Lusaka, February 21, 2018
In the 2016/2017 farming season Zambia experienced a bumper harvest of about 3.6 Million MT and had a carry over stock of about 500’000 MT. Zambia’s total consumption amounted to about 3 million MT therefore the country had an excess of about 1,1 million metric tonnes.
In the last week, however, millers have noted that, in spite this bumper harvest, Zambia is currently experiencing an artificial maize shortage created by the grain traders. According to the millers this has therefore resulted in a rise in mealie meal prices and as such, the they have requested the Food Reserve Agency (FRA) to begin to sell maize to them to protect consumers.
The Zambia National Farmers Union (ZNFU) and the Grain Traders Association of Zambia (GTAZ) have however refuted this claim saying there is no maize shortage in the country and that the problem is that some millers failed to plan ahead.
As CUTS our view is that the best way to address the concerns of all the key stakeholders within the maize sector is make use of the Zambia Commodity Exchange (ZAMACE). ZAMACE is a private limited liability company incorporated under the Companies Act in 2007 that operates Zambia’s sole commodities exchange under Agricultural Credits Act 35 of 2010.
As the authorised agency for the implementation of the warehouse receipt system ZAMACE provides a transparent trading platform for various commodities, including maize. The platform works in the best interest of all players in the agricultural sector. Farmers are able to benefit because it guarantees the quality and quantity of their stored maize which allows them to access loans; and millers are also able to benefit because they are able to purchase maize through a transparent and competitive bidding process.
In light of the concerns that have been raised, CUTS therefore urges the millers to indicate their requirements on the ZAMACE platform. Trading on ZAMACE will not only ensure that consumers benefit from millers purchasing maize that has been bought at the lowest market determined price, but it will also allow the government to make informed decisions on issues of supply and demand in the market.
As CUTS we urge the government to only decide on their intervention into the maize market following the 2017/2018 Crop Forecast Survey that is based on a universally applied scientific survey method. Secondly, policy makers might also reconsider the policy of providing maize to selected millers at highly subsidised prices as research has indicated that very little of the treasury costs incurred in providing FRA grain to millers at below-market prices have benefited urban consumers.
It is important to note that it is indeed likely that due to the combination of factors including the late rainfalls, the outbreak of the army worm and the late distribution of inputs, we will experience low harvests this year and potentially see an increase in mealie prices. If this is the case, the need for the FRA to release its strategic grain reserves onto the market may be imminent later this year and so it is in the best interest of the country that prudence be exercised in releasing the grain to minimise the impact on consumers.
For further information please contact:
The Centre Coordinator, Consumer Unity and Trust Society (CUTS) Lusaka, at lusaka@cuts.org or 097 8055 293.