Voluntary Report - public distribution

Date: 5/4/2006

GAIN Report Number: RH6006

RH6006

Zimbabwe

Grain and Feed

Monthly Update

2006

Approved by:

![](media/image1.wmf)Scott Reynolds

#### **U.S. Embassy, South Africa**

Prepared by:

Herman Germishuis

Report Highlights:

After the corn crop planted in 2004 produced an estimated 550,000 MT,
the Government of Zimbabwe announced that it intended to import 1.2
million MT to make up the shortfall from the 550,000 MT crop. Imports
from South Africa at the end of April 2006 reached 1.04 million tons for
the 2005/06 season, a commendable achievement considering the state of
the Zimbabwean economy. The crop planted in 2005 is estimated at 900,000
MT, necessitating further imports.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Pretoria \[SF1\]

\[RH\]

## **SUMMARY** {#summary-1}

The 2005/06-rainfall season has come to an end. Most parts of the
country have received normal to above normal rainfall except the
southeastern part of the country, which has suffered a mid-season
drought that has severely reduced yield potential. With corn production
estimated at about 900,000 MT the country faces another food deficit
after the harvest in May 2006.

Official estimates for corn are not available. The Government of
Zimbabwe (GOZ) has called off a joint crop and food supply assessment
mission with the FAO that would have produced official food estimates.

Preparations for wheat planting are in progress. The area to be planted
under wheat is estimated at a maximum of 45,000 hectares in 2006.

Exchange rate:

April 2006 US\$1.00 = Z\$99,201 (official rate)

US\$1.00 = Z\$ 200,000 (parallel market rate)

## 

####### CORN

  ------------------- ---------- --------- --------- ---------- --------- ----------
  PSD Table                                                               

  Country             Zimbabwe                                            

  Commodity           Corn                                                

  1000 HA             2003       Revised   2004      Estimate   2005      Forecast

  1000 MT             USDA       Post      USDA      Post       USDA      Post
                      \[Old\]    \[New\]   \[Old\]   \[New\]    \[Old\]   \[New\]

  Market Year Begin              05/2004             05/2005              05/2006

  Area Harvested      1365       1365      1200      1200       1300      1300

  Beginning Stocks    46         46        0         0          0         25

  Production          900        900       550       550        900       900

  TOTAL Mkt. Yr.      287        300       1050      1040       600       600
  Imports                                                                 

  Oct-Sep Imports     233        233       700       550        900       900

  Oct-Sep Import U.S. 0          0         0         0          0         0

  TOTAL SUPPLY        1233       1246      1600      1590       1500      1525

  TOTAL Mkt. Yr.      0          0         0         0          0         0
  Exports                                                                 

  Oct-Sep Exports     0          0         0         0          0         0

  Feed Dom.           125        75        75        75         75        75
  Consumption                                                             

  TOTAL Dom.          1233       1246      1600      1565       1500      1525
  Consumption                                                             

  Ending Stocks       0          0         0         25         0         0

  TOTAL DISTRIBUTION  1233       1246      1600      1590       1500      1525
  ------------------- ---------- --------- --------- ---------- --------- ----------

###### Production

Most of the corn crop that was planted early (November and December
2005) has matured and is ready for harvest. The short season hybrids
have largely been harvested.

Rainfall in most parts of the country has been normal to above normal
with the exception of the southeastern and southern parts of the country
(Manicaland, Masvingo and Matebeleland South provinces) that experienced
a long dry spell in February and March, reducing harvest prospects in
these areas.

Constraints to production this season include shortage of inputs (seed,
fertilizer and chemicals), shortage of labor for weeding particularly on
the smaller commercial farms, leaching of nutrients, and a controlled
price and market for the commodity. Security of land tenure is yet to be
granted to beneficiaries of the land reform program and is a major
constraint to long-term development and investment on the farms.

Government has not yet released official crop estimates. GOZ had earlier
invited FAO to undertake a joint crop and food assessment mission but
has now called it off. Our estimate is for a national corn output of
about 900,000 MT, which is much lower than the optimal national
requirement of about 1,6 million MT.

## **Consumption**

Corn availability improved in most retail outlets in the country largely
because the rural households in particular became less dependent on the
market for their corn supply due to the commencement of harvests.

**Trade**

Despite a serious shortage of foreign currency, imports of corn from
South Africa continued as shown on the table below.

