The Agricultural Credit Guarantee Scheme (ACGS) has paid over a hundred million in partially settling loans received by farmers from state owned funding institutions after they suffered crop losses.
President Mokgweetsi Masisi on Monday during the state of the nation address (SONA) said scheme which assist farmers to repay part of their loans in the event of crop failures due to natural occurrence have benefitted from the P134.3 million paid out by the scheme to clear some debts owed to Citizen Entrepreneurial Development Agency (CEDA) and the National Development Bank (NDB).
“This amount is equivalent to 85 percent of the farmer’s instalments in 2018/2019. The Scheme is in the process of being reviewed to align it with developments in the agricultural sub-sector and to establish the feasibility and sustainability of extending it to cover additional agricultural subsectors and other causes of loss other than drought, floods, frost and hailstorm, as well as to include other financing institutions, ” the president said in parliament during the address.
Thabo Thamane, the CEDA chief executive in May said during the current season (2018/19) the, the funding agency invested P8.8m as compared to P9.6m in 2017/18 for working capital and encouraged farmers to subscribe to the ACGS set up by government to assist dry-land farmers with crop cover. He said the cover is meant to assist dry-land crop farmers in reducing their debt obligations with participating banks and lending institutions in case of crop failure.
“The Agency has continued to accept funding applications from farmers that were unable to settle their 15 percent portions of their seasonal loans. We are happy that government is fast-tracking a drought management strategy and incorporating climate change interventions in agriculture to introduce drought compliant crops and livestock. As an Agency, we pledge our support to these initiatives, as we stand ready to assist farmers across the country to adapt to these changes,” said Thamane in a speech delivered at Mosisedi Harvest Day seven months ago.
It was words also echoed by the President as he disclosed in his second SONA that the government has taken a decision to develop a Drought Management Strategy which would classify drought as a permanent feature in the country’s budget plans rather than an emergency, and the strategy is expected to be completed before the end of this financial year
Following the declaration of 2018/2019 as a drought year, the government unveiled a raft of interventions which included hiking the subsidies on livestock feeds, vaccines and drugs by 35 percent until 2020, increasing slaughter prices offered to farmers by the state-owned Botswana Meat Commission (BMC), and allowed for cattle owners to export live cattle for immediate slaughter.
“As a long-term intervention, government intends to establish fodder banks and fodder reserves in a way such that there will be adequate livestock feeds during the dry periods including the production of Napier grass,” Masisi said.
Still, economists at the local research firm Econsult recently expressed concerns about government subsidies, revealing that the agricultural sector which is probably the biggest recipient of subsidies has not achieved sustained growth or significantly improved incomes for those engaged in agriculture.
“This suggests that a thorough evaluation of the effectiveness of agricultural subsidy scheme is called. Indeed, the cost Integrated Support Programme for Arable Agriculture (ISPAAD) subsidies appears to be greater than value added in crop production, which suggests that the subsidy is encouraging Batswana to undertake activities that destroy, rather than create economic value,” reads part of Econsult’s third quarterly brief.