Zambian government removes the maize subsidy
By Nawa Mutumweno – Government has removed the subsidy on maize, a move likely to trigger an increase in mealie-meal prices.
The state has also revised the Farmer Input Support Programme (FISP) in which farmers would be paying double for inputs effective this marketing season.
The maize subsidy, known as millers-consumer subsidy, was the money that the Government availed to enable millers to maintain stable prices of mealie-meal sold to consumers.
Agriculture and Livestock minister Bob Sichinga announced the Cabinet decision to remove the subsidy, a move he said was aimed at reducing losses that the Government had been incurring on the whole exercise.
He was speaking at a media briefing on May 14, 2013 where he also announced the 2012/13 crop forecast survey and the food basket status.
The minister also announced the alignment of the FISP and the Food Reserve Agency (FRA).
Government, through the FRA had for a long time been incurring losses when buying maize from small-scale farmers at a higher price and selling it at a lower price.
‘’Cabinet has reluctantly authorised the removal of the miller-consumer subsidy. The implication of this removal is that the price of our staple food, mealie-meal, will inevitably have to rise,’’ he said.
He tabulated how much the FRA original budget had been exceeded by higher percentages from 2009 to 2012, rising as high as 2 632 percent.
If the subsidy was to be maintained, FRA would continue to be in a loss-making position.
FRA had been buying maize at KR65 and selling it to millers at KR60, with resultant loss of KR5 for every 50 kilogramme bag sold or KR100 per tonne.
A multi-sectoral and multi-disciplinary team was being constituted to work out the detailed modalities and the pricing structure of mealie-meal.
The FRA would this farming season purchase 500 000 tonnes of maize and any maize that would be left after the private sector buys the grain from the farmers.
The floor price for maize would, however, be maintained at KR65.
Under the re-aligned FISP, the price of a bag of fertilizer had been adjusted from KR50 to KR100 and the Government would give the seed pack under the programme for free, the minister elaborated.
Government has also introduced a barter system under the programme where 659 000 out of the 900 000 farmers would be allowed to barter for fertilizer.
Commenting on the subsidy removal, President Michael Sata says his Government’s decision to scrap subsidies on maize and fertilizer is meant to spread the wealth around and enhance development equitably through various sectors and regions across the country.
‘’Our people need to understand that maize subsidies have been a pillar for the huge economic unequality in our society as they only benefit the already well-to-do middlemen and not the targeted vulnerable groups of our society,’’ he explained.
He assured that the new measures will help in channelling ’’resources to the very poor citizens of our society and we are certain that for real economic and well-distributed growth to occur, these changes are necessary, Therefore, all well-meaning Zambians need to look beyond today and tomorrow,’’ according to a statement issued by the President’s spokesperson, George Chellah.
Meanwhile, the Zambia National Farmers Union (ZNFU) has embarked on a critical analysis of issues raised by Minister of Agriculture and Livestock Bob Sichinga when he announced Government’s decision to remove the subsidy on maize.
ZNFU president Jervis Zimba said in Lusaka that most of the issues raised by the minister border on matters of policy, hence the need to seriously study and understand the move before coming up with a stance.
The removal of financial support on maize will have adverse effects on maize farmers, the cost of production and mealie-meal prices.
Farmers will be disadvantaged further by the impending removal of support on farm inputs such as fertilizers, he added.
