Harare - Zimbabwe’s agricultural sector has taken a huge knock with farmers involved in the country’s major crops of tobacco and cotton bracing themselves for further turmoil as current drought conditions wilt profitability prospects.
This should worry Finance Minister Patrick Chinamasa as the mining and agricultural sectors that he had pinned his hopes on for economic recovery show signs of distress.
Read: Drought intensifies food struggle
The country’s mining industry is weighed down by power woes, rising costs and other issues, while agriculture is battling the most severe drought in the past few years.
Water and Climate Minister Oppah Muchinguri said this week that water sources in the country were half full and would not last until the next rainy season.
This will affect irrigation projects and, to make matters worse, boreholes have started running out of water.
Read: El Nino drives up inflation in southern Africa
The national tobacco crop for 2015 is already down on the prior year and TSL, among the big tobacco processors, this week said its revenues were down and it anticipated that this year would be difficult.
“The combined effects of the smaller national tobacco crop and softer world market prices negatively impacted the performance” of its tobacco business, TSL said.
“The agricultural season was particularly difficult due to erratic rainfall. Consequently, national tobacco production was down 8 percent on last year to 199 million kilograms,” the company, which also has other interests in car rentals, property and logistics, said.
The company is anticipating that the macroeconomic environment in Zimbabwe will remain difficult this year.
In the year to the end of October, TSL registered stagnant revenues at $48.6 million (R793.2m), with the profit before tax position falling 11 percent to $6.1m.
Another powerhouse agricultural company in Zimbabwe, Cottco, also plunged in sentiment over the stability of the sector after it reported on Friday that the national crop for cotton had declined from 135 000 tons in 2014 to 100 000 tons last year.
It attributed the decline to “poor funding by the cotton industry players”, while “poor yields caused by… poorly funded crops continue to threaten the viability” of the cotton industry.
Zimbabwe had also taken over Cottco’s bank loans.
Another poor agricultural season will further compound Zimbabwe’s economic woes, with household farmers who have previously relied on income from tobacco and cotton being the hardest hit. Experts are also warning that growth projections of 1.5 percent for this year will likely be missed.
SUNDAY INDEPENDENT