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Kultur Dokumente
Abstract: Zimbabwe, just like many other developing nations has its economic growth path mapped mainly by the
agricultural sector. The agricultural sector has been labelled the backborne of many economies, and countries are re-
prioritizing agriculture and food security as paramount to human development. The sector provides food to mankind
and raw materials to other sectors of the economy and hence promotes industrialisation. In the last decade, a fall in
agricultural production in Zimbabwe has seen the country transitioning from being recognised as the bread basket of
the Southern African region, to a bread bowl case. Deterioration of the agricultural sector implies backward
development, especially for developing nations like Zimbabwe. Citrus production is one of the agricultural activities
practised in Zimbabwe, with Beitbridge region as one of the success stories in history. The study seeks to analyse the
effects of increased electricity tariffs on citrus production in Beitbridge, Zimbabwe. Data on citrus production was
collected from 7 big citrus farms located in the Beitbridge area using face to face questionnaire method. By employing
an investigative and empirical approach, the research results revealed that the increase in electricity tariffs by the
Zimbabwe Electricity Supply Authority (ZESA) adversely affected citrus production in the area under study due to
increased total production costs.
Keywords: Agricultural Sector, Citrus Production, Electricity Tariffs, Cost of Production, Beitbridge
JEL Codes: C83, C93, D23, D24, D61, E23, F41, F62, H21, L52, N50, N57, Q01, Q02, Q12, Q15.
I. INTRODUCTION
Agriculture has for a long time been referred to as the backbone of the Zimbabwean economy and will under
normal conditions continue to be so in the foreseeable future. Many countries are revisiting their agricultural strategies,
while regional bodies are also crafting new agricultural policies (Matondi and Chikulo, 2012). Although when
producing at full capacity agriculture contributes only 11-14 percent of GDP, the sector has potential to provide
employment for about 50% of the countrys population, about 60 percent of all raw materials for the industry and about
40 percent of the countrys exports are of agricultural origin. Albani and Palentini (2016), indicated as for Zimbabwe
that agriculture provides livelihoods for about 70% of the population and accounts for 23% of formal employment.
The global markets for horticultural products remain attractive and Zimbabwes horticultural sector has the
potential to develop a strong global competitive position, thereby providing substantial social and economic benefits to
the country (SNV, 2014). In different parts of the country, different agricultural activities are practised but in this paper
emphasis is on citrus farmers along Umzingwane and Limpopo Rivers in the Beitbridge district. Citrus are one of the
most common fruits consumed on a regular basis by people globally (Zarini, Yaghoubi and Akram, 2013). Citrus fruits
grown in Zimbabwe include grapefruits, lemons, naartijies, nectarines and oranges. Citrus can be consumed as fresh
fruit or processed for juice making, juice concentrates and dried fruit production (Macaskill, 2016).
Beitbridge is predominately an arid ranching area, but the farmers have for the past 50 years or so been involved in
cotton, wheat, vegetable and citrus production. Heri (2000), indicated that Zimbabwes geographic position and climate
makes it ideal to produce early maturing varieties of oranges which reach the target markets earlier than neighbouring
competing countries. With time and the advent of the Zhovhe Dam, significant areas have been planted to citrus which
is now the predominate crop. This development in the district has resulted in the growers being the largest employers of
labour in Matabeleland and the largest Citrus Exporters in Zimbabwe. Crops like cotton, wheat and vegetables have
diminished and some stopped altogether due to non-viability, mainly due to power costs.
Citrus by its nature is a crop that one cannot enter into easily, nor leave easily during hard economic times. This is
because it takes 8 years for a citrus tree to start giving value to the investor. The initial capital is huge and hence it takes
long for the farmer to break even and thereby start to make profits from the business. Citrus fruits are seasonal and
during ripening tend to ripen almost at once causing seasonal gluts resulting in increased postharvest management
challenges when they are in season (Musasa et. al, 2014). The sector therefore requires a non-fluctuating business and
economic environment that will enable planning and forecasting not to deviate significantly from the actual business
outcomes.
Modern agriculture has become very energy-intensive (Zarini, Yaghoubi and Akram, 2013). Farmers in Beitbridge
have for a long time been crying foul, that ever since ZESA abandoned the tariff they used to operate on, their cost of
production has gone up with electricity bills occupying more than 41% of their total production cost today. For this
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The Effects of Increased ZESA Tariffs on Citrus Production in Beitbridge
reason, the growing of field crops, has become unviable, and the margins on Citrus production, questionable,
particularly, with regard to the establishment, of new Orchards. Even growers, with established Orchards and
infrastructure, are finding it difficult to maintain Citrus production.
