“Government should promote diversification within the agriculture sector!,” prods Kelvin Chisanga
By Kelvin Chisanga Communications Specialist
Government should promote diversification within the agriculture sector!
Agriculture delivers a main support base for Zambia’s rural economy because of this, from the base of research that I had undertaken, I believe so strongly that e-voucher seems to be a good model of empowerment for small scale farmers than the use of Farmers Input Support Programmes which is commonly known as FISP due to the crop diversification strategy involved with the implementation of E-voucher facility, even though it has also some social effects mainly driven from the baseline of assessment, monitoring and evaluation.
The growth in the agricultural sector is the clearest avenue as it gives out 100 % surety on outputs through which poverty reduction can quickly be achieved in Zambia. Sixty seven percent of the Zambian population has depended mainly on the agriculture sector through smallholder production for most of livelihoods and employment. Zambia should therefore drive agriculture as one of the key priority sectors in achieving sustainable economic growth and should take a serious model of diversifying away from the mining sector, by making sure that Agriculture becomes a main economic stay going forward.
Looking at the Ministry of Agriculture’s annual budget allocations which usually stands out to be at 53.4% towards the Farmer Input Support Programme, with a stake of 17.3% towards Food Reserve Agency and the 29.3% towards other expenditure. Given Zambia’s current fiscal position coupled with widening budget deficit, I remember pretty well that PMRC recommended to Government about limiting of FRA’s role in purchasing of strategic reserves, and following such prescription of quantities and areas of purchase. I think the government should scale up and clean up the beneficiaries on FISP in order to allow many others as well to be on this scheme so as to achieve a broad-based social and economic benefits.
From the observations, it is prudent that government should re-direct part of its efforts and resources from the FRA to other key drivers of growth within the agricultural sector which include livestock production, disease control measures, extension service and agricultural research and development as well as value addition to boost local production. These measures can ultimately be used to de-regulation of the maize market demands, save governments’ resources and enhance production in subsectors of agriculture such as livestock and fisheries whose potential has remained limited and untapped, the demand is therefore unmet by many local producers as we have resorted to even importing of fish due to high consumption levels and it’s very shameful when we have plenty of water bodies especially in Luapula province.
It’s good to note that FRA over the years has engaged more actively in the market by exceeding its prescribed target levels, and has often bought more than double of the prescribed tonnage. It’s therefore unfortunate that FRA usually buys above the market price for maize and then sells the grain to the millers at a subsidized rate and this makes maize political in nature, where the floor price is used controlled politically as opposed to letting market factors of law of demand and supply be applicable, which in this case can’t interplay in the marketplace.
From the times when the FRA was set up, it has however boosted the status of vulnerable communities and also favours socioeconomic programmes such as the Disaster Management and Mitigation Unit under the Vice President’s office, Correctional Facilities under the Ministry of Home Affairs, and the Ministry of Education with social programmes for vulnerable children such as the home grown school feeding and hospitals.
The FRA’s original mandate was to establish and administer a national food security alongside private grain trade which I strongly believe should have set for massive exports with this scope targeting DR Congo in order to improve national economic status and also to serve as a buffer stock to cushion grain price variability by providing liquidity in the grain market.
This FRA activity in maize marketing is partly a Government’s desire to resolve the “food price dilemma” by ensuring that maize producers do not peg a higher price tag to destabilize the staple food, on the one hand maintains mealie meal prices at affordable levels for the consumers especially vulnerable households.
The floor prices used by the government to prevent prices from being too low or high, may be actually bad for the economy especially the one that is speaking of agriculture diversification strategy. I understand that floor prices are often used in agriculture to try to protect farmers but for a floor price to be effective, it must be set above the equilibrium price. If it’s not the case by being slightly above equilibrium, then the market won’t sell below the equilibrium and the floor price will eventually become irrelevant.
Like in the case of maize in our nation, if the floor price is raised just above the price set at equilibrium, then the consumers will not be willing to buy as much as needed stock in terms of quantity. The consumers will ultimately decide to purchase based on the quantity especially where the quantity demanded is equal to the price floor made available on the market, while on the other hand, since the price could be set to have taken a higher price than what it would be when it stood at equilibrium, the suppliers might be willing to supply more than the equilibrium quantity.
Therefore, if this situation reaches out to such levels then this creates a big challenge in the local market because it means that there is less quantity consumed than quantity produced which stands out to be a good surplus in some way and if that surplus is allowed to be seen in the market then the price would automatically force the drop below equilibrium.
In such instances where surplus is evidently positive, I think I can conquer with one of the think tanks PMRC who advised the government to use the model of buying up of all the surplus and sell them at a cheaper price at a later stage, though this often leads to subsidization of millers and briefcase re-sellers take advantage by widening up on their profits as they do not pass on the full benefit of this subsidy to the intended final consumers.
Government can strictly enforce the floor price on the market and let the surplus go to the export market within the region. This means that the suppliers that are able to sell their goods are better off with the blessings of government while those who can’t sell theirs due to logistical difficulties, can supply to millers at favourable market price, we should make price competitive.
From the way Zambian Government operates, the central administration can control how much is produced by supplying inputs right on time especially when there is seemingly a favourable rain pattern with the help of strategic methodological department. Surprisingly, a state controlled floor price market model has proven to have characterized with some negative impacts on society more than it helps out. It may help farmers in the short term, but it only helps those people by negatively impacting everyone else within the economy and causing deadweight welfare losses on the nation.
From the key observations, it is now prudent to say that government should re-direct part of its efforts and resources of FRA to other key growth points in the agricultural sector which may include livestock production, disease control measures, extension service and agricultural research and development. These measures should ultimately lead to de-regulation of the maize market, save public resources and enhance productivity in sub-sectors of agriculture such as livestock and fisheries whose potential has remained very limited and untapped, while the demand is therefore left unmet by many local players on the market.
