By Agriculture Reporter- Wheat farmers in Zimbabwe are threatening to withhold their crops unless the government agrees to pay them in foreign currency, a move that could lead to a major bread shortage during the festive season.
This standoff poses a significant challenge to the government’s push to promote the Zimbabwe Gold (ZiG) currency, which has struggled to gain traction.
Last week, the Grain Marketing Board (GMB) acknowledged farmers’ demands for foreign currency payments, putting them at odds with the treasury, which continues to claim that the ZiG is appreciating in value.
The farmers pressured GMB have rejected payment in local currency, citing its sharp decline against the US dollar.
They argue that their farming inputs are priced in foreign currency, making accepting payments in Zimbabwe dollars impossible.
Former Zimbabwe Commercial Farmers Union president, Wonder Chabikwa, highlighted the financial strain farmers face:
“As wheat farmers, we need US dollars to recapitalise our farms and acquire essential inputs. Most service providers require payment in foreign currency, which makes life very difficult for us.”
Similarly, Zimbabwe National Farmers Union president, Monica Chinamasa, urged the GMB to pay farmers on time to avoid mounting debts. “We prefer USD payments because our financial obligations are in foreign currency. Delayed payments only add to our burdens.”
Economists warn that paying wheat farmers in US dollars could trigger a wider rejection of the local currency among other farmers and exporters, further undermining efforts to strengthen foreign exchange reserves. During the 2023 winter wheat season, farmers were paid US$440 per tonne, with a 75% payment in US dollars and 25% in Zimbabwe dollars. This year, farmers will receive US$450 per tonne for standard-grade wheat, with all payments in US dollars.
The ongoing rejection of the ZiG comes as no surprise to many. Since its introduction in April 2024, the ZiG—Zimbabwe’s sixth attempt at establishing a stable currency in 15 years—has significantly depreciated.
Initially launched at a rate of 1:13.50 against the US dollar, it is now trading between 1:25 and 1:30 on the black market.
As the bread crisis looms, the government’s currency ambitions hang in the balance, with fears that more sectors may abandon the local currency if farmers’ demands are not met.