Almost all the farmers in the District owe ZESA large amounts of money backdating to 2009. This paper seeks to
examine the environmental conditions that citrus farmers in Beitbridge operate under, investigate the effects of ZESA
tariffs on their production, explore how dollarization affected them and to try and suggest solutions and
recommendations.
This tariff was farmer friendly, and in this particular area made it a viable power source which they could grow and
develop to where they are today. However, in recent years this tariff was unilaterally removed without consultation and
the current tariff E5.1 substituted it and this tariff made no allowance for large kilowatt hour usage. In fact, low
consumption domestic users virtually pay the same if not lower tariff per kilowatt hour unit.
The consequence of removing the Tariff 5 type structure and the introduction of the E5.1 tariff imposed on the
famers has serious viability implications. With the E5.1 tariff, farmers who have the Low Tension Distribution Line
system have been prejudiced and this system has become a total liability.
The introduction of the multi-currency system dominated by use of the US dollar brought gradual stability to the
economy while providing a relatively conducive environment for the revival of various business enterprises (Matondi
and Chikulo, 2012). It is in the interest of this study to explore the hindering factors that has led to the decline in citrus
production for Beitbridge farmers in the dollarization era despite the much cited benefits of dollarization.
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The Effects of Increased ZESA Tariffs on Citrus Production in Beitbridge
1. How has the change in ZESA tariffs in the dollarization era impacted citrus production for farmers in
Beitbridge region?
2. What have been the social and economic impact to the society emanating from the increased ZESA tariffs for
citrus farmers in the Beitbridge region since the inception of dollarization in Zimbabwe?
3. What environmental conditions do Beitbridge citrus farmers operate under?
4. How did the dollarization impacted on citrus farmers production capacity?
5. What national strategies can be employed to raise citrus production for export competitiveness?
Temperatures in the Beitbridge region are very high causing high evaporation as shown by Figure 2 below.
Figure 2: Evaporation levels by area in Zimbabwe
Evaporation (m). Information supplied by Meterological Services
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The annual evaporation in the Beit Bridge District is 2.64 metres and the required irrigation is 1.5 metres per
annum which extrapolates to 15 mega Litres per hectare per annum. This is higher than all other crop farming areas
in Zimbabwe. The sustainable production of citrus depends on the availability of adequate water throughout the year
since citrus is an evergreen crop (Dzingai, 2010).
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The Effects of Increased ZESA Tariffs on Citrus Production in Beitbridge
Beitbridge receives the least rainfall as compared to other parts of Zimbabwe. The little rain received usually
comes as heavy showers, the majority runs off and what remains is ineffective as it evaporates away the next day.
Figure 3 below shows rainfall patterns in Beitbridge District.
Figure 3:Rainfall Patterns for Beitbridge since 1964
Stacked Rainfall Records Since 1974
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
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The annual long term average puts Beitbridges rainfall at only 300mm which is characterised by wide
variations each year.
It follows that unlike most areas in Zimbabwe that might get away with supplementary Irrigation for certain
periods of the year, by contrast, the Beitbridge Irrigators cannot count on any relief from rain, and they have to apply
all the water requirement needs of the various crops grown.
Therefore, adequate water is required for efficient production of citrus fruits. When water is insufficient,
growth is retarded, leaves curl and drop, young fruit fall and fruit that mature are deficient in juice and inferior in
quality (Dzingai, 2010). Irrigation for citrus orchards should match, not only the growth and development stages of the
trees, but also the topography of the orchard, this includes soil properties.
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The Effects of Increased ZESA Tariffs on Citrus Production in Beitbridge
If one looks at the 2012 rate of 12 cents per kilowatt hour unit, this was not the total cost, as one had to add a
6% Rural Electrification Levy. By adding this cost it takes total cost per unit closer to the 13 cents level, without the
addition of the VAT at 15%.
To survive in these tough economic times, the farmers should have an edge on their competitors who are also
vying for the same regional and overseas markets. If we compare the Beitbridge farmers against their South African
and Zambian counterparts, the Beitbridge famers pay more for electricity. Taking a look at the costs in US$ in cents
per kilowatt hour, neighbouring country farmers pay approximately the following for power:
Zambia $0.033c /kW hr (K168.08)
RSA $0.083c / kW hr (ZAR0.7148)
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The Effects of Increased ZESA Tariffs on Citrus Production in Beitbridge
In the case of the Beitbridge growers their direct competitors are found in South Africa and especially in
regards to export citrus. The two Pie Charts below amply show the effect the high electricity costs have on Field
production as compared to a similar farmer in the Musina Area of South Africa.
Due to the high pricing, the Beitbridge farmer accounts for 41% of total production costs to electricity bills,
which is far greater (double) than the average bill for a South African farmer who accounts for only 20%. The
zimbabwean farmer is therefore too weak to compete for both foreign and local markets as compared to the South
african counterpart. There is however so much similarity on other types of costs and this leaves something to be done on
the pricing level of electricity for beitbridge farmers.
