ZAMACE urges government to go beyond reviewing FRA operations
By Kabanda Chulu
Mon 12 Mar. 2012, 12:00 CAT
ZAMACE executive director Brian Tembo has advised the government to go beyond reviewing operations of the FRA and support agriculture commodity exchanges that will provide various market opportunities to farmers.
Commenting on agriculture minister Emmanuel Chenda's statement that the government had revised operations of the Food Reserve Agency so that it gets back to its original mandate of buying strategic food reserves only, Tembo said limiting the role of the FRA would encourage private sector to re-enter the maize market.
"The FRA was originally designed to manage the nation's grain reserve but it has since moved beyond that mandate to become the most significant player in the maize market. This in turn draws maize out of private sector markets and creates a great deal of market uncertainty and drives up the price of Zambian maize thus making it uncompetitive in the region," Tembo said.
"So reverting FRA to its original mandate is what we have been advocating for since maize prices will better reflect prevailing market conditions, which in bumper harvest years will create viable export opportunities for Zambia but also government should support commodity exchanges to help provide reliable and alternative market opportunities to farmers."
He challenged the government to quickly present the commodities exchange Bill to Parliament for enactment so that commodity exchanges were licensed to operate in an environment that would increase its investments.
Labels: BRIAN TEMBO, FRA, ZAMACE
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Tembo advises government on commodities exchange
By Joan Chirwa-Ngoma
Wed 01 Feb. 2012, 13:59 CAT
THE government must put in place a legal framework for the commodities exchange, advises Zambia Agricultural Commodities Exchange executive director Brian Tembo. In an interview, Tembo also advised the government to exit from the main crop market and offer policy direction in the agriculture sector.
He said the government should support the commodities exchange so that private sector players can freely trade in a regulated environment.
"It was important to look at agriculture as a business. When there is over production of tomatoes, no one cries foul. The market corrects itself. What most stakeholders have been saying is that the government should put in place a legal framework for the commodities exchange," Tembo said.
"In so doing, let government exit and focus on other things like infrastructure development, regulation…and tone down and revert FRA's role to that of strategic reserve."
Last week, Ministry of Agriculture acting permanent secretary Edwin Sakala and director of agri-business Green Mbozi said there was too much political interference from top MMD officials when determining maize floor prices.
Appearing before the parliamentary committee on agriculture on Monday, the duo admitted that it was possible to address the chaotic crop marketing and even allow private sector participation provided there is no government interference.
The duo revealed that there was too much political interference when determining maize prices during the MMD's regime, with top government officials overlooking advice from technocrats in the Ministry of Agriculture.
They said top government officials at times opted to peg maize prices at levels that were not cost-reflective in a bid to please those that strongly lobbied the government.
And Food Reserve Agency executive director David Matongo, during the same committee sitting, said there is need to quickly put an end to the "blame game" on the chaotic maize marketing in the country by addressing the root causes of the problem.
And Tembo said the majority of small-scale farmers were not benefitting from the subsidy programme despite a lot of money being spent on the initiative.
"According to research, there is also no impact on poverty reduction. This should tell the government that if you are not getting anything, then there is something wrong. What us Zambians and the new government need to understand is that for a lot of money being spent on maize, there is a school that hasn't been built; drugs that haven't been built and many more," said Tembo.
"The government spends about US $500 million to purchase maize from the farmers which they do not even have capacity to store. There is no return on the investments made in the manner that the government has made on maize. About 40 per cent of budget on agriculture spent on input support."
Labels: BRIAN TEMBO, COMMODITIES
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Maize fiasco
By The Post
Wed 01 June 2011, 04:00 CAT
Eustarkio Kazonga, the Minister of Agriculture, on May 16, 2011 announced the Crop Forecast Survey for the 2010/2011 production season and the national Food Balance Status for the 2011/2012 marketing season.
Kazonga, in his speech, stated that: “The official crop production estimates that I am releasing today are based on a universally applied scientific survey method that is used every year. The survey is jointly conducted by the Ministry of Agriculture and Cooperatives and the Central Statistical Office and covers all the districts of the country.”
We therefore take Kazonga’s word for it and the released official statistics as accurate. He announced that the Crop Forecast Survey indicated that the country had produced 3,020,380 tonnes of maize which represents an eight per cent increase over last year’s figure of 2,795,483 tonnes.
Kazonga attributed this “historic” achievement to an increase of area cultivated by small and medium-scale farmers by 11 per cent; an increase in the area planted by these farmers due to the good price and guaranteed market provided by the Food Reserve Agency last season; increase in the quantity of inputs distributed by the government and increase in use of hybrid seed.
