ZIMBABWE'S fragile agricultural sector, which suffered massively under the country's controversial agrarian reforms, requires funding to the tune of at least US$2,5 billion per season to fully recover, The Financial Gazette can report.

This emerged as fresh information indicated that a liquidity-strapped domestic banking sector, under political pressure to fund agriculture, was becoming increasingly jittery after default rates for loans extended to the farming sector soared in recent years.

The 2011/2012 agricultural season is expected to start in less than three weeks.

Commercial Farmers' Union (CFU) president, Charles Taffs, who last week spoke exclusively to The Financial Gazette following private briefings between his organisation, banker representatives through the Bankers Association of Zimbabwe and diplomats, said the local banking sector was willing to bankroll agriculture, but had been significantly discouraged by shocking default rates from farmers that had topped 83 percent.

He said Zimbabwe required US$2,5 billion to fully fund agriculture per season, but the union was expecting that US$350 million would be channeled into the industry this year, from US$100 million in 2010.

This translates to a US$2,2 billion funding gap.

The funding crisis, he emphasised, had been compounded by huge cuts from traditional donors, themselves fighting to calm a historic financial meltdown in their own territories.

"In 2000, US$1,87 billion was lent to agriculture," Taffs told this paper after his briefing with diplomats and bankers on a wide range of issues.

"If we have to go back there (2000 production levels), we will need US$2,5 billion at least. But we are seeing only US$300 million coming to agriculture this season, from banks, government and other support. Donors have cut funding by 75 percent because they see Zimbabwe's problems not as a result of natural problems like drought, but policy," the CFU president said.

Last week, traditional chiefs on a facility tour of Zimbabwe Stock Exchange-listed seed producer, Seed Co Limited, were furious about lack of urgency by government and banks to inject funding for inputs before the season kicked off.

But Taffs said the banks wanted to be involved.

"But they don't lend because they have no money. Eighty-three percent of all loans granted to agriculture have not been serviced. I am talking about their (banks) own figures. There is no offshore lending for banks," he said.

The performance of the agricultural sector has perennially been hampered by erratic rainfall patterns emanating from changes in the global climate, poor planning and a weak banking sector.

Government has failed to timeously deliver inputs during a decade in which it resettled more than 300?000 under-capitalised and inexperienced new farmers on land previously controlled by well-funded white commercial farmers.

Late announcement of producer prices, together with delayed payment for maize by the Grain Marketing Board, had also forced some farmers to scale down production.

Taffs said his membership "was at the crossroads", but were prepared to work with government to rebuild the sector.

He highlighted serious funding challenges triggered by a shift to State land holding policy, and a controversial tenure system that had discouraged lenders.

Taffs said future economic growth and development hinged on a shift from subsistence to commercial farming.

"CFU currently finds itself at the crossroads," he said.

"With our active farming membership now below five percent of what it was in 2000, we basically have two choices. Firstly, close down or, secondly, rise up from behind the shadows and embrace the challenges facing us by being an integral part of the Zimbabwean recovery. We have chosen the second," he told the diplomats and bankers.

Taffs said great markets for agricultural output had opened up across the globe, but Zimbabwe had failed to capitalise on the opportunities due to unending deadlocks between government and farmers.

"With global financial markets currently in distress, investors are looking for new frontiers and we are well placed to take advantage, but with this comes responsibility, good governance, eradication of rampant corruption as well as a full understanding that we are part of a rapidly shrinking global environment and as a result can no longer act independent of each other. To do so will guarantee our demise. Opportunities are there, it is up to us take full advantage of them," he said.

Agriculture, which together with the mining, manufacturing and tourism industries were expected to spearhead economic recovery, was projected to grow by 19,3 percent this year, underpinned by strong performances in tobacco, sugar and cotton.

Recent reports suggest that most projections have been missed.