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Friday, 20 July, 2001, 15:58 GMT 16:58 UK
Zimbabwe hit by rising grain prices
Zimbabwe's so-called 'war veterans' barricade a farm they have claimed for resettlement
Zimbabwe's maize crop has been hit by the land resettlement programme
Zimbabweans are facing the threat of spiralling prices for maize, one of the country's staple foodstuff.

This year's crop in regional powerhouse South Africa looks set to fall well short of last year's bumper levels, pushing up prices.

To head off civil and political unrest - triggered in the past by prices hikes - Zimbabwe's government has been pushed into re-establishing price controls.

Official predictions in July set the South African harvest for 2000-2001 at 7.193m tonnes, well below the 10.1m tonnes seen last year.

With about 2m tonnes left over from last year, domestic South African consumption of about 7.5m tonnes should easily be covered.

But in Zimbabwe the ongoing land resettlement programme has hit the local maize harvest, with local supplies set to run out by February 2002, international food officials say.

The likelihood of a shortfall has forced up the price of South African maize futures to levels almost 50% above last year's.

Sliding output

Zimbabwe's land programme has cut the area under large scale commercial maize cultivation by more than 50% this year, according to the UN's Food and Agriculture Organisation (FAO).

President Robert Mugabe's government is facing severe maize shortages
Mugabe: imposed grain price controls
Smallholdings make up some of the difference, the FAO says.

But overall, maize production at 1.57m tonnes is likely to be down more than a quarter this year, and imports might be as high as 450,000 tonnes.

Earlier in July the situation forced the government, led by President Robert Mugabe, to call for food to be donated to forestall shortages.

And this week the government announced price controls on maize through a state-run Grain Marketing Board which economists say could encourage farmers to hold off from growing maize next year.

In turn, that would exacerbate the food shortages as the country heads into a presidential election in which Mugabe and his Zanu-PF party will try to extend his term into a third decade.

Falling gold and tobacco production and a rapidly sliding exchange rate mean Zimbabwe is extremely short on foreign currency for agricultural imports.

Slim foreign exchange reserves are being further depleted by the heavy burden of importing $40m of fuel a month both for domestic purposes and to support the ongoing military presence in Congo.

On this front, reports in the country's Financial Gazette newspaper suggest that Libya has stepped in with a lifeline, offering Zimbabwe Government fuel worth $360m a year in exchange for exports of Zimbabwean products.

The reported deal follows a recent visit to the country by Libyan President Muammar Gaddafi.

See also:

05 Jul 01 | Africa
Zimbabwe admits food crisis
13 Jul 01 | Africa
Gaddafi driven to support Mugabe
18 Jun 01 | Africa
Fuel protest in Zimbabwe
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