Good weather was conveniently left out as one of the key contributing factors to this grand production.
We should, however, not be misunderstood to be against farmers. To the contrary, we commend our farmers for this grand production. However, we sympathise with farmers as this mono-crop approach is shrouded in deception, tainted with malice and a political tool to win rural support.
Government funds or guarantees to FRA borrowing are used as the bait for small and medium-scale farmers to grow maize by the tonnes.
Dora Siliya, the Minister of Education, was seen on ZNBC television earlier this year, excitedly announcing that the MMD government had put K1.3 trillion in peasant farmers’ pockets. However, researched facts indicate otherwise.
Whilst it is true that the government spent considerably more than this amount, the beneficiaries were generally not the targeted farmers but a series of better-off farmers. The Food Security Research Project in its Working Paper number 49 of January 2011 titled, ‘Who Gained and Who Lost from Zambia’s 2010 Maize Marketing Policies?’ revealed that the government’s 2010 maize policies produced both winners and losers – the government being winners and our poor farmers, the losers.
It stated that: “Because they raise maize prices, in the short-term, the government’s policies in 2010 positively affect households that sell maize: large-scale farmers and the roughly 26 per cent of smallholder households that sell more maize than they buy.
But the benefits of the high FRA buy price and large quantities purchased accrue to a small number of relatively better off medium-scale farmers that account for the majority of the maize sold by smallholders. By raising maize prices, the 2010 maize marketing policies negatively affect households that buy maize: urban consumers and the approximately 36 per cent of smallholder households that buy more maize than they sell...”
It is therefore important for our people to understand that in the 2010 government financial year, the Ministry of Agriculture was allocated K1.3 trillion. It requires little intelligence – if little is all that one has – to realise that agriculture is much bigger than maize production.
However, against this logic, we see that this same government by its own admission spent more than 100 per cent of its allocation to agriculture on maize grain input support and marketing! The 2011 budget allocation to agriculture is K1.23 trillion and yet again the government is poised to spend more than its own allocation to agriculture on maize.
From this wastefulness, we are well placed to confer the title of Minister of Maize on Kazonga and to indicate to our people that much of the alleged Ministry of Agriculture and Cooperatives allocated finances and time are spent on promotion of maize production. The magnitude of the impact of maize on the Treasury is such that its support is even greater than the entire allocation to health! This is scary and warrants questioning or some very serious reflections.
The 2011/2012 Food Balance Status shows that this marketing season has opened with carryover stocks of 848,606 tonnes of which 75 per cent or 636,000 tonnes are held by FRA. The rest are expected to be held by millers – mostly bought from FRA at government’s directed US $160 per tonne – traders and some farmers.
The irony of this is that those farmers who held on to their maize, expecting higher prices after planting, had a rude shock when Ronnie Shikapwasha, the Minister of Information and government spokesperson, announced that the government had directed the FRA to sell maize to millers at US $160 and for export at US $200.
This eliminated their market to local millers and made our maize expensive to the export market, particularly Zimbabwe, where 60 per cent of our exported maize is announced to have gone.
The high opening stock figures also indicate that we underperformed on our exports. Market players state that optimistically, FRA exported 300,000 tonnes of maize between October 2010 and now. And Kazonga stated that most of the carryover stocks are in safe storage under the FRA. No honest assessment has been made as to how much of this maize is actually fit for human consumption.
There are indications that most of the maize is bad or poorly stored. Further, the Food Security Research Programme indicated that the Treasury was losing almost US $100 per tonne for each tonne of maize exported due to the high purchase price it was bought at. The taxpayer absorbs these very high and unacceptable costs.
This government does not indicate to its people the impact on service delivery of these maize subsidies.
And the Crop Forecast Survey indicated that from the nationwide production figure, plus the carryover stocks, the country has total maize stocks of 3,868,986 tonnes.
However, this does not mean that all of this maize is readily available. Out of this total, when we subtract a statistical estimation of human consumption (maize meal and FRA net stocks of 240,000 tonnes), industrial use (stock feed breweries and seed) and modest five per cent losses, we remain with an estimation of national total surplus of 1,661,626 tonnes.
This does not mean that this is the amount of maize that has been securely stored or is available but it is a statistical indication of the amount of maize which is potentially available as a surplus given the allowances for the various local uses. It is therefore a misrepresentation to tell the nation that Zambia has recorded a surplus of 1.6 million tonnes.
