislation that would nationalize all land before moving ahead with the 99 year leases. It is not clear whether these leases will be transferable, and if so, under what conditions.

23. There is little transparency on how the recipients of the most productive farms acquired under the A-2 scheme have been selected. Issues regarding the equity and openness of the redistribution process remain, especially given that no payments have been made by the recipients for the land itself. There is also little transparency as to the identity of those currently residing on the confiscated farms. Currently less than 20 percent of the original owners are still residing on their farms.

B. Recent Performance in Agriculture

24. Agricultural production in the 2004/05 season is estimated to have declined, with further difficulties expected in 2005/06.14 In addition to being affected by drought conditions experienced in January-February 2005, production also suffered from the late delivery of seed and fertilizer to farmers, failure to provide new farmers with adequate tillage units, and fuel shortages. The competing needs created by drought and food shortages coupled with lack of fuel are expected to result in late planting and/or reduced tillage, thus negatively affecting prospects for the 2005/06 season as well.

25. The market incentives required for revival of the agricultural sector are lacking, and input and output markets are highly distorted. The agriculture sector is becoming increasingly driven by the principles of a command-based economy. There are large inefficiencies and considerable selectivity involved in obtaining inputs at subsidized prices. Moreover, the multiplicity of agricultural subsidies and support prices contribute to the perpetuation of economic distortions given their complexity and provide opportunities for rent seeking. The central bank’s efforts to sustain thousands of new loss-making small-scale farms through numerous subsidies and support prices also contribute to macroeconomic instability.

C. Food Security

26. A substantial gap currently exists between food needs and the estimated availability of food. While the food (maize) needs are estimated at approximately 1.8 million metric tons (MT), the estimate of the maize crop is around 0.6 MT, putting the gap at 1.2 million MT (the output of maize is well below normal levels due to the factors discussed above, delays in distributing seed and fertilizer last year, and lower-than-normal rainfall).15 Contrary to the situation observed last year, the authorities’ estimate of food needs is broadly similar to that of NGOs and international observers.

27. As many as 4 million people (some 40 percent of the population) are likely to be food insecure from April 2005 to March 2006.16 The problem of food insecurity is likely to be exacerbated by the recent “Operation Restore Order,” which has, according to the United Nations (UN) Special Envoy, directly affected 700,000 people and indirectly affected some 2½ million people.17 With the informal economy severely curtailed, the loss of livelihood and reduction in real income of such a large proportion of the population is likely to make Zimbabwe’s food needs even higher this year.

28. The government has made no formal request or appeal for food aid. The authorities have indicated they have plans and logistical arrangements in place to import 1.2 million MT for direct distribution and 0.6 million MT for the Strategic Fund Reserve (SFR), which is completely depleted at this point. Maize imports come primarily from South Africa, which is not affected by the drought. Some estimates suggest that maize imports have averaged 30,000 MT per month over the past few months. This will have to increase to an average of 100,000 MT per month to fulfill the target of importing 1.2 million MT for direct distribution.

29. It is estimated that about US$270 million would be needed to cover the cost of importing 1.2 million MT of grain.18 Although financial constraints dominate, infrastructural capacity could also affect the speed and volume of grain distributed, given limitations of existing port and railway facilities and the current fuel shortage.

30. The United Nations World Food Program (WFP) plans to submit an appeal to donor for food assistance equivalent to 300,000 MT of maize, or 25 percent of the estimated total requirement. Although not explicitly requested by the government, the WFP declared its readiness to mobilize assistance. Of the proposed assistance in the amount of 300,000 MT of maize, the current in-country stock is 9,000 MT, and confirmed contributions as of end-June are 62,000 MT. 19

31. It could take up to 6 months before the pledged support from the WFP reaches those in need. The promptness of receiving food aid depends on the time the donors need to make a decision, and on the composition of the donors. For example, food aid from the United States is provided in-kind, which can extend the time between when the pledge is made and when the food is received by up to 6 months. Food aid from some other donors comes in the form of monetary pledges, which the WFP can use to buy food stocks in international markets (in the case of Zimbabwe, the WFP would buy maize in South Africa).

32. WFP support normally takes the form of targeted feeding programs aimed at vulnerable groups such as orphans and AIDS sufferers through school feeding and supplementary feeding programs run by NGOs. The 300,000 MT in assistance currently being raised will cover these regular programs. Large-scale distributions are also carried out from time-to-time depending on the need. Substantial geographical variation in the extent of crop failure creates additional challenges for targeting food support on large-scale distributions. Southern areas of the country have been affected much more by the drought compared to northern areas, with some areas in the south having virtually no crop at all.

