Mtesa cautions over World Bank proposal on grain marketing

Mtesa cautions over World Bank proposal on grain marketing
By Gift Chanda in Kabwe
Fri 15 June 2012, 13:25 CAT

ENDING the government's participation in grain marketing abruptly could disrupt maize production, warns Ambassador Love Mtesa. The World Bank last week urged the government to stop setting prices at which it buys maize from local farmers and allow the prices to be determined by the market to promote sustainable growth in the agriculture industry.

But Ambassador Mtesa, who is also board chairperson for the Zambian chapter of the Consumer Unity Trust (CUTS) International, said caution needed to be exercised when implementing the proposal by the World Bank.

He said "the process of shifting away government's involvement in the country's maize marketing needs to be smooth and gradual".

The government announced that it would buy maize from small-scale farmers at K65,000 per 50 kilogramme bag in the 2012/2013 marketing season, a move that was criticised by the World Bank saying the pricing of maize should be left to market forces.

"We cannot afford to have an abrupt end of government's participation in maize marketing because we risk a disruption in production," Ambassador Mtesa said in an interview. "We need to be careful in managing this process. That is not to say we shouldn't implement the proposal by the World Bank. Yes we should implement this proposal in future."

Ambassador Mtesa advised that a well-functioning agricultural commodities exchange should be in place to avoid opportunistic pricing.

"Storage should also be sorted out. The government through the Food Reserve Agency (FRA) should also continue buying maize from farmers for food strategic purposes but it should play its initial role of buyer of the last resort," he said.

Ambassador Mutesa further advised that farmers should be allowed to export maize to regional markets.

"By doing so, we will be allowing farmers to earn more on their produce and production obviously will go up. We will also cut on loses that the country has been making," added Ambassador Mtesa.

The government normally buys the maize at higher prices than those offered by private buyers to ensure higher returns for the farmers, especially those that receive subsidised inputs.

It then sells the maize locally and within the region at reduced prices.
But the World Bank advised that this policy was costly and not sustainable in the long term and urged the government to review it.

"This old policy has not resulted in significant reduction in rural poverty and job creation. This policy direction has also limited private sector investments in the agriculture sector," it said in a statement.

Analysts have also raised concerns about the high expenditure on maize, saying the government was effectively using "treasury funds to subsidise the region".

Maize output declined by about six per cent to 2.8 million tonnes in the 2011/2012 season.