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BALANCING THE AGRICULTURE TIGHTROPE: A CASE FOR ZAMBIA

By DARLINGTON CHILUBA

THE diversification of the agriculture sector has been a political and economic theme for Zambia since the 1970s when it became obvious that single commodity dependence could negatively impact the country.

This dependence on copper has since plagued successive administrations and resulted in the creation of subsidy programmes with the Farmer Input Support Programme (FISP) ranking high among them in the agriculture sector.

This programme, while creating an intersection of finance for the supplier, the banks and the government, only solves part of the problem and remains a non-refundable expense on the national budget – albeit a necessary one.  

The most noticeable thing about agriculture in Zambia is that it is not aptly mechanised. In other words, the sector is dependent on weather patterns and therefore makes it prone to such catastrophes as drought.

This perhaps explains why food for local consumption is largely produced by local farmers than the more business-oriented commercial farmers. The Bank of Zambia Monetary Policy Committee (MPC), for example, often refers to food-led inflation which is a direct result of food supply; which itself is a result of a cycle of farming dependent on rain. 

To put it simply, the demand and supply of food stuff, the availability of essential commodities like maize (corn) and essential seeds impacts the rate of inflation. 

The August 2022 MPC, for instance, mentioned that ‘improved supply of vegetables was key to driving inflation down.’  Of course, this is a portion of inflation but affects the substantive value of the currency and economy at large. 

This is a simple statement yet explains the supreme place that agriculture has in the economy and why government plays a role in ensuring that financing is available to farmers to ensure their produce has a market.

This produce must be available to sell on time to have market value. The takeaway is that if something affects and is affected by the currency, then inflation comes into play. If this is true, then at some level, we can agree that the FISP or its supposed replacement can be an inflation-control mechanism.

But if this expenditure worth millions of dollars is dependent on rain, it will be an artificial expenditure. It will be better to transform FISP into a mechanisation programme for the sector. At the moment, the FISP funding cycle is fixed so that funds are available at the cusp of the farming season so that inputs are available to coincide with the rains.  

The FISP has many detractors, but most agree that it necessary because it is a function of government to balance social welfare and market efficiency. The programme itself has evolved exponentially from its conception in the 1990s to where it is now.

It is a politically explosive matter because a large section of the population engages in one form of agriculture or another for survival. 

The interesting turnout for this particular programme is that the International Monetary Fund (IMF) supported this social welfare programme to the extent that Government has increased its finding in the 2023 budget by about US$237 million (if we apply the annual 2022 rate of 15.79/1 ZMW: USD).

The admission in the 2023 budget is that reform is necessary for this programme. What the reform will be is going to determine if this expenditure retains value in the economy or not. 

In all fairness, around 2010, the government admitted and supported out grower schemes, farm blocs and scrapping of import taxation for agriculture related capital equipment such as pivots, tractors and so on.

The 2023 budget has rightly returned to this line of thinking. The expectation, as it happened then, is that banks will finance the importation of capital equipment like pivots. This will improve food supply because irrigation is mechanically (or technologically) driven than seasonal or rain dependent. 

The availability of foodstuff lessens stress on the currency because it is readily available. The laws of demand and supply dictate that when a commodity is abundantly available, the price reduces, making it affordable). This is the simple explanation.

When you recall that agriculture supplier firms engage in out-grower schemes that encourage mechanised agriculture, the picture brightens further. Even more when one adds the export potential of agriculture. 

So, on one hand the government has continued with FISP while on the other it has created an avenue for the private sector to drive mechanisation of agriculture through the banking stream.

The point however remains, that whether the subsidy is via direct input or electronic (e-FISP), the essential component to manage is rain dependence.

When presenting the 2023 national budget, the minister admitted that ‘The production of crops such as maize, rice, sorghum and cassava declined due to the late onset of rains as well as drought and flash floods in some parts of the country (2023 National Budget p13.).

The proposal so far is to use farm block and build dams which is definitely welcome, but mechanization is still the ultimate solution.  

What is before Zambia is something every democratic or liberalised economy ponders. The solution to allow private sector participation and initiative in this sector came in 1991.

Incremental ideas on how to resolve the conundrum of stagnant subsidies that do not graduate beneficiaries have forced amendments to this sector which have, until now, not mechanised the programme. The Comprehensive Africa Agriculture Development Programme (CAADP), a framework of the African Union (AU) proposed that African nations should allocate a minimum of 10 percent of their national budgets to agriculture.

Since 2020, only education as a singular sector has been allocated more than 10 percent of the national budget while health often comes a distant second. Agriculture sits under economic affairs and receives subsidies in most cases. If this target has to be reached in the next five or ten years, mechanisation at subsidy or private-public partnership levels is inescapable. 

How do we conclude this transient discourse on a core sector without becoming redundantly repetitive? Let us try this way: that a budget is a calculable manifestation of vision. That vision is what separates achievers from incessant armchair critics.

That in 1991 there was a vision to liberate the country and liberalise the nation sector by sector – beginning with the brain. That ideas will be shared collectively for the full benefit of the nation.

The combination of the 1970s vision to diversify agriculture, and the 1991 vision to liberalise and mechanise that sector is now before us to readily achieve. Let us do so as any delay would be doing a disservice to the nation. 

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