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. 

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