Zambia
Zambian maize producers face pricing crisis

Misanet.com / Palesa, 7 March - Following the poor pricing of maize in Zambia, it is feared that most producers might resort to growing the crop for home consumption. In the last season, the highest maize price was fairing at K24,500 (about US$9) in February 2000 per 50 kilogramme bag while the lowest was at K14,500 (about $4). 

The latter price however kept fluctuating up to November 2000. Compared to last year's situation, the prices are much lower currently due to a better supply than in the year 1999/2000 season.

- The main contributing factor to the increase in supply has come from the small scale sector who managed to obtain input assistance such as seed and fertiliser for the season, says a General Manager at the Agricultural Commodity Exchange (ACE), Hans Brammer.

On the other hand, the commercial sectors' crop was also substantially up in the previous season. "This was in anticipation of higher prices achieved in the markets for the 1999/2000 crop. But the demand for the maize in 2000/2001 did not match supply and this has had a marked effect on prices."

Furthermore, farmers quoting their production in United States Dollar terms, have seen prices as low as US$65.00 per metric tonne at farm over the past year, way off from the usual average prices of US$120.00.

Brammer says the whole marketing season did not see much excitement with processors being able to buy the stocks readily in the market. The absence of international based traders trading the markets substantially in the previous seasons affected the amount of ready capital in the market.

In addition, local trading houses, as in the past, provided their usual services. Unfortunately, lack of capital from this sector allowed the mills to enter the markets more directly and pricing was more controlled in terms of buyer demand. "The sensitive way in which the markets have worked, has had a profound effect on the farming community. And with increased input costs against decreasing commodity prices, some deals have been struck at farm gate which have left some farmers not very well off," observes Brammer.

For instance, a desperate small scale farmer in Serenje district of Zambia's Central Province, hardly recalls exactly the last time he realised enough money from his sweat to buy sufficient food for the family.

Jackson Sabi, asserts that the problem has been with commodity pricing. Despite having the commodity in stock, Sabi says the negotiated amount of money in exchange for the produce means that he will have to sell at least three bags of maize to raise his transport back home. This is before adding the cost of hiring a truck to fetch the bags to Lusaka the capital city, where most millers are based.

- Selling maize at K20,000 (about US$ 6) per 90kg bag would be too unfair on my part especially if considered against the cost of resources that I have put in producing the crop, Sabi says. "I was buying a 50kg bag of fertiliser and 25kg bag of seeds at K50,000 ( about US$ 14) and K90,000 (about US$ 26) respectively. Selling the maize at such prices would have resulted in incurring untold losses."

In another agricultural settlement area, Kanakantapa, situated 45 kilometres East of Lusaka, farmers are forced to hire trucks at a charge almost half the price of their produce.

Admini Senga observes that the cost of inputs is more than the selling price of maize. For each 50kg bag of fertiliser procured on credit basis, "we are made to pay back five 90kg bags in return. The situation is tense for us. We are starving and yet we have the maize at home."

However, the closure of some milling operations and threats of relocation directly after the implementation of the Comesa Free Trade Area, sent warning signals of the possible competitive nature of Zambia's neighbours.

Brammer says two types of commodities that have played heavily in farmers minds are oilseeds such as Soya and Sunflower; with Wheat playing an important role. "The producers of these commodities have seen their prices being more determined by the importation of either the same commodity or downstream products."

In retrospect to local production in terms of costs, inputs have not been able to compete with the lower production costs in other countries. With diminished returns, the crop size has shrunk over the years resulting in an increase in the importation of the commodities and downstream products.

He discloses that task forces have been set up to investigate unfair competition in the milling and edible oilseeds industry. This is in response to complaints from the farming sector and the milling industry. For the forthcoming season however, Brammer predicts that, "the value for Maize, Soya and Wheat will depend on how the markets treat each commodity in terms of its needs in the market."

Forward contract prices have been set for Soy beans and Sunflower, while Maize will probably start attracting interest just before the start of the next harvest. "These are issues that have to be brought to the fore, with regards to developing much more robust market systems to serve both buyer and seller."

The value of commodities trading through transparent organisations such as the ACE, has to increase so as to allow for more downstream products to be developed. The market also needs to start regulating itself more efficiently. According to the general manager, better commodity prices as seen from buyer and seller are very much at the mercy of market forces. 

At times, it might seem that market forces alleviate the situation by pushing prices in the opposite direction as to what the buyer and sellers wish to price that commodity at. "There are however, solutions to the current problems facing the entire sectors that are involved with the commodities mentioned. If the attitude is one of indifference to the needs of each partner in the process, then the problems facing the sectors could continue."

By Racheal Mwikisa / PALESA

© Racheal Mwikisa / PALESA (Lusaka, Zambia).    You can contact us at mail@afrol.com