I have been reviewing that fantastic FRSP paper blogged in the 1st edition, on the short term policy options available to GRZ in face of rising maize prices. That paper helpfully set out four broad objetives to keep in mind :
It then goes on to articulate three possible policy responses :
- Avoid the very high costs to GRZ and consumers of delayed imports. Decisions to import late would involve greater competition for transport with other countries and thereby entail higher transport costs. Late importation could produce the more extreme result of widespread hunger if local scarcity starts to manifest before needed imports arrive.
- Maintain incentive prices for farmers to stimulate supply response in the 2008/2009 production season.
- Keep maize grain supplies available in rural markets during the lean season for rural grain consumers and traders, and thereby help protect urban/rural net buyers of maize against much greater than normal seasonal price increases for maize meal.
- Find options for positive roles for both GRZ and private traders/importers.
- 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.