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MAIZE PROFITS DOWN 27%

25/08/2022 08:16:00 Mhlengi Magongo

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EZULWINI – The high cost of farming inputs has negatively affected production which led to the decrease in performance, thus affecting the profit margin.

The agriculture business segment performance has been stagnant in the current reporting period due to challenges in production and market accessibility. Production was low owing to the high cost of farming inputs and the market was slow, due to the decrease in quality of produce, and the European Union (EU) imposed changes. Maize was also not spared in the challenging period as profits generated from both local and outbound sales contracted by 27 per cent. Maize profits stood at E3 695 000 in 2021 and decreased to E2 695 000 in 2022. This was mentioned by Lwazi Mamba, the Executive Director of Eswatini National Agricultural Union (ESNAU), during the horticulture innovation platform workshop. Mamba said the decline in profits was because the supply chains were disrupted, mainly because of the shortage of farming inputs.

He said inefficient tractor hire service and shortage of implements plus the high cost of electricity further contributed to the performance. “Some farmers apply less fertilisers and chemicals so it compromised yields and quality standards. Double application of fertilisers due to excessive rains,” he said. The executive director added that the regulated price review process was not responsive and profit margin were low as they stood at E2 695 per hectare for maize, cotton E264 per hectare and BT cotton E2640. Mamba said the delayed payments to farmers for produce, reduced profitability thus farmers fail to pay loans on time.

“Most farmers exit farming, arable land remain unproductive or converted to non-agricultural activities, which contributes to high reliance on imports for food and agriculture become less attractive to financiers,” he said. When asked how the performance of the sector could increase in order for Eswatini to reduce imports, he said we needed to utilise idle arable land and produce at scale and protect arable land by developing policy.

Improving

He added that improving tractor service provision and strengthening extension services would also contribute to production upscale. Minister of Agriculture Jabulani Mabuza said their focus was to deliberate and come up with strategies on how to improve resilience of the horticulture sub-sector in the midst of skyrocketing farm input costs with fertiliser taking the lead. Mabuza said over and above the excessive costs, these inputs had also become very difficult to source. The minister said in the planting season of 2021, their suppliers in the agro-industry faced challenges in getting fertiliser and by the time they had access, the price had escalated tremendously. “This predicament was firstly caused by the COVID-19 pandemic where factories around the world had to suspend operations in respect of health protocols,” he said.

The minister added that this resulted in very limited supplies while the demand was continuously increasing. Mabuza added that when the situation was normalising, the agriculture industry was once again hit hard by the Russia-Ukraine war. “As we are all aware that the SADC region purchases most of its fertiliser from various sources outside the region. These sources were affected by the war and as such the price continued to increase to the current levels,” he said. The minister further mentioned that Eswatini needed to continue eating and government looked up to agriculture to come up with solutions.

Eswatini Water and Agricultural Development Enterprise (ESWADE) Chief Executive Officer Sam Sithole also said their objective was to discuss the possible strategies for reducing agricultural production costs such as fertilisers and seeds with the aim of achieving profitable farming. He said most agricultural enterprises and horticultural in particular were now below break-even, productivity was low, produce quality was compromised and post-harvest losses were on the rise and therefore, there was an urgent need as a country to address the problems.
“As the country is working tirelessly to recover from the destabilising effects of these crises, the consequences of the Ukraine crisis, including rising fuel prices, will further create additional vulnerabilities and make it more difficult for the country to achieve its SDGs,” he said. Sithole also mentioned that fertiliser was one of these strategic commodities Eswatini still heavily imported. Hence, the prices for fertilisers, which were mostly made from gas, had drastically increased since the start of the crisis.