Dealers whine over subsidy induced losses

Thursday November 05 2020

Dealers in agricultural equipment and inputs are selling subsidised equipment to farmers. PHOTO | FILE


Dealers who signed contract with government to sell subsidised agricultural equipment and inputs to farmers are between a rock and a hard place in their quest to revise prices.

The government is reluctant to revise the prices earlier agreed to enable the dealers supply farmers with the equipment and inputs at affordable prices. 

The dealers said the standoff over proposal for review of prices has subjected them to losses due to other costs, like transport, freight clearing, among others have shot up due to Covid-19 related disruptions.

“The prices of for instance irrigation equipment have significantly increased, transport and freight costs have also shot up yet we are stuck on the old prices, it's becoming harder to hedge the business” said Begumisa Franklin, a dealer in agricultural equipment.

The dealers were supposed to have signed new contracts by now, but the government advised them to write requesting an extension of the contracts they have, which means the listed prices will stand for two years.

“The prices are fixed for two years, the only way we are surviving is that when you go to the source you can negotiate some discounts, but the issue is how to hedge and make a profit based on the current prices” he said.


Mr Begumisa noted that much as they are committed to continuing to support smallholder farmers, especially at such a difficult time, the other challenge on their business is that many farmers are too cash strapped to even pay the 50 per cent meant for the subsidized pumps, so a lot of the equipment lays idle in the stores.

The dealers, who are able to sell some pumps, are selling the smaller equipment with little value, remaining with a lot of dead stock on the high value equipment.