Comparative economic advantage of crop production in Zimbabwe

The research was carried out in the country"s five agroecological zones and across the country"s two major farming systems: the 1.3 million resource-poor smallholder farmers, who occupy 21 million hectares of land, and the 4,000 highly mechanized large-scale commercial farmers, who occupy about 11 million acres. The domestic resource cost (DRC) ratio method was used to evaluate the competitiveness of different geographic areas and farming systems in producing a variety of agricultural commodities, while the policy analysis matrix (PAM) was used to identify and assess the economic impact of the distortions inherent in Zimbabwe"s agricultural industry. Study results are as follows: In the large-scale commercial sector, the most competitive crop is groundnuts, which ranks first in zones 1, 2, and 3 and second in zone 4. Ranked relatively low in zone 1, sunflowers and Virginia tobacco become relatively more competitive in drier ecological zones. Maize, despite taking the lion"s share of cultivated land, is only competitive in zones 1 and 2, where it ranks last in its efficiency in using domestic resources. These findings indicate that the emphasis on maize production may not be warranted and that removal of maize subsidies would boost the production of other crops. In the small-scale commercial sector, only three crops -- groundnuts, sunflowers, and maize -- were found to be competitive based on average farmer practices. However, compared with the other sectors, a higher number of crops are economically viable in each zone in the small-scale commercial sector. The most efficient crop in the communal sector was groundnuts, followed by sunflowers, finger miller, and cotton in all zones. On the policy level, only a small share of agriculture tax revenue is reinvested into agricultural sector support institutions such as research and extension. The results also indicate that the pan-territorial pricing system that has been in place for decades has created severe distortions through net subsidization of farmers in regions remote from main consumption centers. The current policy of setting only floor prices still has flaws, as these prices may still be more than efficiency prices in very remote areas. In addition, liberalization has put the whole burden of subsidy on the government and has removed some cross subsidization possibilities.