Revise agric share scheme

By Stompie Lekakane, Lehlohonolo Ramootsi and Thuto Ramakhula

The economy of Lesotho is predominantly driven by three sectors: the agriculture sector, industrial sector as well as financial sector. The importance of the agriculture sector is not debatable in Lesotho.

Pre-independence, the agriculture sector alone contributed more 70 percent of Lesotho’s Gross Domestic Product (GDP), which is a measure for total national economic activity while industrial and service sectors contributed 10 percent and 28 percent respectively.

Nonetheless, the contribution of the agric sector has significantly declined over the years, contributing 28.6 percent in 2012, with a minor hike to 30.4 percent in the 1^st quarter of 2013, making the financial sector the most dominant sector in the economy with the contribution of more than 60 percent in 2013, followed by the industrial sector with 30 percent around the same period.

The government of Lesotho has made some initiatives to boost the agric sector by engaging in some activities including but not limited to introducing aquaculture in Katse Dam and Mohale Dam. With this expansion they hope to educate Basotho about fishing so they may gain from having dams.

The government also introduced expansionary fiscal policy by imposing zero percent tax on imports of seeds, fertilizers and other products used in crop farming.  It is worth noting that the zero percent tax on imports did not apply to importation of livestock agriculture. Thus this tariff discrimination becomes a central question in the growth of agric sector, as livestock also plays a fundamental role in the agric sector and the economy of Lesotho at large.

Livestock farming is a branch in the agricultural sector which contributes a sizeable share of GDP. The question to the government would be how to give incentives to Basotho farmers to invest intensively in commercial livestock farming. Treating farmers equally, that is by imposing a zero percent tax on their imports would prompt many people to join the agricultural sector despite the current prevailing humps that discourage the population from taking up farming.

Livestock farming in Lesotho has a potential to contribute a larger percentage to GDP, despite the unfavourable climate conditions if incentives are put in place. For instance, in the highlands most livestock farmers have an average of 200 sheep per farmer, and a minimum of 100 goats per farmer, and from their products (wool and mohair) are exported to foreign countries.

If our livestock farmers are motivated through tax cuts on importation of livestock and every product related to it for improvement, clearly more products will be produced and exported for the benefit of our economy. Indeed our government has tried to expand our economy by subsidising the crop farmer not taking into account the portion of arable land we have.

Lesotho is a country with potential to gain from its natural resources. It is blessed with great pastures in the foothills which prompt the population to increase its production in the subsector of agriculture.

Some credit has to be given to the government for the measures it has taken to try and encourage the population to get more interested in taking up farming by offering up free fertilizers and giving up free tractors to plough up the fields for farmers and in return the farmers give 60 percent of their produce.

However, even at this point, the question of a “fair share” becomes central if the focal point is to motivate, capacitate and boost the agricultural sector. It is true that the government solely provides private farmers with agricultural facilities such as fertilizers and seeds, but how fair is 40 percent share of the yield that goes to private farmers as opposed to 60 percent that goes to the government?

Will the 40 percent share sustain private farming as a strategy to promote private sector – which is the wheel for development? Or could the 40 percent share mean that Basotho farmers are only sweating under the illusion of free labour? There is therefore an urgent need for the revision of the share of the agriculture yield between stakeholders.

In conclusion the agriculture sector remains the fundamental pillar of Lesotho’s economy. The government must therefore critically look at all possible aspects to fully give incentives for private farmers to develop such a sector beyond the current situations. There should be a team of experts to set up a strategic plan on how to fully commercialise and globalise Lesotho’s agricultural products in a way that they will be competitive and attractive across the globe.

• The writers are Economics students at the National University of Lesotho