Trade restrictions affecting maize marketing – IAPRI
Written by Millennium on February 27, 2019
THE imposition of trade restrictions on maize marketing is one of key problems affecting grain marketing in Zambia, says Indaba Agriculture Policy Research Institute (IAPRI) research director, Paul Samboko.
Mr Samboko said that was despite Zambia being a surplus producer of the crop.
And a report by IAPRI, research associate, Antony Chapoto, the problem arose from government’s view that an export ban would ensure food security in Zambia.
“Contrary to the notion that imposing bans on the export of maize helps to ensure food security, it in fact tends to hurt the same consumers and smallholders that it is assumed to protect in the medium to long-term” the report says.
It says that trade restrictions are detrimental to the sector and have a negative spillover effect on farmers while jobs are lost.
The report observes, first and foremost, that rotations are typically ill-timed, with disposal done at a time when the private sector is planning to sell their maize to the millers.
It explains that private sector profitability is also adversely affected because this is usually done at lower prices.
Secondly, according to the report, the government in 2018 paid off transporters in maize equivalents and they later sold their maize to millers at prices below the market price.
“The consequence of these two actions is that the only viable market for the private sector is the export market,” stated the report.
The report further states that government, in November 2018, put in place export maize export restrictions which resulted in farmers and traders becoming stranded with maize in storage and no profitable alternative markets.
“Because of this situation, their ability to pay back commercial bank loans among industry players has diminished, with many actors are scaling down, or closing operations. While others face the risk of bank repossessions,” says the report.
“We recommend that the timing of FRA stock rotations be reviewed by involving stakeholders in identifying an optimal period for FRA stock rotation. At the same time, stakeholders should be engaged on the proposed FRA reforms.
Debt swaps with transporters or any player in the market should be discouraged as this introduces market distortions and has far-reaching negative effects on the performance of the sector,” states the report.
