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Wednesday, 20 October 2010

Budget 2011 : National Budget for Agriculture

I always look forward to the ACF / FSRP policy presentation on the Budget. This year's assessment - What is in the 2011 National Budget for Zambian Agriculture? Presented by Antony Chapoto. ACF/FSRP Budget Breakfast Meeting. Pamodzi Hotel, Lusaka October 19, 2010.  I am not sure if the budget for agriculture means anything any more. There has been such deviation from actual allocations that the budget does not exist in a real sense. By the way, do look out for slide 33 which has a revealing assessment on the limits of the agriculture subsidies. A couple of extracts below (click to enlarge) :


2 comments:

  1. The percentage of the agriculture budget that consists of subsidies is quite important. If we produce a heavily subsidized maize surplus, the only solution is to export. You are then asking the Zambian taxpayer to subsidize food for Congo, Angola or wherever. Is this what taxpayers want their taxes used for?
    The main beneficiary of agricultural subsidies is not the producer but the urban consumer. This is because the subsidy just drops the price. It would be more meaningful to subsidize what farmers really need which is decent roads, extension and veterinary services that work and organized marketing structures. All the farmers marketing problems would end if everyone who lives in town had a job, so maybe we should rather subsidize job creation? Could we have tax breaks on a "per job created" basis?
    It would be better than giving the big tax breaks to the mines and the importers.

    ReplyDelete
  2. Hi R. Henson,

    The percentage of the agriculture budget that consists of subsidies is quite important. If we produce a heavily subsidized maize surplus, the only solution is to export. You are then asking the Zambian taxpayer to subsidize food for Congo, Angola or wherever. Is this what taxpayers want their taxes used for?

    Actually they pay taxes so the mines won't have to - literally. Because of neoliberal economics, there has been a shift in the tax burden from the mines to workers.

    Also, the only solution to a surplus of maize is not necessarily export - it is also manufacturing. Bourbon, boxed cornflakes, cornflower, etc.

    The main beneficiary of agricultural subsidies is not the producer but the urban consumer. This is because the subsidy just drops the price.

    In the case of FSP, it also increases production. And considering the fluctuations in the price of maize, the limited storage, there is a lot of upside potential.

    It would be more meaningful to subsidize what farmers really need which is decent roads, extension and veterinary services that work and organized marketing structures.

    I wouldn't disagree with that at all. We need a comprehensive agriculturald development program.

    All the farmers marketing problems would end if everyone who lives in town had a job, so maybe we should rather subsidize job creation? Could we have tax breaks on a "per job created" basis?

    Well right on Comrade Henson. :) Full employment of course runs counter to the neoliberal economic policies that this government has been following. As Alan Greenspan as head of the Federal Reserve once said: "My job is to maintain a certain level of worker insecurity".

    The neoliberal model is based on (among other things) the low cost of labour. The more unemployed and uneducated people are, the more they can suppress wages and increase profits and their own power/influence on policy.

    It would be better than giving the big tax breaks to the mines and the importers.

    I completely agree. The mines should be contributing at least $1 billion a year to the budget.

    The way forward for me would look like this:

    1) The mines pay $1.2 billion in taxes or more

    2) There is a cleaning up of the mess at the various ministries, which also accounts for hundreds of million of dollars a year wasted

    3) Streamlining government towards service delivery and away from administration - reduce the number of ministries from 29 to 12, and decentralize rights and responsibilities to local government

    4) Start large scale infrastructure works projects (roads, irrigation) to create large scale employment and give people money to spend, and connect the various commercial centers nationally and regionally

    5) Localize both production and consumption through legislation (import restrictions and tariffs on locally produced goods - the German beer industry before the corporate takeovers would be a good model of a highly regionalized and SME/family business oriented model)

    ReplyDelete

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