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June 12, 2011

Zimbabwe's horticulture exports fall sharply

by Obert Chifamba

The Zimbabwe Horticulture Promotion Council says deterrent freight charges, high production and export-related costs had caused a steep decline in horticultural exports over the last seven years.

HPC chief executive Mr Basilio Sandamu said the planes they contracted to ferry produce were failing to get southwards bound cargo and were only getting northwards bound cargo. This, he said, had made it very expensive to contract them as their charges were designed to make up for all the losses incurred.

Freight charges constitute 55 percent of all the costs of production.

"In the past there were between four and five flights to European markets every week but now there are only three, which reflects that export volumes have fallen sharply. "Last year we exported seven million kilogrammes of flowers, down from the traditional 24 million kilogrammes per year in good years," explained Mr Sandamu.

He said it was now critical for the industry to maintain the current mark and start building from there as any further descent would be disastrous and would also give regional competitors like Kenya and Uganda more edge over Zimbabwe.

"Critical mass is key in making a footprint on the markets. It is a game of volumes so we must maintain our grip on the market to be taken seriously," he added.

He said Zimbabwe enjoyed preferences in EU markets under the EU/ACP (African, Caribbean and Pacific) agreement that enabled it to export flowers duty free.

At the moment the country sends 85 percent of its flowers to EU destinations through the Dutch auction floors, which makes it vital to access cheap funds to refurbish infrastructure and re-plant new varieties while expanding the area under production.

"In the past we used to have 400ha under horticulture, now it is less than 150ha. We are currently operating at 30 percent of our full potential. The most painful fact is that we have very good growing conditions and highly skilled personnel," lamented Mr Sandamu.

Furthermore, he said funding constraints had seen farmers failing to refurbish greenhouses or replace old varieties with new ones to keep pace with developments on the markets.

"Farmers have no access to credits. "This comes against a background that has seen prices for basic export requirements like the CD 1 export form rising from US$50 in the recent past to the current US$250 for a single sheet. Indirectly, this is taxing farmers and compromising viability," he said.

Mr Sandamu said phytosanitary, tax and nursery charges accompanied by the SADC and EUR 1-certificate costs made it very difficult for farmers to operate viably. In the end the costs of exporting end up higher than the returns, which discourages farmers from producing for the export markets.

Additionally, very high production costs are making life difficult for farmers, as they need 16 Euro to establish a square metre of a green field while a hectare needs 160 000 Euro.

To break even the farmer needs to have planted nothing less than 5ha in which the first 18 months will be without an income.

"Working capital of 40 000 Euro per hectare per year is also needed, which is difficult for the current crop of farmers. In the past those who excelled used proceeds from tobacco and other crops to fund horticulture. There was a lot of cross subsidisation and this made it possible for the farmers to survive before they even started reaping anything from their horticultural projects," further explained Mr Sandamu.

Horticultural earnings now contribute between 1,5 and 2 percent to the country's GDP, down from a high of 5 percent in the recent past.

"Farmers are no longer re-capitalising but only maintaining what is there, leaving us operating at a fifth of what we used to do in 2001. There are economic fundamentals to be addressed first, failure of which the industry is doomed to continue singing the blues," he said.

The Herald

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