Zambia’s Indaba Agricultural Policy Research Institute (IAPRI) says the system of market-based pricing adopted by the Food Reserve Agency (FRA) will create a more stable and sustainable grain market.
“There is no doubt that the move towards market-based pricing by FRA will attract a lot of attention and resistance from various stakeholders, but government must remain steadfast because if sustained, the decision will result in less volatile prices in the medium to long term,” the IAPRI said.
While acknowledging that the current price will negatively affect some farmers, IAPRI said social cash transfers should be considered to cushion farmers while they increase production. IAPRI further recommended that borders be opened to create market conditions that benefit producers and consumers.
“Ignoring market conditions is an ineffective way of helping farmers… The answer lies in enhancing their level of productivity because higher yields are correlated by lower cost of production,” the institute said.
Zambia produced a massive harvest, but so did several other countries in Southern Africa. South Africa has the largest maize surplus. East Africa, in particular Kenya and Rwanda, has the largest deficits. Locally, prices dropped by more than 25% from a year ago, leading to an outcry from farmers.
Meanwhile, Ministry of Agriculture Permanent Secretary Julius Shawa said government will not insist that the FRA increases its purchase offer. “We cannot contradict FRA after giving them the mandate to determine the price at which it will buy maize,” he said.
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