Producers, including Chemplex, Windmill and Zimbabwe Fertilizer Company, are owed a collective $40m by customers who borrowed fertilizer in previous farming seasons, but have failed to honour their obligation to service their debts.
Misheck Kachere, the chief executive of Chemplex Corporation and spokesperson for the industry, told The Zimbabwean in an interview that the company had hardly any money to start producing for the 2012-13 season.
Government, under its various state-sponsored inputs schemes, is one of the major creditors. It also owes seed houses huge amounts of money.
“Some customers have not paid for fertilizer supplied last season. We are still owed in the region of $40m. If defaulting customers do not pay up, we will be severely crippled in our endeavors to meet this season’s demand,” said Kachere. Preparations for the next farming season are already underway, with rains expected to start in a matter of weeks. Climate change, however, seems to have generally pushed the onset of the rains later in the year.
Kachere said production of Ammonium Nitrate, the top dressing fertilizer, was particularly endangered. “Even if we were to get the money today, Sable Chemicals, the sole producer of AN, cannot produce 150,000 tonnes required for the summer season. We are currently producing about 10,000 tonnes per month due to a number of operational challenges,” he said.
“We only have about 25,000 tonnes of AN in stock, so we just pray that if we get the money now, we can start importing from overseas to close the gap,” he added. Demand for compounds might be met as there was still capacity to produce 30,000 tonnes per month, depending on the availability of money to meet operational costs. The country needs an average of 300,000 tonnes of both compounds and AN for the summer farming season.
Tendai Biti, the Finance Minister, said government was making plans to avail money to settle its debt to the industry. He said government was working to mobilise $150m for the agricultural sector, $60m of which would go towards paying the fertilizer companies.
It is not clear how the money is going to be raised.
The looming shortage is expected to push input prices up and further cripple farmers, many of whom have still not been paid for crops delivered to the Grain Marketing Board.
Economist Eric Bloch said government had no choice but to borrow from inputs producers because it did not have ready cash, but in doing so had jeopardized the agricultural industry. “If government does not borrow, there would be more starvation, but through that borrowing, we are being pushed further into the emergency mode,” added Bloch.
Post published in: News