Posted on 03/21/2006 6:37:05 PM PST by blam
Zambia's new farmers are being killed by kindness
By David Blair in Choma
(Filed: 22/03/2006)
James Chance slept in a tent for four months when he arrived to farm the bush country of Zambia.
Having lost his farm in Zimbabwe, Mr Chance leased 4,400 acres in its northern neighbour and was "exhilarated" to have a second opportunity to till Africa's soil.
Bruce Danckwerts [L] and one of his workers inspect tobacco that will fetch much less on foreign markets
Yet his hopes and those of 200 other white farmers, all fugitives from Zimbabwe, have been shattered almost overnight.
Most of their farms have lost their viability at a stroke because in the past three months Zambia's currency, the kwacha, has risen by a third against the US dollar.
The farmers grow tobacco and maize for export at prices in dollars. But their costs are paid in the local currency so they must find more dollars to survive. Mr Chance estimates that his annual costs have grown by about $20,000 (£11,400).
No one predicted the kwacha's sudden rise or budgeted for this increase. For a new, heavily indebted and relatively small-scale farmer, such a burden could spell the difference between survival and collapse.
"It troubles me all the time," said Mr Chance, 38. "Our first year was excellent and now things have got dramatically worse. I don't see it working. Only established farmers will be able to keep going. The rest of us are out."
Only by cutting costs can Mr Chance survive, so he must lay off 30 of his 120 workers. Every labourer supports about 10 relatives, so about 300 Zambians will be impoverished by the crisis on this one farm alone.
The kwacha's surge makes everything produced in Zambia more expensive abroad. It has damaged not only commercial agriculture but every other exporter as well.
There are many reasons for the currency's climb. One is the decision by the G8 group of rich countries, among them Britain, to write off Zambia's foreign debt last year and double aid. In January, Zambia was among the first 19 poor countries to benefit from 100 per cent debt relief and allow its government to spend money on health and education that would have repaid loans.
This has boosted confidence in Zambia's economy. But the unintended consequence has been the rise of the kwacha and the punishment of the export sector, with tens of thousands of small maize, tobacco and cotton growers hardest hit.
"Writing off debt and increasing aid is intended to alleviate poverty," said Bruce Danckwerts, 51, an established farmer in Zambia who has 40 fewer workers than normal this year. "But revaluation is hurting the poorest the most."
Mr Chance lost his tobacco farm in the Matepatepa region of Zimbabwe in 2002 after a squatters' invasion. In 2003, he moved to Choma district in Zambia, where about 12 fugitives from Zimbabwe and a dozen established white farmers form a tightly knit community.
He leased a derelict farm and began making it habitable. "I thought, yes we can make this work. Now it's very different. I wonder how we can carry on."
Ping.
How ironic. I wonder what Bono would have to say about this unfortunate unintended consequence of debt forgiveness.
Same plight as the American small farmer. Go figure.
I can't believe there are still white farmers still alive in S Africa! He's one lucky dude.
The law of unintended consequences.
These farmers sure are troopers. I hope things work out for them and their employees somehow.
On the foreign-aid - exchange rate angle
The law of unintended consequences strikes again. This sort of benevolence is misguided.
My guess is that this "unintended consequence" could have been predicted confidently by a decent economist.
Walter Williams, for example.
There are few truly "unintended" consequences: most can be more accurately described as the result of stupidity.
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