Monthly imports of corn (May 2005 to April 2006)

+----------------------------------+-----------------------------------+
| Month and Year                   | ###                               |
|                                  |  Corn imported from South Africa  |
+----------------------------------+-----------------------------------+
| 2005                             | MT                                |
+----------------------------------+-----------------------------------+
| May                              | 107,205                           |
+----------------------------------+-----------------------------------+
| June                             | 95,166                            |
+----------------------------------+-----------------------------------+
| July                             | 95,274                            |
+----------------------------------+-----------------------------------+
| August                           | 87,327                            |
+----------------------------------+-----------------------------------+
| September                        | 87,553                            |
+----------------------------------+-----------------------------------+
| October                          | 77,650                            |
+----------------------------------+-----------------------------------+
| November                         | 87,135                            |
+----------------------------------+-----------------------------------+
| December                         | 92,431                            |
+----------------------------------+-----------------------------------+
| 2006                             |                                   |
+----------------------------------+-----------------------------------+
| January                          | 51,044                            |
+----------------------------------+-----------------------------------+
| ### February                     | 152,583                           |
+----------------------------------+-----------------------------------+
| ### March                        | 78,673                            |
+----------------------------------+-----------------------------------+
| ### April                        | 28,584                            |
+----------------------------------+-----------------------------------+
| ### Total                        | 1,040,624 (with adjustments)      |
+----------------------------------+-----------------------------------+
| ### Average monthly imports      | 86,720                            |
+----------------------------------+-----------------------------------+

A total of 1.04 million MT of the 1.2 million MT government target was
imported from South Africa during MY 05/06.

**Prices**

The government has increased the producer price for corn for the 2006/07
selling season from to Z\$31.3 million per ton from Z\$2.2 million in
the 2005/06 marketing season, giving producers a 25% return. It his
hoped that the new price will cushion the farmers against inflation and
the rising costs of production. Annual inflation as at the end of March
was 913%.

###### WHEAT

  ------------------- ---------- --------- ------------- ---------- --------- ----------
  PSD Table                                                                   

  Country             Zimbabwe                                                

  Commodity           Wheat                                                   

  1000 HA             2004       Revised   2005          Estimate   2006      Forecast

  1000 MT             USDA       Post      USDA\[Old\]   Post       USDA      Post
                      \[Old\]    \[New\]                 \[New\]    \[Old\]   \[New\]

  Market Year Begin              07/2004                 07/2005              07/2006

  Area Harvested      35         35        35            35         0         45

  Beginning Stocks    100        0         100           0          100       0

  Production          105        105       95            120        0         145

  TOTAL Mkt. Yr.      130        130       150           90         0         60
  Imports                                                                     

  Jul-Jun Imports     130        130       150           90         0         80

  Jul-Jun Import U.S. 0          21        0             0          0         0

  TOTAL SUPPLY        335        235       345           210        100       205

  TOTAL Mkt. Yr.      0          0         0             0          0         0
  Exports                                                                     

  Jul-Jun Exports     0          0         0             0          0         0

  Feed Dom.           0          0         0             0          0         0
  Consumption                                                                 

  TOTAL Dom.          235        235       245           210        0         205
  Consumption                                                                 

  Ending Stocks       100        0         100           0          0         0

  TOTAL DISTRIBUTION  335        235       345           210        0         205
  ------------------- ---------- --------- ------------- ---------- --------- ----------

**Production**

The estimated wheat output for 2005 has been revised up to 120,000 MT
from an area of about 35,000 hectares. Wheat production has declined
substantially from 329,000 MT in 2001 to 120,000 MT in 2005.

The country has a maximum potential of 65,000 hectares that could be put
under irrigated winter cereals. Some of the irrigation equipment has
been vandalized. There is potential to rehabilitate irrigation schemes
so as to utilize the entire 65,000 hectares for winter cereal production
but this will not be achieved this season. The Irrigation Association of
Zimbabwe estimates that complete rehabilitation of the irrigation
schemes would take 3 to 4 years.

Preparations for winter wheat production are in progress. The
recommended cut off date for planting winter wheat is 15 May. An
estimated 8,000 MT of wheat seed is available for planting. Should all
the seed be planted, a maximum wheat area of 88,000 hectares at the
seeding rate of 90kg/ha would be possible. However, the farmers'
organizations indicated that the country would only be able to plant a
maximum of 45,000 hectares against a government target of 110,000
hectares. Major constraints influencing their projections include
limited tillage capacity, late planting, poor availability of inputs
such as fertilizer and chemicals, high production costs and
disincentives such as the controlled market, the unknown producer price,
and late payments for the crop by the GMB.

Production will be encouraged if free marketing of wheat is introduced,
a pre-planting price that ensures viability is offered to producers,
producers are guaranteed security of tenure; there is timely
availability of critical inputs and if power supply is reliable.

###### Consumption

Bread is the second most important food after corn particularly in the
urban areas. Due to the limited availability, GMB has been rationing
wheat to millers. Since the beginning of January 2006 weekly allocations
of wheat to millers have been reduced to 4,000 MT or 208,000 MT per
annum against an optimum national requirement of about 300,000 MT per
year.

## **Trade**

Since August 2005 the country has not officially imported any wheat due
to unavailability of foreign currency for this purpose.