Nottingham Estate
The whole farm has about 1000 hectares of irrigable land but currently they are using 398 hectares and they are
expecting 24 048 tonnes of yield with a yield per hectare of 60 tonnes. This is due to the current conditions given the
cost of electricity. Under normal circumstances they have the capacity to operate at full capacity thus using all the 1000
hectares. Before the tariff increases they were using 800 hectares with expansion plans to use all the 1000 hectares.
They have 156 permanent employees and 650 casuals who usually come during the picking season but they
used to have 290 permanents and 1000 casuals, they have been forced to reduce labour costs due to the increase in
power cost.
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The Effects of Increased ZESA Tariffs on Citrus Production in Beitbridge
Electricity used to represent about 16% of their total production cost but now its consuming 38%. In 2011 they
paid ZAR 1 726 490 as bills to ZESA and are currently owing ZESA $120 000 backdated to June 2007. Last year they
have lost about 65 tonnes of fruit as a result of load shedding,
In 2010 when the ZESA tariff was 8c per unit they had an annual total revenue of ZAR 9 296 337 and their
ZESA cost was ZAR 3 860 838 and a net profit of ZAR 2 527 623. But in 2011 with a tariff of 12c per unit they had a
revenue of ZAR 13 390 244 and their ZESA bill was ZAR 4 434 199 and they had a net loss of ZAR 453 647. This
means there was no money for expansion and other investments.
Apart from paying taxes, employment creation and generating exports they are helping the nation through
social responsibility activities. They have built a school, a clinic and have an employment policy where they employ
people from the surrounding villages first.
V. RESEARCH FINDINGS
1. The main cause of the problems is the introduction of a blanket electricity pricing structures over the whole
country by ZESA, which totally ignores the diverse climatic conditions prevailing in the different regions in
the country and more importantly the requirements of the multitude of different crops by the agricultural
industry.
2. Irrigation in the district was driven by diesel engines and the irrigation designs were for flood irrigation. With
the advent of electricity supplied under tariff 5 by ESC (ZESA) the district switched over to sprinkler irrigation
to increase efficiency of water usage and reduce labour costs. There was as well tremendous expansion which
would never been possible pumping water with diesel. These irrigation schemes were designed by the farmers
with tariff 5 in mind. It was never appreciated that the very basis upon which the electricity tariff was
structured would be changed. With the imposition of the new tariff it became unaffordable for the irrigators to
rearrange their entire irrigation system to revert to flood irrigation to suite the straight line tariff introduced by
ZESA. The capital cost could have been prohibitive for all producers.
3. When tariff 5 was still in force, power consumption constituted on average 16 % of total production cost but
with the introduction of the new tariff power consumption alone is now in excess of 41 % of total production
cost.
4. It takes 8 years for a citrus tree to start giving return to the farmer so under tariff 5 they used to grow cash
crops like wheat, cotton and maize to finance the establishment of citrus production. With the introduction of
the new tariffs, cash crop farming was abandoned completely. As a result, many people have lost their jobs and
the government have lost heavily on taxes and foreign currency inflows. An example is Germ farm that
developed 240 hectares of land for the irrigation of field crops at tremendous expenses, to specifically finance
new citrus crops. This land had to be abandoned and had lain fallow ever since. About 80 people lost their
jobs. Another good example is the Border Ridge farm case that came into the district later than most and was
caught in the early stages of establishing Citrus Orchards and being suddenly faced with the increase in power
tariffs overnight which in the case of Cotton increased the percentage cost of electricity from 15% to 45% of
the production costs. They have had to abandon the enterprise.
5. Load shedding is seriously affecting yields, the frequent and long periods of load shedding is becoming a
threat to the economic survival of the irrigators in Beitbridge District. Pumped water is the absolute lifeblood
to the continuing viability of all the enterprises, which will be seriously affected with a power reduction,
particularly at critical times such as the Citrus fruit setting period and germination of seeds and seed beds.
This has already affected this years yield with some farmers already 50% down on what it should be and if the
trend continues they will have great difficulty in making economic sense on their efforts.
6. The Citrus packing season has been turned in to a nightmare with frequent load shedding. Growers have to
meet certain dates for shipping and one cannot pack a fruit that had been picked days before and fruits held in
cold rooms are triggered into giving off ethylene which is part of the ripening process and cant be stopped so
fruits deteriorate rapidly.
7. The original designs of the pump stations were for pumping with diesel engines and did not cater for and
install protection for sudden losses of power. The sudden and unscheduled power cuts is wreaking havoc with
pumping installation and particularly the suction lines buried in the sand in the river. The tremendous back
pressure with water rushing back is bursting the suction lines in the sand and these are difficult and expensive
to repair.
