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Wednesday, 19 April, 2000, 15:45 GMT 16:45 UK
Zimbabwe's economy under threat
War veterans occupy farm
The occupation of farms is delaying crop sales
Amid the violence and political upheaval in Zimbabwe, fears are growing that the country's fragile economy could suffer long-lasting damage.

The farms at the centre of the dispute over land reform provide the nation's economic backbone - agriculture is said to make up 20% of gross domestic product.

At the heart of the current problem is the fact that just 4,500 white farmers own 11 million hectares of prime agricultural land, mainly huge commercial estates.

About one million blacks own 16 million hectares, often scratching a living in drought-hit areas.

But the policy of land redistribution - a key plank of President Mugabe's election campaign - could end up hurting those it seeks to help.

Damaged crops

Heinrich von Pezold runs a 22,000 hectare estate north of the capital, Harare.

As well as tobacco - Zimbabwe is the world's second largest exporter - he produces maize, wheat, soya, beef and citrus fruit.
Tobacco plant
Tobacco makes up 30% of Zimbabwe's exports

The farm was invaded by war veterans last week and Mr von Pezold has been counting the cost since. Next year's crop is badly damaged.

"We are running around doing crisis management, not farming any more," he said.

The implications of that could be serious. This particular farm employs 2,500 workers, indirectly supporting 20,000 people.

Problems at the farm could lead to many of them joining an unemployment total which some put as high as 50%.

While many white farmers agree that 1% of the population should not own most of the productive land, they believe simply handing it over to people who might not have the money to farm it is not the solution.

Roger Hawkins, professor of business studies at Zimbabwe University, agrees.

"There's no way you're going to have small-scale agriculture performing as effectively and efficiently as large-scale commercial agriculture has over the years," he told the BBC.

Sales postponed

In the immediate future, however, there are more pressing problems to tackle.

Although many crops had already been harvested before the farm occupations began, farmers must still sell their produce.

Disruption of production and absenteeism have forced the Zimbabwe Tobacco Association to postpone the start of the tobacco selling season, due to begin on 26 April.

This week only 3,500 bales had been booked, compared with 50,000 last year.

Farmers are also concerned about the country's exchange rate, artificially pegged at 38 dollars to the US dollar.

They have to pay more for equipment but sell their crops for less, and are asking for devaluation.

"The exchange rate obviously needs to be devalued but the government appears paralysed on that score," said Roger Hawkins.

"The tobacco growers are saying that if there's no devaluation by the time the sales open, then you're not going to have much tobacco delivered to the floor."

With inflation at about 50% and a huge budget deficit, Zimbabwe cannot afford to lose crucial revenue from agriculture.

Long-term effects

Critics say the central bank and the finance minister are doing little to tackle any of the problems the economy is facing.

The short-term implications of the demise of the white farming sector are a cause of some concern.

Roger Hawkins believes the current crisis could have a big impact on Zimbabwe's economic future.

"The long-term effects on confidence, and on people planting crops next year and investing could become very grave indeed," he said.

"Winning the election is all that matters now. The economy is just a pawn in the game, really.

"There are other very serious economic problems building up but these are all being left on the sidelines while the government concentrates on trying to win the election."

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See also:

04 Apr 00 | Africa
Zimbabwe's economic woes
07 Jan 00 | Africa
Who owns the land?
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