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Sunday, 16 August 2009

Splitting Agriculture Is Wrong (Guest Blog)

The decision by President Rupiah Banda’s government to split the Ministry of Agriculture into two government ministries is one of the most absurd decisions a government can make. One would perhaps agree with the split if it was a line Ministry that actually performed the functions of rearing fish and livestock and tending to food crops (including maize, cassava, sorghum, millet, sweet potatoes, beans, wheat, and groundnuts).

This is clearly a decision designed to create sinecures for some of the MMD leaders who have not yet been compensated for their contributions to MMD campaigns. Vice-President George Kunda should not expect Zambians to accept the rationale he has presented to Parliament for the split. It is absolutely unacceptable and irresponsible!

What Zambia needs is a Ministry of Agriculture and Food Security that is designed to advise the Republican President on, and spearhead the implementation of, policies relating to the following: sustainable agricultural development and long-term food security – including the provision of agricultural incentives, support to agribusiness establishments and agricultural research centers, damming rivers, and construction of irrigation canals; and coordination of national programs and activities pertaining to agriculture and food security with those of the private sector and both provincial and municipal governments.

Such a Ministry should support all kinds of agricultural pursuits and en deavors, including dairy farming, ranching, fish farming, horticul ture, and crop husband ry.

Splitting such a Ministry into the Ministry of Agriculture and Cooperatives and the Ministry of Livestock and Fisheries will only contribute to the usual duplication of effort that characterizes the current structure of government. For example, cooperatives can be established by growers of food crops as well as farmers in the livestock and fisheries industry – the split in the Ministry will mean that each one of the two new ministries will separately handle this function!

Instead of creating sinecures, we should be thinking about how Zambia can attain sustain able agricultural de ve lopment and long-term food secu rity through such measures and initiatives as the following:

1) Zambia National Service: We should fully and promptly revive and revitalize the Zambia National Service (ZNS) production camps, which should accept enroll ment by Zambian citizens on a volu ntary basis, as well as promo te and bolster agri cultural pro duction in the camps thro ugh greater fina ncial support and generous condi tions of service for ZNS person nel. Vacated refugee camps dotted across the country should also be utilized for agriculture-related training, crop production, and other vocations to be facilitated by a cadre of skilled and professional trainers.

2) Provincial Agricultural Estates: We should require all provinces to create revenue-generating agricultural schemes, and to use a portion of the output of the schemes to maintain their own local food reserves.

3) District Councils: District councils which current ly run municipal farms as part of their commercial undertak ings should be encour aged to continue running such farms.

4) School Production Units: All educational and training institu tions should be encoura ged to join in the nation’s quest for greater agricultur al output and food security. In this endeavor, we should require each and every student and trainee to actively participate in agriculture-based production units at their schools, colleges and universities. Their partici pation in such units should be graded and noted in their testimoni als.

5) The Military and Civil Police: Police camps and military barracks and garrisons should also be expected to initiate and maintain agricultural production units.

6) Agricultural Incentives: We should provide for attractive agri cultural incen tives to boost both small-scale and large-scale farm ers. As provided for in the World Trade Organizati on’s Uruguay Round acc ord conc luded in December 1993 in Punta del Este, Uru guay, WTO mem ber-countries’ quest for enhan ced food security precedes the need for progres sive redu ction of governmen tal supp ort for, and protection of, agricultural activities in order to enhance market access and com peti tive ness interna tionally.

7) Agricultural Inputs: We should promote effi ciency in process ing, sourc ing, and distribution of agricultural inputs by provi ding for informal trade in agricultural inputs among farmers, and the crea tion of a “Far mers’ Hold ing Company” by farmers (through a low-interest loan, if need ed), to supply low-cost inputs nationwide at zero value-added tax—inc luding seeds, seed lings, ferti lize rs, pesti­cides, insecticides, stock feeds, and grain bags. The cooperating farm ers should as­sume ownership of the com pany as founding sharehold ers, and the com pany should prefera bly be registered and operat ed as a corporate entity. Besides, we should encourage farmers to engage in direct and informally initiated far mer-to-farmer trade in low-cost and orga nic agricultur al inp uts—including compost, chick en-droppi­ngs and cattle-dung manures—and young birds, ani mals and species of fish intended for breed ing.

