The much anticipated bumper harvest of major crops are most likely to spur economic growth, more so, the manufacturing sector which heavily relies on raw materials from agriculture, economic analysts predict.
The goods rains experienced this past farming season were a timely relief the agriculture sector and the entire economy which was already reeling from the effects of the Covid-19 pandemic.
A recent crop assessment done by government points to a good harvesting season.
The estimated maize production stands at 2 717 171 MT which is 199 percent of the 907 628 MT produced
in the 2019/2020 season.
Traditional Grains production for the 2020/2021 season is estimated at 347 968 MT which is 128 percent
more compared to 152 515 MT in 2019/2020.
1.1.5 Sorghum production is expected to be 244 063 MT which is 135 percent more than 103 684 MT obtained
during 2019/2020 season.
Finger Millet production is expected to be at 13 223 MT which is 35 percent more than 9 799 MT produced in
the 2018/2019 season.
Analysts say the manufacturing sector will be amongst the major winners as most manufacturers will this year access raw materials locally and much cheaper.
“The manufacturing sector is going to be the biggest winner. As you know there are strong linkages between agriculture and manufacturing because 65 percent of raw materials in industries comes from agriculture produce,” economic analyst, Victor Bhoroma told 263Chat Business.
“With better local availability of maize, soya and wheat which are mainly needed by food processing industries, there willbe much relief because a good harvest will translate to cheaper raw materials as opposed to importing them like in recent dry years,” he added.
In past dry years, some manufacturers had to cut operations owing to shortages of raw materials locally, and had to wait for days and sometimes weeks for raw materials to get into the country from overseas.
This was witnessed in the milling industry where millers slowed operations due to shortages of wheat and maize, spiking inflation.
On the local industry, capacity utilisation and production suffered severely.
Matters were compounded by the fact that Zimbabwe has been battling foreign currency shortages since 2013 hence settling external payments was a huge challenge for most companies.
“The pressure for foreign currency on manufacturing industry is likely to ease since most raw materials will be readily available and can be accessed using the local currency,” said Pepukai Chivoore, director at Parliament Budget Office.
This is expected to ease pressure on the Reserve Bank of Zimbabwe’s foreign currency auction market.
However, despite production growth in maize, soya beans and other small grains, volumes of wheat and soya beans for instance remains below annual national demand, which may require some form of import cover.
“In the soya bean and wheat subsectors there is growth in production but it still remains short of what we may actually need as a nation for the entire season. There is need to improve on these strategic crops,” added Chivore.
Growth in production from the agriculture sector is also expected to ease inflation pressures in the economy.
“In terms of cost push inflation, we expect it to slow down since the manufacturing industry should be able to produce at a lower cost if inputs are secured locally which is cheaper than importing,” Bhoroma weighed in.
Outside the manufacturing sector, a bumper harvest is likely to also improve the standard of living for most Zimbabweans once food security is established.