Crop production in Zambia exceeded average levels in 2002/03, greatly boosting prospects for recovery from last year's drought, but Zambian farmers face well supplied markets, depressed prices and import and export policy uncertainties. These problems require prompt action.
During the 2002/03 crop production year ending April 30, Zambia harvested about 1.263 million MT of maize, millet and sorghum (of which nearly 96 percent was maize), as well as nearly 960,000 MT of cassava. Maize production more than doubled between 2001/02 and 2002/03 and exceeded average production by about 29 percent. The national food balance shows a sizeable surplus of 120,000 MT of maize and more than 375,000 MT of cassava through April 2004.
With abundant supplies and falling prices, most households will be food secure through the lean months (October-February). Only 60,000 people require targeted food relief during this period, while another 40,000 require monitoring. Taking these and other factors into account, FEWS NET has downgraded Zambia's alert status from Warning to Watch.
Maize production improved as a result of good rainfall and larger planted area as well as a Government input subsidy program that provided seed and fertilizer to about 120,000 small farmers. This subsidy program will be expanded next year, provided the Government has sufficient funding. Yet, several factors suggest that the maize subsector faces problems ahead:
- First, Zambia has ample supplies of maize on hand and more is on the way. In addition to the recent harvest, commercial and relief maize imports continue to arrive. The Food Reserve Agency (FRA) has nearly 42,000 MT of maize in stock and is trying to auction some of it off.
- Second, maize grain and mealie meal prices continue to fall (see graphic), representing an obvious advantage to consumers, but a major disincentive to producers. Small-farmer maize is fetching between ZMK 12-15,000 per MT, far below the Government floor price of ZMK 30,000 per MT. Farmers do not have enough savings to withhold their maize from the market, preventing them from taking advantage of higher prices expected from August onwards. This forces farmers into a perpetual cycle of selling low, but buying high. Some farmers will quit maize for more lucrative crops, such as soyabeans and wheat.
- Third, Zambia still maintains a ban on maize exports, despite ample supplies and low prices that give Zambia ready markets in neighboring Zimbabwe and the Democratic Republic of Congo and that would boost domestic prices. Zambian maize is very competitive (around US$120-140 per MT), falling below the export parity price within southern Africa between US$180-220, the usual decision rule to export.
There are some bright spots that will boost demand for maize. The FRA has announced that it will buy more than 205,000 MT at ZMK 30,000 per 50 Kg bag (or ZMK 600,000 per MT) in the next four months, mostly in July and August, provided it has sufficient funds to compete with private sector traders who are offering lower prices. To supply its new Regional Emergency Operation (EMOP) for southern Africa through June 2004, the World Food Program (WFP) has appealed for US$308 million to buy 540,000 MT of food, some of which could be procured within Zambia.
Timeline of Critical Events
Recommendations for Action
- The Government should reduce its commercial and food relief maize imports, if not halt imports altogether, so that markets can clear the abundant post-harvest supplies and so that farmers don't face the disincentive of unusually low prices.
- Simultaneously the Government should lift its ban on maize exports, at least for a fixed volume of maize, to restore trading channels and take advantage of high demand in neighboring countries, thereby supporting farm gate prices in Zambia,
- The Government should initiate appropriate policies that lower production costs and provide a predictable and enabling environment for maize production and marketing The Government and its agencies should strive for greater transparency in their maize import/export and stocking/destocking policies as a way to guide private sector decisions.
- The World Food Program and donors with budgetary flexibility should contribute to the new WFP Regional EMOP for Southern Africa by buying maize from Zambia.
FEWS NET intends to remain an advocate for prompt, meaningful action through these alert statements.