HOME  BACKGROUND RESOURCES FIELD TRIPS |
|
|
|
|
|
Introduction |
Home  Field Trips Rural Life and Agriculture Tour Government Intervention in the Maize MarketSmall Farm 2 - KasameGovernment Intervention in the Maize MarketNext issue - The Impact of Farming on the Environment >> Despite Zambia's aim of self-sufficiency in maize production, it has still been a net importer of maize in most years since 1970. There have been a number of reasons put forward to explain this including droughts, the increased demand from a growing population and the inability of the agricultural sector to raise productivity. Some economists argue that interventionist government agricultural policy is also partly responsible. In an attempt to promote self-sufficiency in the production of the staple, maize, alleviate poverty and to reduce or eliminate dependence on imports, the government of President Kaunda resorted in the 1970s and 80s to a number of agricultural support mechanisms aimed to encourage the supply of maize. These included
Price ceilings occur when governments set a price above which producers are unable to sell the good. Price ceilings were placed on maize and other agricultural goods at the beginning of the crop season with the aim of keeping prices of agricultural goods at a level that all Zambians could afford. The price was consequently set at below the world market price and every producer received the same price for the maize it produced irrespective of the costs involved in producing this. Economic theory would predict that such intervention would result in a shortage with the artificially low price stimulating demand and reducing supply.
As the government intended to stimulate supply other policies were needed as well. The government granted a series of subsidies on fertiliser and maize seed, and transportation to encourage farmers to maintain and increase production. The effect of a producer subsidy is to reduce the costs of production thus encouraging more output. The effects of this direct government intervention are difficult to ascertain. Although the yield per farm increased due to the subsidy on fertilisers, the amount of land dedicated to maize production was reduced and as a consequence the amount of maize produced fell The objective of self sufficiency was not achieved and imports of maize increased. However the impact on individual farmers and their livelihoods is more difficult to judge. Larger commercial farms with cost advantages due to better access to infrastructure or benefiting from economies of scale found price ceilings too low and looked for alternative more profitable crops such as coffee and tobacco. Small farms benefited from the subsidy on fertilisers and maize seed and were able to provide for their own consumption. In the 1990s the President Chiluba's government, following a more outward oriented and supply side approach reduced or eliminated many government subsidies and liberalised markets freeing up prices of agricultural goods. The price ceilings were removed and prices were determined by market prices. The purpose of this liberalisation was designed to encourage crop diversification and reduce dependence on fertiliser. As a result farmers are now developing interest in crops like sorghum, sweet potatoes, sunflower, cotton and vegetables. But maize still continues to be prevalent. Certainly the large commercial farms benefited through the opening up of markets and removal of price controls. However many of the smaller farms did not. They saw their yields fall and as a result many farmers and their families fell deeper into poverty. A 2000 World Bank study acknowledged that the removal of all subsidies on maize and fertilizer led to 'stagnation and regression instead of helping Zambia's agricultural sector'. Next issue - The Impact of Farming on the Environment >>
Related Glossary Items: |
 |
||
Site Index Contact Us Return to Biz/edCopyright © 2009 |
Top of Page Supported by  |
|
