Agricultural Policies and Food Security Challenges in Zambia

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1 Agricultural Policies and Food Security Challenges in Zambia Auckland Kuteya Presentation at the Africa Lead Champions for Change Leadership Training, Protea Hotel, Chisamba, Zambia th April, 2012 INDABA AGRICULTURAL POLICY RESEARCH INSTITUTE

2 Presentation Outline 1 Goals for Zambia s development initiatives Fundamental engines of agricultural growth Overview of the agricultural sector in Zambia Zambia s agricultural policy challenges Composition of national budget on agriculture Way forward on agricultural policies

3 Goals for Zambia s Development Initiatives: 2 SNDP/Zambian CAADP/MDG Reduce poverty through broad-based income growth for those in agricultural sector Attain 90% household food security and cut hunger by 50% by 2015 Grow the agriculture sector from 1% to 7-10% per year Increase agric contribution to GDP from 18-20% to 25% Increase agriculture contribution to foreign currency earning from 3-5% to 10-20% Implement the Zambia CAADP Investment Plan

4 3 Fundamental Engines of Agricultural Growth Research, technology and extension for both crops and livestock Soil fertility management & enhancements Animal disease control & animal nutrition improvements Irrigation to reduce uncertainty & raise input response Reliable & competitive Markets Strategic infrastructure development to keep production costs down

5 Overview of Zambia s Agricultural Sector 4 Rapid population growth 13 million (64% rural) in 2010 Agriculture employs above 70% of the rural population By 2009 Agriculture s contribution to GDP was 12.6% About 82% smallholders grow rain-fed maize Poverty levels (80%) still stubbornly high in rural areas Income inequality in urban areas Stagnant agricultural productivity (yields)

6 % of Crop Area Harvested to Planted Agricultural Policy Challenges 5 Smallholders highly vulnerable to weather shocks Maize Groundnuts Cassava Sweet potatoes Sources: MAL/CSO Crop Forecast Surveys, 2000/ /11

7 % of farms cultivated Land constraints among smallholder farmers ha ha ha ha > 10 ha Source: CSO Crop Forecast Survey, 2011

8 Low agricultural productivity levels (Mt/ha) 7 Crop 2001/ / / / /10 Global Maize G/nuts Millet Sorghum Rice Sources: MAL/CSO Crop Forecast Surveys, 2000/ /11 while global averages from COMESA

9 % Farmers Receiving FISP Fertilizer FISP fertilizer received per farm household, 2010/ Total Area Cultivated in Ha (maize + other crops)

10 % under poverty line Rural headcount poverty rates in Zambia traditional new

11 10 National Production per Agricultural Household (Metric Tonnes) Crop 2005/ / / / / /11 Trend Maize G/nuts Cassava M/Beans Millet Sorghum S/Potato Rice

12 Nearly 50% of rural HHs are net buyers of maize 11 Buyers only, 45% Sellers only, 18.6% Neither Buy nor sell, 22.9% Buy and sell (net buyers), 4.1% Buy and Sell (net sellers), 8.9%

13 Highly concentrated patterns of maize surplus generation, N= Farm size (ha) Ha farmed Gross rev., maize sales Gross rev., crop sales (ha) (million kw) (million kw) Top 50% of maize sales 78, (5.2%) Rest of maize sellers 499, (33.2%) Households not selling maize 927, (61.6%) Source: CSO Crop Forecast Survey, 2011

14 Who benefits from higher market prices? 13 Smallholder maize market position Large-scale farmers Not directly affected Do not buy or sell maize 23% Maize net sellers 28% Maize net buyers 49% Harmed Helped Urban consumers Source: 2008 CSO/MACO/FSRP Supplemental Survey

15 Allocation of Public Budget to Agriculture, Arrears 0.3% PRP (All Other) 1.4% Ag Show 0.4% Capital Expenditure 5.6% Ag Dev Programs 21.6% Poverty Reduction Program (FRA) 18.4% PE 12.6% RDC 8.5% Poverty Reduction Program (FISP) 30.6% Grants 0.7%

16 % Share of Agriculture to GRZ Budget 15 Agriculture s Share of Zambian National Budget Includes supplemental funding of K1,449 Billion mostly to FRA and FISP CAADP Target Allocation Year 0.2% drop if we ignore supplemental funding to FRA and FISP in 2011 Actual ( only up to Oct)

17 Other Policy Challenges 16 Most of the key agricultural growth drivers (e.g., R&D, feeder roads) are still under funded FISP distribution has not been targeted in a way consistent with poverty reduction goals Public expenditures on FRA largely captured by relatively large farmers Maize-centric policies through FRA and FISP discourage crop diversification FRA s above market prices crowds out and stifle private sector investment & market participation

18 Way forward 17 Review FRA s roles to concentrate on strategic reserves Use flexible FISP (E-voucher) to cover other farm inputs Need increased commitment to invest in key drivers (R&D, extension) of agricultural growth Enact the Agricultural Marketing Act Create a conducive environment for the private sector investment and participation Ensure predictable, rules-based market and agricultural trade policies esp. from government

19 Thank You 18 Any Questions?

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