Command agriculture and the politics of subsidies

Command agriculture – a major, private-sector-backed subsidy programme implemented by the Government of Zimbabwe – has been hailed as a massive success, especially following the huge maize harvest reaped this year (see last week’s post). President Mugabe recently described command agriculture as ‘beautiful’.  The programme, led by the Vice President, Emerson Mnangagwa, with the ministry of agriculture and support from the armed services, involved the delivery of fertiliser (along with seed and fuel) to farmers in higher potential areas, and especially with larger land areas (targeting 2000 farmers with 200 ha or more of arable land) and irrigation facilities. Sakunda Holdings (and others) backed the scheme reputedly to the tune of $160m, and government implemented it on the ground, requiring those receiving the package to repay by delivering an ambitious five tonnes of maize per hectare funded to the Grain Marketing Board (GMB).

The command agriculture programme is being repeated again this coming season; this time with even more ambitious targets, and again with backing of Sakunda. Apparently 45,000 have registered and high crop outputs are expected. While much of the hype is wildly unrealistic, the programme has become core to an increasingly centralised approach to agricultural planning and development in Zimbabwe, as advocated by the VP. There are now ‘command’ approaches mooted for livestock, fisheries, wildlife and more. Given the VP’s background, these all follow the model of Chinese central planning, executed with military logistics and support. Hailed by the Chinese ambassador, it has been an enormous operation, taking up the energies and time of extension workers and apparently up to 1000 members of the army across the country.

The programme has not surprisingly come under intense scrutiny, and has become embroiled in the on-going soap opera of internal ZANU-PF political machinations, with a lively media spat between Higher Education minister Jonathan Moyo (of the G40 faction – and apparently a direct beneficiary), who denounced command agriculture, and the Lacoste faction who vigorously back the programme. The commander of the defence forces gave a robust defence too. Given the scale and ambition of the programme, there have been ‘leakages’ – and some high-profile cases of those abusing the system – and the delivery was not always smooth, with many not receiving the full package on time.

But despite everything – and significantly because of the excellent rains – the programme seemingly delivered. I cannot find reliable data that details how much of the 2.15 million tonnes of maize produced in the 2016-17 season (as well as improved soya production too) is attributable to command agriculture (some say 1 million tonnes), nor any results of detailed economic evaluations, but the basic point is that if you throw inputs (notably nitrogen fertiliser) at improved seed in well prepared soil, and there’s good rainfall, increased outputs will result. There is no agronomic surprise there. But with the GMB buying maize at $390 per tonne, way above world prices, and questions about how the financing works, there are clear concerns. The big question is of course, how sustainable is this approach for the longer term – economically and politically?

How sustainable?

This is the concern raised by economists and other policy analysts, including the IMF. There are precedents of course. This is not the first time Zimbabwe has embarked on massive agricultural subsidy programmes. Indeed the successful origins of white commercial agriculture in the country were built on huge subsidies from the state. Is this just a well-timed kick-start to the struggling A2 farms, which have lagged behind due to lack of financing, allowing them to find their own feet, as white farmers did before? In the 1980s and 90s, there were regular fertiliser subsidy (or cheap credit) programmes aimed at boosting communal area agriculture, resulting in a short-lived ‘green revolution’ in the country. In the 2000s, subsidy programmes – from Taguta to the mechanisation progammes led by the Reserve Bank – were attempts at spurring growth in the sector following land reform, but failed due to poor implementation, patronage and corruption.

More widely in the region, Malawi had a period of intensive investment in (mostly) maize production through the FISP (Fertiliser Input Subsidy Programme). This produced a significant growth in production, with Malawi becoming a regional exporter of maize. The same occurred in Zambia, through a range of programmes across successive governments. All of these subsidy programmes however became fiscally unsustainable, and while producing food and reducing import bills became very, very expensive, taking up significant proportions of national expenditure (with opportunity costs elsewhere – in schools, health services, road building and on). A bad rainfall year (or even a middling one) may unravel things quickly, loading more onto an already crippling national debt.

Subsidies and politics

Subsidies are always political. They are ways of directing political power and patronage to particular groups, who those in power want the support of. In the 1980s, it was the communal areas, who had backed the liberation war, with the political compact being that rural people (and their votes) needed securing. In the 2000s, it was the new resettlement farmers (notably A1 smallholders) who required support, as they were the base that ZANU-PF had to rely on in a succession of contested elections.

Today, while an economic-technocratic position of commercial boosting production is well articulated, the focus is on larger, more connected A2 farmers who are being favoured. As the core of the middle class, professional, business and security service elite who benefited from such land, but had not been using it effectively, securing their support politically, and ensuring greater economic viability of A2 farms (while securing food for the nation) had become a political imperative. And given the positioning of the VP and the ED/Lacoste faction, very much in line with a political dynamic unfolding now.

A more strategic view?

As with the support of emerging white settler agriculture by the colonial government of Rhodesia in the 1930s and 40s, this may be seen in the future as a successful investment. Long-term commitment by states to transformation – through innovation and core support – is increasingly seen as essential in any economic strategy. Gone are the days of the Washington Consensus when subsidy was always a dirty word.

But a wider strategic debate about such investment (including more broadly finance and credit in agriculture) and approaches to exit is needed, separating it from the complex machinations of intra-party politics and faction fighting. As with Zambia and Malawi (and India and so many other countries besides where electoral politics is heavily reliant on a rural vote), extricating the state from subsidy addiction is tough. Phasing out a fuel or fertiliser subsidy can result in protests, and an electoral backlash. Patronage and dependency relationships get set up, and peoples’ political careers and parties’ fortunes, become tied up with subsidies.

Zimbabwe urgently needs a more thorough-going debate about what type of subsidies make sense for rebuilding agriculture, avoiding the ideological knee-jerk that all subsidies are bad, but at the same time countering the tendency of patronage lock-in that subsidy programmes, tied to political cycles, always generate.

This post was written by Ian Scoones and appeared on Zimbabweland