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Subsidies on maize exports can leave Zambia in debt - expert

Subsidies on maize exports can leave Zambia in debt - expert
By Gift Chanda
Thu 08 Sep. 2011, 14:01 CAT

CONTINUED government subsidies on maize exports could leave the country in serous debt, an economic expert has warned. Jean Mshiu, a Kenyan economist, said much as subsides like the Farmer Input Support Programme (FISP) were key to the growth of the agriculture sector, caution needs to be taken in the way they are implemented.

"For instance, Zambia currently subsidises maize exports in regional markets, I feel that is not sustainable for a developing country like Zambia whose larger portion of the budget is donor funded," Mshiu said in an interview.

"It is unsustainable and it can just lead to the government rushing to banks and other lending institutions to borrow more money to sustain such a venture.
And if caution is not taken this could be the case for Zambia. The country could fall into serious debt."

Mshiu urged a review of strategies the government had instituted to help propel growth in the agriculture sector.

He said the government needs to work out ways to discontinue subsidies on maize exports, adding that the government should also adequately prepare for next year's farming season.

"Since the country could be expecting another record harvest, serious preparations ought to start now. You need to plan way in advance where you will sell the maize and how you are going to properly store it. The government should sort out the storage infrastructure, find ways to bring down the cost of producing these crops and also diversify the crops they want to promote. In fact, on the storage, what should have happened is that the moment the government saw that the country had recorded a record harvest, it should have started looking at investing in storage infrastructure," he said.

"But there was a lapse because the government kept pumping more money into subsidising farming inputs. This is something they need to re-visit because if they don't the country will continue facing the same problem it is facing now where it is subsidising consumption."

Mshiu further urged the government to address the marketing challenges.

"They must ensure that a ready market is in place to prevent further loss of maize," said Mshiu.

Labels: FARM SUBSIDIES, FISP, MAIZE

posted by MrK @ 4:41 AM