D. Agricultural Growth and Food Security: A Way Forward

33. A recent World Bank assessment of land reform and agricultural policies sets out a possible way forward for agricultural recovery and enhanced social protection for the rural population in Zimbabwe that is rooted in a comprehensive strategy based on the following major pillars:20

  • Removing tenure insecurity and completing the land reform process. It is important to finalize the acquisition process of the expropriated land via confirmation by the Administrative Court and payment of adequate compensation to former land owners. The policy and implementation rules have to be clarified and disseminated through information campaigns and training. Clear land rights (title deeds, leases, permits, or any other form of arrangement protected by the law) should be granted to all new and old farmers. All disputes related to already or yet to be completed allocation of land and infrastructure on the acquired farm among A1 and A2 settlers, the remaining former farmers, and the remaining former farm workers need to be resolved in a transparent manner.

  • Restoring and enhancing agricultural productivity. This would involve the gradual removal of all export controls and foreign exchange restrictions, as well as price controls, for both agricultural inputs and outputs. It is also important to ensure adequate allocations in the government budget, within the limitations imposed by macroeconomic stabilization needs, to target rehabilitation of infrastructure and the agricultural research and extension system. It is crucial to facilitate improved access to purchased inputs (farm machinery, fertilizer, seed and agro chemicals) by improving the operating environment for private sector input suppliers.

  • Implementing a broader social protection program for poor and marginalized groups of the rural population. This would include the expansion of the existing public works programs during off-peak agricultural periods, using both existing and new community-driven modalities (including for communal farm families, A1 settlers, farm workers, the HIV/AIDS affected, vulnerable female headed households, etc.); the direct provision of food to the poor and marginal groups who lack the necessary means and cannot earn them via their supply of labor; and free or heavily subsidized access to social services for all the poor and marginal groups.

  • Building and/or rebuilding a cohesive policy and institutional framework for land administration and management, and for agricultural growth and development. The effective institutional arrangements are crucial for policy formulation and implementation to promote an expanded and improved environment for agrarian reform policy dialogue with stakeholders, based upon increased public information, research and sound analysis. It is important to have a policy and administrative framework for a more permanent system to allocate land to remaining and future marginal and impoverished groups who lack sufficient access to land.

  • Mobilizing necessary financial resources. The resources received from taxation, community and private sector, and external partners can be used to fund the array of activities and programs for completing the land reform and stimulating agricultural recovery and growth. There should be a sustainable resource mobilization strategy which specifies the cost burdens to be shouldered by the Government, farmers, private service agents and development support agencies (NGOs and donors), and demarcate clearly the benefits to be derived from cost recovery and grants. The issue of land taxation also needs to be resolved.

References

    Agricultural Growth and Land Reform in Zimbabwe: Assessment and Recovery Options. The World Bank Report no. 31699 ZW. 2005.

    Agricultural Growth and Land Reform in Zimbabwe: Assessment and Recovery Options. The JAG Trust’s Comment on the World Bank Report no. 31699 ZW. 2005.

    Interim Strategy Note for the Republic of Zimbabwe. International Development Association. Report No. 31553-ZW. February2005.

    Report of the Fact-Finding Mission to Zimbabwe to Assess the Scope and Impact of Operation Murambatsvina by the UN Special Envoy on Human Settlements Issues in Zimbabwe. July2005.

    Report on the Food Security Situation in Zimbabwe. The United Nations World Food ProgramJune2005.

    Zimbabwe Human Development Report 2003: Redirecting our Responses to HIV and AIDS. UNDP. 2003.

Prepared by Oleksiy Ivaschenko (World Bank).

Agricultural Growth and Land Reform in Zimbabwe: Assessment and Recovery Options. The World Bank Report No. 31699 ZW. 2005.

At the height of land ownership large scale commercial farmers owned about 37 percent of the 39 million hectares of arable land. By the beginning of the FTLRP, that percentage was down to 22 percent (18.5 percent and 3.5 percent by white and black farmers, respectively). These statistics are provided in the JAG Trust’s Comment on the World Bank Report No. 31699 ZW. 2005.

The authorities’ expectation was that agricultural production would grow by more than 20 percent.

The production figures refer to the April 2004-March 2005 period, while the assessment of the gap refers to the April 2005-March 2006.

The Report on Food Security Situation in Zimbabwe. The United Nations World Food Program, June 2005.

Report of the Fact-Finding Mission to Zimbabwe to Assess the Scope and Impact of Operation Murambatsvina by the UN Special Envoy on Human Settlements Issues in Zimbabwe.

This estimate is obtained using the price of US$225 per MT of maize, which consists of US$100 purchase price (South Africa), US$100 for delivery to Zimbabwe, and US$25 for distribution within the country.

The Report on Food Security Situation in Zimbabwe. The United Nations World Food Program, June 2005.

Agricultural Growth and Land Reform in Zimbabwe: Assessment and Recovery Options. The World Bank Report No. 31699 ZW. 2005.

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