8) Agriculture-Related Imports: All the various kinds of imports that are currently exempted from customs duty should continue to enjoy the duty-free status—including fertilizer, irrigation equipment, irrigation pumps, tractors, machinery for soil preparation and cultivation, harvesting and threshing machinery, poultry machinery, fungicides, and herbicides.

9) Marketing of Produce: We should create—in collaboration with the Zambia National Farmers Union (ZNFU), the Millers Association of Zambia (MAZ), the Zambia Cooperative Federation (ZCF), and other relevant stakeholders—a marketing system for all kinds of agri cultural produce designed to provide for the following: direct sourcing of such produce from farmers by mill ers, re tailers and other industrial buyers; and procure ment of unsold produce by the Food Re serve Agency at wholesale prices for preser vation and/or distri bu tion to government institutions like boarding schools, colleges and hos pitals.

10) Irrigation Schemes: We should actively seek to create and maint ain irri gation schemes at tax-payer expense, including the damming of rivers and const ruction of irri gation can als nationwide. We need to promote all-season crop production—January through Decem ber.

11) Other Imperatives: We should create feeder roads and maintain old ones nationwide, im prove training conducted in agri cultural re search centers, provide for low-interest loans for erecting secure storage facilities, and extend incen tives to agri busi nesses and canners and proce ssors of agricultural produce.

Henry Kyambalesa
(Guest Blogger, Agenda for Change)

8 comments:

  1. This article is really confusing. In my opinion, points 1 to 5 have been cancelled by point number 6. In addition, I have struggled to see the areas which stand out as alternatives because the author has not provided a credible reason for not opting to split MACO other than a proposal to extend participation in agriculture activities to schools and police camps (although I’m wondering how much space there is in Sikanze Camp, Mulenga Police Camp in Nchanga, or is it Sibongo kwa Mongu, or even Riverside Police Camp in Kitwe). One may say they’d use greenhouses, well may be from that point. But then would cows, goats, pigs, chickens be kept in the same as well? What about “Zambia needs is a Ministry of Agriculture and Food Security”? This appears to be low-ambition approach. Why “food security” and not just end at Agriculture? And incentives! What is meant by ”incentives” in terms of Zambia’s agriculture which emphasises on peasant farmers? Is it free fertiliser, tools? I know there is already some form of “tax free”, whatever the name is. That one is ok and it is a good thing especially were commercial farming, which I support, is concerned. But what about in police camps and schools as being proposed, what is the author pointing to as incentives?
    That aside. In some of the points after number 6 what is being proposed is what is already happening, and it is equally wrong. I have argued on this blog (forgive me for using different names but rest assured that this one will stand a test of time) that activities to do with feeder roads, storage facilities, irrigation, to some extent even the social activity of fertiliser distribution should not be part of ministry of agriculture. Except for the last one which I feel can be handled by social welfare ministry the rest are better left to the local authorities because other than streamlining the activities it will even provide a window for job creation. That is why I have repeatedly said that it is activities supporting agriculture (manufacturing) which matter - rather than the digging and planting per se as the situation is being promulgated – and will contribute significantly to our economy. My proposal may take a long time to implement because peoples’ minds have to be tuned not to look at it as a way of reducing funding to MACO, thereby resisting that change.
    Nevertheless, has anyone wondered how that FRA’s mandate seems to have been framed on maize and not livestock and poultry? So, should we have laissez faire approach when we can also promote the latter which has been neglected for over 40 years? I think we need to give it a chance (the livestock part) especially that we have denkete year-in-year-out and we have not broken into the international because of not having a focus on value addition (manufacturing/ processing) industry.

