The fertiliser industry needs additional ways of meeting funding requirements so that there is adequate and timely provision of the product to give impetus to the Pfumvudza/ Intwasa and Presidential Input Scheme, a Parliamentary committee has heard.
ZFC managing director Dr Richard Dafana said Zimbabwe should consider letters of credit and other instruments to complement the Reserve Bank of Zimbabwe’s foreign currency auctions.
He said while the auction floor system was working well and had transformed funding mechanism for the fertiliser industry, additional methods were required so that companies could take acvantage of bulk discounts on raw materials.
Dr Dafana took Parliament’s portfolio committee on Lands, Agriculture, Fisheries, Water and Rural Resettlement on a tour of his company’s production plant in Southerton, Harare.
The committee chaired by Gokwe Nembudziya legislator Cde Justice Mayor Wadyajena has embarked on a tour of fertiliser producing companies contracted by Government to produce the product for its programmes.
Dr Dafana said import of raw materials in huge quantities would give them a competitive edge to negotiate for better prices thereby making the product cheaper for a farmer who is the end user.
“Right now we have an auction system floor (for forex) which has been a success story. But as ZFC we need US$50 million per year and at the auction floor we get about US$500 000 per week which is not enough to fund the fertiliser industry,”
said Dr Dafana.
“With US$500 000 we will get small quantities and you cannot compete with big companies in other countries like India because you get what is called spot price, you cannot negotiate for better prices. So we need financial instruments. Those instruments must have the blessing of the RBZ.”
He said the country had enough capacity to produce adequate fertiliser but there is need for a financing model that makes the production viable and helpful to farmers.
Windmill Fertiliser chief executive officer, Mr George Rundogo, commended the central bank for the auction system saying it has kept his company going.
But he wanted Government and other customers to timeously place orders so that the production process continues to commence on time.
“We are capable of supplying the required fertiliser as an industry,”
said Mr Rundogo.
“What we need is to conclude contracts early because that will trigger the production process and the process to mobilise resources. Some of the raw materials are imported and require a lead time of about three months.”
Legislators expressed concern over the delay by the fertiliser industry to provide the market with the product on time particularly top dressing.
They urged the industry to consider producing in large quantities for the open market in addition to that of Government programmes.
Both Dr Dafana and Mr Rundogo said they were prepared for the winter wheat programme as adequate stocks were available.