The Zimbabwean government has announced new prices for wheat farmers. The new prices were announced just as farmers are starting to harvest 2022’s winter wheat crop. Unlike what they did with maize and traditional grains, the price of wheat is now set exclusively in US dollars although they will still receive most of their payments in Zimbabwean dollars.

According to the government, wheat farmers will now be paid:

US$620 per tonner for an ordinary grade of wheat instead of the April pre-planting price of $175 741.86 per tonne
Farmers will be paid US$682 per tonne for premium grade wheat. Instead of the $193 316 ZWL per tonne announced back in April

NB

While these new prices are being hailed as better prices compared to prices announced back in April. They are not. If we want to be conservative and use the official exchange rate on 1 May 2022 which was $159.3482 it means farmers were promised about US$1 100 per tonne of ordinary wheat and US$1 210 per tonne for premium grade. This is a classic glimpse into the convoluted world of exchange rates.

Farmers still getting paid in mostly ZWL

Even though farmers are getting a USD base price of US$620 and US682, they will still be paid mostly in ZWL. They will get paid in a ratio of 33:67 with 33% of the payment being made in USD and the remainder paid in ZWL. That translates to US$200 and $243 680 ZWL per tonne for ordinary wheat and $220plus $268 048 ZWL for premium grade wheat. Those who grew their wheat under the AFC and CBZ schemes will be paid by their respective bank after they deliver their wheat to the GMB. The government will also purchase wheat from self-financed farmers.

To further complicate things:

To preserve value for farmers, a suspension of the 20% compulsory liquidation on local nostro transfers for wheat farmers will be introduced for the marketing season for both Government and contract-purchased (self-financed) wheat and the 2% IMTT tax on nostro payments will be suspended for wheat farmer for the 2022 season
Minister of Agriculture Dr Anxious Masuka

The way taxes are rules are applied is messy and confusing. Farmers had no way of knowing this would happen so while this might seems like a sound policy it is not. Most farmers are long-term planners. This is something that could have affected a given farmer’s decision to grow or not to grow wheat and is a condemnation of command agriculture.