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Tuesday, 7 October 2008

To import or not to import...

FRSP has released a new policy synthesis on the short term policy options available to GRZ in face of rising maize prices. Well worth the read. Here are the key conclusions :

  • Maize prices are rising rapidly in 2008 and are fast approaching import parity levels.
  • Maize traders, millers and farmers all agree that Zambia will likely require imports by early 2009 in order to avoid domestic maize supply shortages.
  • Official food balance sheets appear to have underestimated the demand for maize this year. They may also have slightly overestimated the size of the 2007/08 maize crop. Hence the slow government recognition of the need for maize imports.
  • As of late September 2008, neither the Government of Zambia (GRZ) nor the private sector have arranged to import maize from South Africa. Trade sources suggest informal imports from Tanzania are helping to relieve the likely shortfall.
  • Zambian policy makers face a delicate balancing act: they need to maintain remunerative prices for farmers, in order to stimulate maize supply response during the coming 2008/09 production season, while at the same time moderating maize meal price increases to protect urban consumers and the many rural households who are net buyers of maize.
  • The time to respond to this balancing act challenge is now rather than later in the marketing season when costs of supplies and transport will increase.
  • Several policy actions offer potential win/win options for balancing these twin concerns:
  • Policy 1. The GRZ would allow private maize imports by issuing permits now or decontrol maize imports for this season so traders can lock in relatively lower grain and transport prices to be in a position to supply millers later in the season. Public sector (FRA) maize imports would not be needed if GRZ and private traders can work together to produce sustainable solutions.
  • Policy 2. GRZ would reserve/dedicate a major part of FRA stocks to sell to local traders and custom milling clients with maize grain in the outlying provinces during the lean season. FRA could also contract with Zambian commercial farmers for “early maize”.
  • Policy 3. GRZ and Donor partners would work together to create a workable special emergency fund to subsidize the cost of grain or perhaps roller meal in the months of November 2008 through March 2009 in order to allow millers to pay traders/importers market prices but not pass these full costs on to low income consumers in Zambia.

1 comment:

  1. Success in a neighbour:


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