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  2. I support splitting the ministry.Livestock has been totally neglected for a long time.In many areas livestock are more suitable than crops. Another alternative that should be considered is removing FRA and FSP from agriculture to social welfare as they are detrimental to agriculture. What farmers need are
    decent roads (well maintained dirt is fine) good research and extension and good vet services. Then we also need consistent policies. We have no consistency. Challenge any govt agric worker to answer one question: "Do we have a free market in Maize?" They can't answer. If we don't the govt price should be law and above production cost and govt should buy all maize. If we do, then export and import should be freely allowed whenever and by whoever desires to do so.
    If we don't know what our policy is on the most basic commodity in Zambia then what are we doing?
    R Henson Farmer

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  3. Chisomo, I agree with most of what you have said, especially the argument that infrastructure support shouldn't be part of the Ministry of Agriculture, although we both agree these services are vital. The Ministry of Transport should be in charge of delivering these things, but even there we see unnecessary duplication with the Ministry of Works and Supply (a unnecessary ministry in my view). Your point on manufacturing is interesting, whilst I agree that in the long term that should be vision, I think there's a strong argument for agriculture as a driver in raising long term productivity and SPURRING the demand for manufacturing etc. The issue here is simply one of competitive comparative advantage. We have plenty of land and cheap labour. It makes sense that we utilize these, but within a broader policy that allows us to incrementally make the transition into manufacturing. There can be no biscuit factory without the raw materials.

    Ruth, I am a bit more skeptical on whether decoupling with actually deliver what you want - a focus. I have always said in Zambia we suffer from "broke institutions". Its not new bodies we need pay se, but more target funding in areas that matter. But if a new Ministry resulted in better "lobbying" by that Ministry for funds then perhaps I will take back my words! We have many underfunded Ministries already. Its not obvious to me that a new Ministry will be more efficient or better funded. On your other points. I fully agree - we discussed those issues many times on this blog e.g. see the fascinating exchanges on A better vision for agriculture....

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  4. Cho,
    I wish I could put it in simpler terms.
    "The issue here is simply one of competitive comparative advantage. We have plenty of land and cheap labour."
    Keeping in mind that our agriculture system is centred on rain-fed peasant farming, who are we going to provide that cheap labour for? Is it the peasant farmers or commercial farmers? Put differently, for what part of agriculture is the cheap labour going to be provided? And you mean comparative advantage of agriculture over manufacturing? If that is what you mean you need to check for the GDP ratios of agriculture's contribution vs manufacturing on a global average; you will be surprised to see that most countries whose economies are dependent on agriculture rank among the poorest.
    "Your point on manufacturing is interesting, whilst I agree that in the long term that should be vision,"
    I guess we need to start walking towards that vision now, and that can be done by changing the focus from agriculture being an event like the Ngoni peoples' N'cwala Ceremony or the Luvales' Likumbi Lyamize to being a process. And the first step is to transfer the fertiliser largesse to social welfare, feeder roads and storage facilities to either local government or works and supply, whichever would be suitable. Then we need to invite commercial farmers on board, say, by way of contracts in production of particular crops on a revolving basis whilst setting/strengthening livestock programmes ranging from research on vaccines to production of tinned beef, condensed milk, or shoes. We will find that what we will remain with is actually manufacturing which would make for whatever we will need especially that we have to develop a knowledge economy to make manufacturing work.
    For example, focusing on commercial farmers will mean steel company in Kafue will not just be making gates and deformed iron bars but will venture in irrigation equipment ploughs and even spare parts (and using incremental principles may be by the grace of God even auto mobiles}. Then comes in NCZ with fertilisers and other chemicals for use on farms. So we have a manufacturing-agriculture-manufacturing burger if you like, with manufacturing (and processing) taking a huge share. We would even find that a small community of commercial farmers can surprise us by addressing the much talked about food (maize) security yet riding on the back of manufacturing which has to be attended to yesterday.

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  5. Chisomo,

    ”Keeping in mind that our agriculture system is centred on rain-fed peasant farming, who are we going to provide that cheap labour for? Is it the peasant farmers or commercial farmers?”
    I think you mean “who are we going to provide that cheap labour to”. The point I was making is that cheap labour is available and it should be made to use through positive incentives. Its not the question of supplying the labour to someone, but turning that labour to productive use. If I have misread your question please clarify for me.

    ”And you mean comparative advantage of agriculture over manufacturing? If that is what you mean you need to check for the GDP ratios of agriculture's contribution vs manufacturing on a global average; you will be surprised to see that most countries whose economies are dependent on agriculture rank among the poorest.”

