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Thursday, 15 March 2012

FRA Reform

There are signs from Agriculture Minister Emmanuel Chenda that the Government may be in the process of revising operations of the highly inefficient Food Reserve Agency (FRA) :
“The [Farmer Input Support Programme] has been revised in order to promote and market other cash crops apart from maize and we are also in the process of reviewing the operations of the FRA so that it reverts to its original mandate of purchasing food crops for strategic national reserves only…”
This appears to be a direct reading from the PF manifesto  which commits to review the Food Reserve Agency (FRA) Act in order to "rationalize its operations and functions". 

The case for reform is overwhelming, especially with respect to how it deals with small scale farmers. Small scale farmers have repeatedly complained that the FRA sets the price too low and thereby discourages small scale farmers from going into maize farming. To make it worse, the FRA rarely pays the farmers on time. The FRA has actually become a negative distortion in its own right, failing to provide the level of certainty in revenue streams that farmers desperately need to invest in more maize and other products.

As Mr Chenda hints, the FRA should be more directly focused on food security, rather than large significant purchases of maize in the market. It might also be good if some food purchases where done through the ZAMACE rather than directly with farmers to reduce price distortions (see Exchanging towards agricultural prosperity ). In recent times it has been forced to use ZAMACE, but perhaps going forward this should be a core part of the policy. Eliminating export restrictions should also be made permanent. When the incentives are correct and you have a fully functioning FRA you have nothing to fear. More exports more money in the pockets of rural dwellers to drive growth in other areas.

With a streamlined FRA the savings can be targeted at what we really need - physical infrastructure provision, especially transport to improve access to markets. We have previously discussed how this remains a key constraint to the developing of agriculture. On a previous post we discuss evidence from FSRP which notes : "Our analysis certainly supports the notion that market access is a key determinant of smallholder income-diversification and growth, and, for peripheral regions, improvements in market access require investments in infrastructure”. Another post presents the evidence on the abysmal and erratic spending on transport infrastructure.


  1. 'Small scale farmers have repeatedly complained that the FRA sets the price too low and thereby discourages small scale farmers from going into maize farming'

    Isn't part of the problem the fact that FRA sets the price too high ($260/ton last year when the market price was in the range of $180/ton), thereby incentivising small scale farmers to plant maize at the expense of other cash crops, grown for a 'false' market based on politics as opposed to demand? Why else has Zambia found itself with a massive maize surplus that has either gone to waste or is in the process of being sold off by FRA at half the price it bought the maize for?

  2. The FRA was set up as a reserve and was supposed to buy at the bottom price. However in years when Market prices fell far below production cost there was political pressure for the FRA price to be above production cost. In actual fact production cost varies widely depending on yield, whether or not inputs were subsidized, and whether one pays minimum wages or not.
    The good news is that the PF has asked ZNFU for their input on this issue and the ZNFU consulted farmers fairly widely for their views. I hope this results in a better policy.
    The real solution is more employment. Fully employed well paid people do not worry much about the price of mealie meal. It is a major issue for the unemployed and the partially employed.
    Another part of the solution is more effective production. Maize can cost the same per hectare whether it is well managed and yields 8 tons or poorly managed and yields 1 ton. The main factor affecting yield are time of planting and time of weeding. Timely management doesn't necessarily cost more.
    A good extension service and decent roads would be better use of money.


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