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Tuesday, 2 November 2010

Pf Policy on Agriculture

We have yet to see coherent policy propositions from the parties vying to rule Zambia for the next five years. Ideally, we should now be seeing emerging policy papers from the parties that test "the ground" with the electorate so that when their manifestos are finalise they would truly be "people driven". But clearly we are far from the "ideal democracy", so our people must be content with crumbs that fall off from interviews. We had another crumb this week with a hint of what PF agriculture policy might look like :
On agriculture, Sata said maize marketing and credit finance under the MMD government has disadvantaged small and medium-scale farmers due to lack of credit and the determination of the floor price of maize by the government without taking into account the production costs incurred by farmers.

He said the PF government would ensure that agriculture plays a pivotal role in creating employment and promoting national food security. “PF will facilitate the establishment of an autonomous farmer's bank, compliment the private sector by being a buyer of last resort especially from emerging farmers in rural areas and review the Food Reserve Agency (FRA) Act in order to nationalise its operations and functions, including its role in maintaining strategic reserve of food crops,” said Sata
I have to believe that something seems to have been lost in translation here. The quote above raises more questions than answers. 

First, it is true that credit constraints continue to be a problem for anyone trying to do any business not just farmers. But in so far as government has delivered a lot of agriculture subsidies, and is now moving towards legislation  that would allow farmers to use their future produce as "collateral", I am not sure "credit" is actually the problem per se. Evidence discussed many times on this website points to the need for any future government to do more to improve roads, other infrastructure and deliver effective land reform. That is the only way to improve agriculture. It seems to me the best way to help agriculture is not treat it as special. Special policies like "export restrictions" and "subsidies" have done little to encourage broad based agriculture.

Secondly, the proposal on a "farmers' bank" is unclear. The quote from the Post seems to suggest that the PF plans to make the farmer's bank a "buyer of last resort".  That surely can't be right. A bank engaging in buying produce would be a disaster, so I have to assume Mr Sata meant to refer to FRA as the "buyer of last resort". But even if we assumed that the farmers' bank would operate like a "normal bank" with some element of subsidised and more tailored facilities, it is still fraught with difficulties. We have previously touched on this issue. The proposal for a bank is not original. It was initially advanced by Ben Kapita only for Caleb Fundanga to dismiss it  due to “moral hazard” concerns. In recent times we have seen the idea substantially grow legs as evidenced by recent exchanges in Parliament. So far the government has failed to explain the fundamental issues which have been raised regarding the idea. 

Finally, the last part of the quote is also unclear - "...review the Food Reserve Agency (FRA) Act in order to nationalise its operations and functions, including its role in maintaining strategic reserve of food crops..".  The word "nationalise" is best understood to mean widen its functions, otherwise it does not add value here since the FRA is already a national organisation. What is more confusing is that it is unclear how FRA can  perform a "strategic reserve" function and at the same time "act as a buyer of last resort", without distorting incentives across the market. A larger FRA is not the answer to making Zambia a viable bread basket. 

Related Posts :

PF Policy on Mining Taxation (Update)
Pf Policy on Mining Taxation?
PF Policy on Parastatals

4 comments:

  1. It's not about who you are... It's all about how you rule others.You see,all political parties in zambia are not what they claim.For 46 years they have failed to hit the nail on the head.That is, address your real needs -- workable agricultural policies,abundant employment and others.All the buzzes they make are but mere goody goody.And what's more,if they were in business,without a doubt,they would be thrown out of business immediately because they have failed to address the exact needs and wants of zambians.Sure,the MMD is trying but it needs time to put itself together...banish corruption and other mal-practices within the party.

    (Learn more at www.jetdim.wordpress.com)

    ReplyDelete
  2. Agricultural credit has an appalling record because it is so hard to consistently make a profit in Agriculture in Zambia. The government can change the policies or the exchange rates with no consultation at any time and doesn't care how many businesses go bankrupt as a result. So making more money available is a losing proposition unless we first do something about the factors contributing to the problem. This would need a lot more space to analyze. (I will write it later if I have time) But yes, agriculture does not need to separated for special treatment from other business. Part of the problem with agriculture is the failure of other business to work, with a resulting loss of employment and market. If everybody can afford to eat, then the farmers will have enough market. The first thing someone does when employed is eat.
    So what we want to see from parties wanting our votes is
    1. Policies that promote employment
    2. Policies that would benefit agriculture especially infrastructure and extension services.

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  3. Chola,

    Stop wasting your time analyzing policies of doomed PF. Just prepare enough medication for your cardiovascular arrest-BP unless you are another one in denial and now like Sata throwing scorn at Fr.Bwalya for announcing the death of a pact, Everything points to a reality that MMD and RB are continuing in power past 2011 elections. We have no opposition in this country to fall on. We are better off mourning the death of the pact and moving on with life. Any chance at the exit of MMD from power you and i must form our own party and drive change crusade. HH and Sata are not going to compromise on any ground because they are bother power hungry myopic egoistic heads chasing a self serving agenda.

    ReplyDelete
  4. Ruth,

    It would be great to have your piece, if you get a chance.

    ReplyDelete

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