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Zimbabwe reintroduces import duties on foodstuffs to promote local production

06 October 2011

At the end of July 2011 the Zimbabwe Minister of Finance, Tendai Biti, announced that the government had reintroduced import duties on foodstuffs to protect local industries. The reintroduced import duties range from 10 to 25%. He said that ‘the re-imposition of duty has been necessitated by improved supply of basic goods and also the need to protect local producers.’ Basic commodities such as maize meal and cooking oil will be affected. According to press reports the announcement takes place against the background of imports of 300,000 tonnes of maize to meet impending shortfalls.

It is acknowledged that the measures will increase price, given the need to rebuild local production capacity. Some analysts argued that after a decade of decline, the Zimbabwean economy now once again needs infant industry protection. The measure is seen as laying the basis for both an expansion of formal sector employment and increased government revenue.

Representatives of the Zimbabwe National Chamber of Commerce said that the new duties would ‘cushion industry from the competition posed by the influx of foreign commodities’, with duties being applied selectively on a case-by-case basis. The Secretary General of the Affirmative Action Group, Mr Tafadzwa Musarara, argued ‘there is no way local industry will grow if we do not protect’. The Consumer Council of Zimbabwe however argued that the measures should have been more gradual, with a careful monitoring of the price effects of a phased introduction. Other reactions were also varied, including concern at the new duties (Zimbabwe Cross-Border Trade Association) and a welcoming of the reintroduction of duties (Zimbabwe Federation of Trade Unions).

A review of the grain situation in Zimbabwe by the US Department of Agriculture reports that maize production is due to reach an estimated 1.4 million tonnes for the 2011/12 marketing year, up from 900,000 tonnes in the 2010/11 marketing year. The increased production is attributed to the availability of subsidised seed and fertiliser, as well as above average rainfall. The increased availability of seed and fertiliser reflects increased local production of these essential agricultural inputs (e.g. a more than threefold increase in fertiliser production in two seasons). However the USDA estimates that the Zimbabwean government will still need to import 100,000 tonnes of maize.

The situation in the wheat sector is even more acute. Wheat production has declined more than 50% to a mere 12,000 tonnes. This contrasts with earlier production levels of 192,000 tonnes in 1990/91. This leaves Zimbabwe needing to import 280,000 tonnes of wheat to meet local demand.

The decline in wheat production in the last 10 years is matched by the decline in livestock production. The national commercial dairy herd has declined from 192,000 head of cattle in 1990/91 to 20,000, while the commercial beef herd has declined from around 800,000 to only 200,000. This has served to reduce national feed demand considerably.

The USDA report notes that ‘the large grain milling companies are now the major importers of white corn from other SADC countries like Zambia, Malawi, South Africa and Mozambique, where corn … is generally cheaper than the locally produced corn.’ Zambia has been the main supplier of maize, accounting for 64% of Zimbabwean maize imports between May 2010 and April 2011 (followed by Malawi with 17.4%, and South Africa with 18.8%). These figures exclude informal cross-border trade, which is believed to be ‘of a significant magnitude’.

Between May 2010 and April 2011, Zimbabwe imported 194,067 tonnes of wheat, with South Africa the main supplier (31.5%), followed by two EU member states (Germany and Lithuania), which together accounted for 23.6% of Zimbabwean wheat imports.

Editorial comment

Zimbabwe, formerly a regular exporter of cereals in the region, is now a major market for expanding Zambian and Malawian maize exports. It is unclear to whether the duties reintroduced in Zimbabwe apply across the board to all imports of the affected food stuffs or only to non-SADC/non-COMESA imports, given the regional trade commitments that the Zimbabwean government has entered into.

The role of tariff policy in supporting the re-establishment of a dynamic agro-food processing sector in Zimbabwe is likely to be a critical policy issue, as is the relative weight to be accorded promoting the interests of agricultural producers and those of agro-processing companies. Across a number of sectors where strong agro-processing industries existed, the option now exists of developing value-added production on the basis of either locally produced raw materials or imported inputs (e.g. in the dairy sector). In the context of ongoing political uncertainty, major investments in the expansion of primary agricultural production are likely to be deferred, suggesting that initially any expansion of agro-processing would be based on imported raw materials. The reintroduction of import duties on basic foodstuffs however could serve to encourage such a development.


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