GOVERNMENT has adopted a new funding model for Command Agriculture for the 2019/20 farming season which will see it providing guarantees to banks and the private sector to unlock the $2,8 billion required for the programme.
The Government has since invited private partners to fund the programme at an interest rate not exceeding four percent as it seeks to dilute its role as the sole financier.
Speaking during a Question and Answer session in the Senate on Friday, Lands, Agriculture, Water, Climate and Rural Resettlement Minister Perrance Shiri said Treasury had committed to issue $968 million worth of guarantees.
“The approach to financing the special maize and soya beans programme, which is commonly referred to as Command Agriculture has changed for the forthcoming season. The programme will be funded through the banks and private sector with Government providing guarantees. Treasury has committed to issue a guarantee worth $968 million to unlock the required funding of $2,8 billion for the programme,” he said.
Minister Shiri said Government guarantee is a vital fall-back position for banks and private sector players participating in the programme. He said the Government has already come up with requirements for the coming farming season.
“We have approached various stakeholders to play their respective roles and we are in the process of receiving and distributing inputs to the farmers.
“So, funding has been availed for the coming 2019/2020 season though the approach this year is slightly varied from what we used to do.
“However, funding has already been put in place and acquisition of various inputs like fertilisers, chemicals and seed is already taking place and has taken place in some cases and farmers have started receiving inputs,” said the Minister.
Minister Shiri said Command Agriculture was a transitional arrangement which was not meant to replace the role of market forces and financial institutions.
“Once the private sector comes on-board and starts financing agriculture, Government’s involvement shall only be limited to a regulatory role and capacity building. To ensure that the programme is fully-funded, the financing mechanism is highly dependent on strong Public Private Partnerships (PPPs). In this kind of arrangement, Government invites private partners to fund the programme at a rate not exceeding four percent,” he said.
Presenting his Mid-Term Fiscal Policy Review and Supplementary Budget Statement last month, Finance and Economic Development Minister Professor Mthuli Ncube said Government has earmarked $2,8 billion for Command Agriculture.
He said Government would extend the facility by another year targeting 210 000 hectares of maize and 30 000 hectares of soya beans during the 2019/20 summer cropping season.
The Finance Minister said the programme would only benefit farmers with track records of repaying loans and producing high yields.
Prof Ncube said Government was this year targeting to support 640 000 hectares of grain crops that include maize, sorghum and pearl millet under the Vulnerable Households Inputs Support Scheme.
The Office of the President and Cabinet oversees Command Agriculture, while the private sector focuses on financing.