The Government of Zimbabwe has announced crop insurance and duty-free to boost Zimbabwean agriculture.
The Zimbabwe Revenue Authority (ZIMRA) has listed import duty and Value Added Tax (VAT)-free agricultural equipment while the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development has introduced a crop insurance product for Pfumvudza/Intwasa beneficiaries as the Government continues to implement a cocktail of measures to boost agricultural production.
Zimra this week said machinery such as manure spreaders, fertiliser distributors, hay balers, combine harvesters, machines for sorting eggs, machines for preparing animal feed, tractors and poultry incubators would be imported duty and VAT-free.
Stakeholders hailed the move as critical to transforming the agricultural sector for economic growth and prosperity.
Duty-free for Zimbabwean agriculture
ZIMRA said importers were required to engage clearing agents registered with the tax collector.
“The goods are treated as commercial importations. Clearance is to be done through a bill of entry and a tax clearance certificate is needed in order to be exempted from payment of presumptive tax. Failure to produce such attracts a presumptive tax of 10 percent of the value for duty purposes,” said ZIMRA.
The decision was greatly welcomed by farmers who said it supported their efforts to grow the agricultural sector by easing the means of production and lowering the burden on most farmers who desperately needed modern equipment and technology.
Mrs Martha Macheke from Banket said it gave relief to those who were importing machinery aimed at improving farming.
“Value addition as well as mechanisation are both critical for us to be sustainable. This type of equipment industrialises and modernises our agriculture through innovation development.
“Mechanisation, for example, leads to precision farming which maximises efficiencies, lowers post-harvest losses, and increases the profits that a farmer can make,” she said.
Another farmer from Raffingora, Mr Tendai Masocha said the scrapping of duty on some equipment would enable them to access machinery at a lower cost and boost the mechanisation programme.
“It has been expensive for farmers to buy machinery, but without duty, it becomes affordable. This is a good move, especially on machinery,’ he said.
Mr Albert Mumanikidzwa of Chinhoyi echoed similar sentiments.
“Our challenge is that sometimes we do not have access to foreign currency. Hopefully, we will have easy access to foreign currency so that we can import machinery and boost production and alleviate poverty,” he said.
The Government had been making huge efforts to revive the agriculture sector by incentivising the importation of machinery.
On the other hand, the area yield index crop insurance, which will be technically directed by Pula Advisors, is meant to protect Pfumvudza farmers from heavy impact of climate change vagaries.
Beginning in the 2021/22 agricultural season, the Ministry will implement a pilot exercise with financial support from development partner, Mercy Corps Zimbabwe.
Pula Advisors has been contracted by Mercy Corps’ AgriFin Digital Farmer (ADF) to provide technical assistance for the design and implementation of a comprehensive area yield index insurance on the inputs distributed under the Pfumvudza initiative in Zimbabwe.
Mercy Corps’ AgriFin Digital Farmer (ADF) is a two-year, $5 million initiative that aims to support the expansion of high-impact, digitally-enabled services to at least one million farmers and to expand the services to a further five million smallholder farmers in partnership with Gates and Bayer foundation.
The expansion efforts will be delivered by growing ecosystems of diverse service providers and building farmer income, productivity, and resilience by 50 percent while reaching 40 percent women.
Permanent Secretary in the Ministry of Agriculture, Dr John Basera said the ministry established a team chaired by the Agricultural Finance Corporation (AFC) Insurance to collectively model out piloting of the Area Yield Index Crop Insurance.
“The task team, which comprises the ministry and relevant stakeholders, is being technically advised by Pula Advisors and they have so far green-ticked a number of key elements and are ready to roll the trial run during this 2021/22 agricultural production season covering farmers under the Pfumvudza/Intwasa Programme,” he said.
“The piloting of the area yield index crop insurance will this season be undertaken in Rushinga and Mwenezi Districts covering about 30 000 smallholder farmers under the Pfumvudza programme for a sum insured of over USD1 million.
“Recognizing the value likely to be created, the Ministry commits itself to fully supporting the associated activities and has activated its structures and institutions to ensure the piloting exercise is a success,” he said.
Dr Basera commended FBC Insurance (Pvt) Ltd for coming on board as the insurer for the pilot exercise.
Ministry chief director, strategic policy planning and business development Mr Clemence Bwenje said the pilot exercise would be exciting as it was premised on the objective of providing proof of concept, showing the benefits, costs, relevance and possibility of scaling out the area yield index crop Insurance next season.
“The evaluation to be produced by the task team will be instrumental in informing policy to the farming community, stakeholders and Government as it will highlight on the quality and scalability of the insurance product,” he said.
Mr Bwenje emphasized that the overaching impact of rolling out such insurance products was to sustainably and affordably protect smallholder farmers from key agricultural risks through the use of insured inputs, which in turn encouraged better farming practices, raised yields while providing compensation (payouts) to support farmer resilience when losses occurred.
“The assurance is that the project will be highly technology and data-driven, enhancing Government’s delivery capabilities and introducing innovations in digital insurance to the sector.
“Insurance in agriculture has been the missing link also given its ability to create opportunities for agricultural investments”, Mr Bwenje said.
Pula Advisors, regional manager for Anglophone Africa, Ms Cynthia Tapera, said the area yield index crop insurance would insure farmers’ harvest.
“It is an insurance cover that insures farmers against a pre-set historical benchmark. The perils covered in this product are windstorms, frost, excessive rainfall, heatwave, hail, floods, drought, pests, and diseases. The pilot will focus on the maize value chain.
“Climate change is upon the whole world and the results are clear for everyone to see. The damaging impact is felt by the smallholder communities with no other sources of income other than agriculture,” she said.
Smallholder farmers in Zimbabwe are increasingly exposed to systemic climate change risks such as droughts, dry spells, delayed seasons, floods, hailstorms, pests, diseases, and many more hence the need for insurance service.