Outrage at GMB's $208m loss

HARARE - Government must get rid of the perennial loss-making Grain Marketing Board (GMB) because it was bleeding the fiscus, analysts said yesterday.

This comes amid shocking revelations in Parliament on Tuesday that the crumbling State grain utility posted a mortifying loss of over $208 million last year on the back of a Command Agriculture subsidy in  which it bought maize from farmers at $390 and sold it — at a $150 loss — for $240.

Analysts said the appalling pricing structure does not make any business sense.

GMB general manager Rockie Mutenha told the Justice Mayor Wadyajena-led parliamentary portfolio committee on Lands, Agriculture and Rural Resettlement that government’s decision to buy grain at $390 per tonne while selling it at $240 per tonne caused the shocking loss.

Mutenha said GMB’s overheads were not fully recovered by storage and handling fees charged to Treasury.

Opposition PDP president Tendai Biti said GMB’s loss actually runs into billions, not the $208 million declared before Parliament.

“Those figures are understated,” Biti told the Daily News. “The overall stock of domestic debt is now $7,2 bn. If you look at my state of the economy address, I stated that by December 2017, domestic debt will be $7bn. This rose from about $4bn in 2017.

“What were they spending it on? They were spending it on Command Agriculture. They spent over $2bn on Command Agriculture just from June last year. So the GMB mess is understated. The GMB is a macrocosm of the broader national fiscal disaster made and engineered by (Finance minister) Patrick Chinamasa. We have got a fiscal mess.”
Biti said Zimbabwe does not need the grain utility.

“Do we really need the GMB? What farmers need is a commodity exchange, we used to have that. Farmers would take their maize to bidders, just like what happens at tobacco auction floors. There is no GMB for tobacco.

“For the strategic grain reserve, we don’t need a physical reserve; we need a reserve in the form of foreign currency. We need good international relations especially with the World Food Programme which has come to our rescue many times.”

Biti said in 2012 when he was the Finance minister, he caused a GMB forensic audit conducted by auditor-general Mildred Chiri and one of the key findings was a shocking wage bill of $10m annually. The audit also showed that the management of GMB could not keep books of accounts.

“GMB receives millions from central government, buying grain, but they don’t return the money. We don’t need the GMB but Zanu PF wants the GMB, it’s the engine of looting the national economy. It’s a reservoir of corruption,” Biti said.
University of Zimbabwe economics professor Tony Hawkins said government was maintaining an inverse pricing structure just to please farmers for political expediency.
Hawkins said it would have made business sense if government provided a subsidy to GMB to cover the loss.

“It doesn’t make sense at all. Government must honour its promises and pay the subsidy to GMB. Buying maize for $390 only makes sense when it was for reserves but at the end, you also need to resale that maize. The policy was put in place to encourage maize growers and also to promote Command Agriculture but it doesn’t make economic sense and it ends up being all about political expediency. They are abusing taxpayers’ money, they must reduce the money they are paying (maize producer price),” said Hawkins.

Another economist Kipson Gundani said: “This does not make business sense. This is a loss. It is not sustainable because someone must pay that money and it’s taxpayers’ money which is going to be used.

“He said he understood that government was trying to promote grain production as an import substitution intervention. We were spending in excess of $300 million importing grain. Probably we need to change the strategy,” Gundani said.

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