Maize Marketing Challenge

By Chibamba Kanyama-The Government should quickly go to the market to raise more funds to finance the purchase of maize as we run the risk of frustrating farmers given that the new farming season is approaching. Out of a total projected output of 1.8 million metric tonnes for the 2009 season, only about half will be purchased by millers, the Food Reserve Agency and a smaller amount used for domestic consumption.

There is a further anticipation by the Zambia National Farmers Union that the maize output for 2010 may drop by 40 percent as many commercial farmers are failing to sell the current produce. The potential crisis is that most farmers have borrowed heavily from the commercial banks and need to urgently repay the loans in the face of the rising interest rates. In the event the farmers reduce hectares under cultivation for 2010, it remains likely many will face mass bank foreclosures, a situation that can be avoided with the timely intervention of government as buyer of last resort.

The government carries the responsibility to source funds from the local market to mop up all the excess maize and this must be done before the commencement of the rain season in October. It must be recognized that the government is already facing huge revenue challenges in view of the under-collection for the half year, failure by multilateral donors to remit funds and challenges of raising capital from the illiquid local financial market. However, an increase in government borrowings aimed at financing critical sectors like agriculture has significant economic value and the Ministry of Finance and National Planning should be little concerned about potential destabilization of the macroeconomic regime.

The millers who have capacity to stock up maize for longer periods can only take up not more than 630,000 metric tonnes. The Food Reserve Agency has capacity for 100,000 metric tonnes but this is where the opportunity lies given the circumstances. The export market and other maize broking firms have capacity for less than 200,000 tonnes bringing the total amount of maize purchasable to less than a million metric tonnes. What will happen to the rest?

If agriculture will indeed be a primary driver towards diversification, we need to signal that government policy supporting this sector is all-encompassing; covering financing, production, transportation, marketing and processing. In other words, we must ensure there is no wastage this year for lack of markets otherwise many farmers will not plant maize and this poses a challenge to food security.
chibambakanyama.com

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