    There are two separate points here. First, by “comparative advantage” I simply meant that we should focus on those things that we are go at or those we can produce at minimal “opportunity cost”. Secondly, many countries have developed through agriculture e.g. Vietnam – see the recent blog What Can Vietnam teach Zambia? . The point is that under normal process of diversification agriculture has been an intermediate step – I touch on this on the blog Five Questions on Agriculture

    ”And the first step is to transfer the fertiliser largesse to social welfare, feeder roads and storage facilities to either local government or works and supply, whichever would be suitable.”

    I am not sure whether swapping ministries is the ultimate answer, but I do see your broader point : responsibility for things appear misallocated.

    ”Then we need to invite commercial farmers on board, say, by way of contracts in production of particular crops on a revolving basis whilst setting/strengthening livestock programmes ranging from research on vaccines to production of tinned beef, condensed milk, or shoes. We will find that what we will remain with is actually manufacturing which would make for whatever we will need especially that we have to develop a knowledge economy to make manufacturing work.”

    Again, nothing wrong with this. Infact, your vision of linking production with research and adding value is consistent with my own view on how to turn agriculture around. See A better vision for agriculture

    We do differ on how approach to small versus large farmers. I think there’s a role for both, but I agree larger farmers are critical in terms of adding value and making the “manufacturing leap” because these things rely on “scale”.

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  6. Just a few points
    Labour is not actually cheap in Zambia. Cheap labour is self employed labour because people will work for anything to survive. Employed labour is subject to laws such as the legal minimum wage, tax and Napsa, Workers compensation and enormous benefits for sickness redundancy retirement etc. For this one gets a fairly inefficient unskilled worker who can usually find a way for three people to do the work of one. (All labour intensive crops are going into the informal sector, going bankrupt, or getting mechanised for this reason)
    Second comparative advantage depends largely on policy. At present policy favours trade especially imports. This to me is the opposite of development. If we tax local production out of business and remove import duties we wind up with everything being imported that we used to produce ourselves for the simple reason that we have made it cheaper. This is probably because a big company pays more bribes than small farmers. A case in point is the removal of duty on malasian palm oil for sale in Zambia. Zambian edible oil crops have been on the edge of total collapse for years and so they remove the duty on imports? Surely it would be better to increase the duty and remove duty on oil processing equipment? Or lower the taxes on it?
    The Goverments belief that a strong kwacha is good shows their total lack of understanding of agriculture issues. Strong kwacha makes malawian peanut butter, kenyan washing powder, or south african ketchup cheaper than the made in Zambia one resulting in job losses in Zambia all the way through the economy. A slight increase in the number of cross border traders will hardly offset this.
    The biggest problem we have as a country is that the people in a position to make decisions have no clue and the rest of us have no way to tell them. If we could have some sort of national policy debate that many people to contribute to that could set direction and priorities it would help.
    Ruth

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  7. Well put Ruth! A positive trade balance leading to a stronger currency will hurt producers unless it is translated into greater capital in the domestic commercial banking stream, with consequently greater loan volumes, and thus presumably lower credit costs which can offset the currency advantage in high inflation economies in the region. Unfortunately since HIPC the country has been borrowing rather heavily, which makes a stronger currency more desirable as the loans are not denominated in kwacha. While a positive balance of trade is a virtual prerequisite for domestic wealth creation on a significant scale, it is entirely possible for a currency policy to avoid allowing this to overly inflate the domestic currency (dropping a currency is easy, just print more or borrow more against future printings). Currency inflation would lead to price inflation however, and therefore be unpopular both with voters and with big donors who want to show results by certain metrics in isolation.

    You make great points about the reality for actual people in the middle of this policy debate, unfortunately I don't think that the decision makers are listening unless you've got a hundred thousand hectares or so of now defunct farmland you'd like to lease to the Chinese.

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  8. Sorry! This sentence should read: "While a positive balance of trade is a virtual prerequisite for domestic wealth creation on a significant scale, it is entirely possible for a currency policy to avoid allowing this to overly deflate the domestic currency"

    I guess I've gotten so used to talking just in terms of inflation that I forget how to even type deflation!

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