Government and the Indaba Agriculture Policy Research Institute (IAPRI) differs on the impact of the Farmer Input Support Programme (FISP) subsidy.
Agriculture permanent secretary Julius Shawa told parliament’s budget committee FISP subsidies have been pivotal in improving productivity in the agriculture sector. This while IAPRI acting executive director Ballad Zulu claims it is counter-productive.
The impact of the subsidy is in the spotlight, because of persistent poverty in Zambia. In December, agriculture minister Dora Siliya told parliament FISP had failed in its current form and needed a complete overhaul.
But Shawa said agricultural subsidies helped improve maize production to 2,873,052 metric tonnes in 2015/2016, from 601,608 in 2002/2003.
He said FISP had undergone several reviews, which resulted in the introduction of crops such as groundnuts, cotton, soybeans, sorghum and beans as a way of diversifying agricultural growth.
Subsidising slow down
The IAPRI, however, believed agricultural subsidies – amounting to more than K10.4 billion – merely contributed to stifling growth.
Zulu said spending on FISP and the related Food Reserve Agency (FRA) is done at the expense of other drivers of agricultural growth.
He said despite subsidies paid out over two decades, rural poverty remained above 75%.
“These subsidies have been maize-centred, thereby undermining Zambia’s ability to become more diversified to achieve sustainable and inclusive agricultural growth, as well as to become the region’s food basket,” Zulu said.
He said the FRA reduced competition and created a government-led marketing system.
“The FRA’s selling of maize at subsidised prices to commercial millers later in the year does not only give comparative advantage to millers that access subsidised maize, but also creates price uncertainty in the maize market,” he said.