By Ruth Henson
The ZNFU did a Maize study about 10 or 15 years ago. It showed that Zambia was the most expensive country in the region in which to grow maize. This was partly due to high transport costs for inputs and partly to low yields.
The study also showed that if the price is completely left to the free market it will fluctuate between import parity (in deficit years) and export parity (in surplus years). At the time of the study, the effective export price at the farm gate was Zero as the world market price was equal to the transport cost. The effective import price was equal to double the world market price, again due to the high transport cost.
The conclusion of the study was that Zambia should grow enough maize for consumption and a strategic reserve and very local export, not more. It is viable to export from northern Zambia to Tanzania and from Copperbelt to Congo and from Southern Province to Zimbabwe and so on. The problem with growing maize for export is that usually neighbouring countries have surplus or shortage in the same years as Zambia, due to similar climatic factors.
Not much has changed in the years since the study except for the collapse of most of Zimbabwe’s agriculture which has created more export market.
The Food Reserve Agency and the Fertiliser Support Program were created with the intention of helping to stabilise the huge variations in maize availability and price resulting from the above factors.
The Food Reserve Agency was supposed to buy at a floor price above production price but below market price and it was supposed to be a buyer of last resort. This did not work because the market price remained consistently below production cost for several years. There is strong political pressure to buy above cost of production. If market price consistently remains below cost, farmers shift away from maize production resulting in shortages and hunger.
The fertiliser support program was supposed to be a small subsidy reducing every year with farmers “graduating” after three years. Due to low maize prices and political pressure the subsidy was increased (to about 80%) instead of reduced. Many people benefit who are only part time farmers or only farmers in the rainy season, and the levels of corruption and resale are fairly high.
FRA and FSP combined with good rainfall led to a bumper harvest two years in a row which had many beneficial effects but at an exorbitant cost. It also led to Zambian tax payers subsidising maize exported to neighbouring countries and huge quantities of maize going to waste due to inadequate storage. This is an expensive and unsustainable situation.
What is the way forward?
The most effective strategy for improved maize marketing would be to tackle urban unemployment and under employment. This would remove the downward pressure on mealie meal prices allowing maize production to become more profitable without huge subsidies. Mealie meal prices are only a big issue to the unemployed as evidenced by the fact that millers can often sell more breakfast meal (at double the price) than roller meal.
Costs of production go up and market prices go down the further a farmer is from a decent road. Maize production would be viable without subsidy over a larger area if the government was to regularly grade and maintain passable roads. Well maintained roads drastically reduce the huge gap between market price and farm gate price.
Soil type, fertiliser and rainfall affect yield but not as much as good management. Educating farmers in best management practises, organic and conservation agriculture increases yield considerably. The Government needs to revamp the extension system into a real rural education program. Farmers need to be easily able to access the required information for improved production and diversification.
Some input subsidy may still be needed. Reducing the subsidy to not more than 25% would drastically reduce the levels of corruption and resale. Widening the reach of the subsidy, if possible, to all farmers would make it fairer.
Alternative farm income earners are also needed such as other crops, livestock and processing. This would help to lessen the impact of years when the market price drops below cost. Livestock provide an alternative marketing channel for some of the maize when used as stock feed. On-farm storage would lengthen the marketing season allowing more farmers to wait for a better price.
The main reason maize is widely grown in the small scale sector is that the labour costs are heavily subsidised by unpaid family labour. The commercial sector which has to pay union agreed wages or the government minimum cannot compete with unpaid labour. This needs to be considered when setting wages for the agricultural sector. The medium and large scale producers are shifting more and more away from labour as an input because the cost keeps going up. For instance farmers will use herbicides for weeding if they are cheaper than hand labour. This goes against the national need for increased job creation.
Market information is crucial to avoiding exploitation. Currently ZNFU provides market information to the farmers on prices offered in various parts of the country. This role should also be taken up by government especially as regards the FRA price which ideally should be announced in September. If planned FRA volumes were announced as well, farmers would be better able to judge how much maize to plant.
Lastly, access to credit would allow more stable production. Due to climatic risks, seasonal credit would probably need to be linked to an insurance scheme to spread the risk. Long term credit (at reasonable rates) for infrastructure development such as dams and irrigation equipment would widen the viable production areas. Credit access for maize buyers also helps to reduce the seasonal gap between the highest and lowest prices.