8. The farmers have been adversely affected by the dollarization of the economy. Most of them lost large
amounts of money that was tied in the local currency in their accounts. Some had their foreign currency taken
from their accounts overnight by the Central Bank. Worst of their problems with the dollarization are the
ZESA debts. Some farmers are owing ZESA large sums which they are struggling to pay because they are
already struggling to pay current bills.
9. Most of their produce is exported but there is a factory that has been established and is designed to take the
lower qualities of fruit that is produced along with export standard fruit and this produces Mazoe orange juice
both for the local and international market.
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The Effects of Increased ZESA Tariffs on Citrus Production in Beitbridge
From the table above it can be clearly seen that these farmers can perform better under tariff 5 than the current
tariff E5.1 and also that a tariff of 6c per unit is a better option.
VI. RECOMMENDATIONS
1. ZESA Tariffs - It is financially viable for the farmers if Zesa can go back to the tariff 5 structure that is farmer
friendly since the more you use power the less you pay. But if Zesa is to continue with the straight line
structure then for the farmers to break even a special tariff of 6c per unit should be adopted.
2. Load shedding- ZESA should give the farmers its load shedding schedule and try to accommodate their needs
at critical periods. If load shedding is done with no known pattern it poses great threats to productivity.
3. ZESA debts - since the farmers are struggling to repay the debts, ZESA should adopt a debt restructuring
strategy that might reduce the accumulated debt to a figure based on the revised long term tariff agreed for
these farmers and at the same time change the terms of the debt repayment. This can be done by negotiating
terms of the current debt, transferring debt to a new loan or consolidating the debt. This is done for benefits
like lower interest rates, lower monthly payments or longer repayment terms. It might take ZESA a longer
period to realise the full amounts but there is a guarantee that they will get it.
4. ZESA Efficiency. In parallel with measures to increase tariff, the power sector should consider improving
efficiency performance as this would relieve the pressure of investment and tariff increase (Nguyen, 2012).
5. Government support There is greater need for the government to fully support farmers in citrus production
for increased produce. It has been generally noted that where the smallholder producers received full support,
the quantity and quality of produce increased while those without full access to support in its various forms
failed to profitably gain from their enterprise (Matondi and Chikulo, 2012).
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The Effects of Increased ZESA Tariffs on Citrus Production in Beitbridge
6. Blending citrus and bee production for increased profits. This concept can be borrowed from Florida, which
has done this for a long time. For decades, citrus growers in Florida have allowed beekeepers to place hives in
their groves during citrus bloom (Rogers, 2014). Worth to note is that, citrus may not directly benefit from the
presence of bees because most citrus varieties are self-pollinating, the resources provided by citrus bloom are
very important for beekeepers. Hence, blending bee keeping can raise revenue for the farmers, rather than
concentrating on citrus production alone.
7. Avoiding Post-harvest losses. Apart from increased production costs associated by increased energy tariffs,
farmers should try as well to manage post-harvest losses because they strain the little revenue to be realised.
Post-harvest losses can be avoided through efficient marketing strategies, group selling and forward contracts
among other possible strategies.
8. Farm invasions. The increased cases of farm invasions in Zimbabwe over the past decade, has significantly
impacted the future of white citrus farmers, thereby reducing productivity. Many citrus farms have been
victims of farm invasions and threats to invasion. The government should support and strengthen citrus
farmers and protect their farms from illegal invasions emanating from political differences.
VII. CONCLUSION
The farms investigated were mainly devoted to citrus production. As previously stated the farms in question were
developed on a low voltage capacity related tariff. The enigma is that when the Agricultural tariffs were changed there
was no concession for capacity related usage of power except in the 11kV (E5.2.11) and 33 kV (E5.2.33) supply
systems, where their usage charges range between 12 cents per unit at peak times, to 3 cents on off peak periods. This
over a 24-hour period gives an average price per unit of 6.02 cents /kilowatt hour. This is a 66% cost saving per unit
compared to the E5.1 tariff structure.
The E5.1 low voltage tariff meters do not have the capability of distinguishing the time of usage, but in general the
farmers are attempting (limited by load shedding) to pump 24 hours a day, so such a system could be worked out. Zesa
has time and again argued that the electricity tariffs are way too low in comparison to what is prevailing in other
countries in the region. While this may be true for some tariff structures, the argument maybe misplaced because
Zimbabwe uses hydro power which is the cheapest source of energy, and abundant reserves of coal. The authorities
should take advantage of these resources and ensure that electricity remains reasonably priced to a level that should
attract investment into this sector and to other sectors of the economy rather than trying to catch up to get to tariff levels
in other countries in the region that do not have these resources.
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