(Reuters) – The World Bank has urged Zambia’s government to stop setting prices at which it buys maize from local farmers and allow the prices to be determined by the market to promote sustainable growth in the agriculture industry.
Zambia announced this week that it would buy maize from small-scale farmers at 65,000 Zambian kwacha ($12.17) per 50 kg bag in the 2012/2013 season.
The government normally buys the maize at higher prices than those offered by private buyers to ensure higher returns for the farmers. It then sells it at reduced prices, locally and within the region.
The World Bank said the policy was costly and not sustainable in the long term and urged the government to review it.
“This old policy has not resulted in significant reduction in rural poverty and job creation. This policy direction has also limited private sector investments in the agriculture sector,” it said in a statement on Thursday.
Analysts have also raised concerns about Lusaka’s costly spend on maize, done via the Food Reserve Agency, saying the government was effectively using “treasury funds to subsidise the region”.
Zambia’s maize output declined by about 6 percent to 2.8 million tonnes in the 2011/2012 season.