Monday, September 24, 2012

Maize and the market

In a warehouse in the centre of one of Zambia’s farming districts, several kilometres away from Lusaka, thousands of bags of maize are stacked. All maize is rotten and will be destroyed. This destruction of food is a calamity for a country where the UN estimates 64 percent of its people are still incapable of placing two meals on the table. In Zambia, the average rural farmer is estimated to survive on less than US$2 (K10,000) per day.

Across the country, hundreds of thousands of tonnes of maize are rotting away or being destroyed. Zambia simply does not have enough storage facilities nor is there an adequate road network to transport maize.

Vice-President Guy Scott recently said: “We have two million tonnes of maize against storage facilities that are meant for 300,000 tonnes of maize, so with poor storage, it gets rotten.” Even schools have reportedly been converted into makeshift warehouses to deal with the overflow.

A problem are the Government subsidies, a programme which provides cheap fertiliser to maize farmers and a government policy to then buy the crop at above-market rates. Zambia moved to increase its food production back in 2004 following a hugely problematic food crisis in 2002. Further hit by the spike in world food prices in 2008 when the cost of maize increased by more than 100 percent compared to 2006, the government again sought to increase production. The new government has continued to subsidise maize production Government subsidies, introduced by the late President Levy Mwanawasa around 2004 to ensure the country grew enough of its own food, have encouraged farmers to boost their maize production. The policy has been so successful that the country has turned itself from an importer of food to an exporter.

But the subsidies are also aimed at reducing poverty, and by this measurement, many argue they have failed.  The World Bank urged the Zambian government to stop subsidising the maize crop, saying it was unsustainable long-term and not addressing the core problem – feeding the poor.
“Current maize prices encourage mono cropping at the expense of crop diversification. Job creation through economic diversification, which is the goal of this government, is unlikely to be achieved if government pursues the same policy in the agricultural sector as that of the previous government. This old policy has not resulted in significant reduction in rural poverty and job creation...Lower prices will not only reduce the cost of living for the poorer Zambians but will also benefit the livestock industry. Low prices will also contribute to the development of a sustainable maize export business, which will allow Zambia to become the bread basket in the region.” Zambian maize bought above market value at about US$12 for a 50kg bag (US$300 per tonne) meant it off loads onto the local and export market at a loss.

Zambia has nearly 1.5m smallholder farmers. It is this rural population that makes up the majority of the country’s poor. But the study shows that the smallest farmers, those farming less than one hectare, increased their maize the least, by an average of just three 50kg bags. The farmers that benefited the most from subsidised fertilizer were those that farmed over five hectares. It is the same with the government’s policy of buying maize at a premium – as two thirds of smallholder farmers do not sell their maize crop there are few that benefit from this government handout. Money spent subsidising farming would be much better spent on other things targeted at the rural poor. With the same amount of money more than 50 new high schools could be constructed and 10,000 more teachers employed. The number of health workers could be doubled for instance.


1 comment:

hallblithe said...

Ivy Alexander, a former member of the Socialist Party, received lots of positive feedback on the publication of her autobiography 'Maid in West Ham' (2001), including the following topical comment from 93 year old former Customs Officer:

'You would have shared my horror at seeing a fleet of dustcarts proceeding through West Ham loaded with perfectly good bananas bound for destruction because they were ripe, and passing so much poverty where they would have been good and tasteful nourishment. Even worse, any ripe fruit was deposited in bins at the quayside for collection and dockers were actually prosecuted for helping themselves to these'.