It is equally a blatant lie for this government to tell our people that they will buy all their maize. This is a clear hallucination. However, the Crop Forecast Survey indicates that out of this total production of maize, farmers are expected to sell 1,619,622 tonnes. Of this, small and medium-scale farmers have produced 1,429,890 tonnes and this is supposed to be the group which FRA buys from.
If indeed this government is mad enough to want to buy all these potential sales, they need K1.86 trillion (about US $395 million). This level of expenditure does not include the costs of logistics and administration to get the maize from farmers to safe storage! Where is the Treasury going to find such gigantic sums of money?
Even if this money were sourced, what is the private sector expected to do? Are we going to see a situation where commercial banks start lending money to FRA guaranteed by the government or the organising of strange financing deals for the government?
One would not be far off the mark to suggest that this maize fiasco is a calculated scheme motivated by self-enrichment and preservation of the current regime.
Rupiah Banda and his friends should reveal to our people how much was spent on maize in 2010, how much was raised from exports and how much has been lost from subsidies.
This information must be made available before the taxpayer is asked to pay more for maize. The price of tomatoes recently crashed due to over-production but we did not see government rush in to intervene. Over a week ago, the government announced it was going to spend K1 trillion on roads.
Why should the Treasury spend so much money on maize grain at the expense of service provision in sectors such as health and education and on safe drinking water and roads? We know that where there is chaos, someone is overly benefiting. What would happen if law enforcement agencies such as the Anti Corruption Commission and Drug Enforcement Commission investigated the government and FRA officials handling these maize purchases and sales, especially exports? How have their assets increased since they started handling maize?
Greed may be acceptable with one’s own money but to pay lip service, deceive our farmers and use taxpayers’ funds to further hoodwink them is pure evil and must come to an end. Let us put an end to the maize fiasco!
Labels: BRIAN TEMBO, EUSTARKIO KAZONGA, MAIZE
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Government's capacity to buy maize in doubt
By Joan Chirwa-Ngoma
Wed 01 June 2011, 07:40 CAT
THERE are growing doubts over the government’s capacity to meet the K2 trillion required to purchase this year’s maize crop from small-scale farmers, says an industry expert.
Zambia Agricultural Commodities Exchange (ZAMACE) executive director Brian Tembo has since
questioned the sustainability of the continued government subsidy on both production and purchases which would translate to US$400 million (almost K2 trillion) on a single crop this year.
The projected K2 trillion, expected to be spent on the close to two million tonnes from small-scale farmers, is above the budgeted K1.23 trillion allocated to the agriculture sector in the national budget.
“But can the country sustain this kind of expenditure?” asked Tembo.
“Whichever way you look at it, for the government to continue subsidising production and purchases, the US$400 million deprives the citizens of the much needed services and also goes to subsidise the region as we will store and sell at lower prices for the benefit of the region.
There is a problem with this sort of business model. The other key issue is that the majority of the maize is smallholder grown and there are therefore quality concerns discounting our maize price on the international market further.”
Following the Food Reserve Agency’s (FRA) announcement that last season’s price of K1.3 million per tonne (which is about US$280 per metric tonne) would be maintained, the South African Futures Exchange (SAFEX) futures price in July when Zambia expects FRA to start buying as moisture content will be within the maximum 12.5 per cent allowable, will be around US $243.
This means that the government will yet again be buying maize at a higher price than the regional competition.
“When it’s time to export, when you factor in the storage and transport and finance charges, we shall effectively sell our maize at a loss.
The point is that the country only expects to consume 1.3 million tonnes of this commodity and we have carryover stocks from last season of over 800,000 tonnes and a bumper crop of three million tonnes! So the surplus will therefore be exported,” Tembo said. “The traditional destination is Zimbabwe.
Zimbabwe will not buy maize until their lean season around September. So factor in storage and also note that they will not just look at Zambia but Malawi (cheaper source) and South Africa (much cheaper source). For export add a differential of about $60 to our price.”
He, however, welcomed the announced bumper harvest.
“We welcome the positive news that Zambia has recorded yet another bumper harvest of maize and other crops among them, cassava, tobacco and the estimated good wheat crop later this year. The country also has healthy carryover maize stocks at over 800,000mt of which 75 per cent or about 636,000 metric tonnes are held by FRA,” Tembo said.
He advised that government's investment in the agricultural sector would better be channeled towards infrastructure development, extension services provision, community dryers for produce, storage, research and development support into better seed, conservation farming, among others.
He further noted that Zambia needed to actively pursue a livestock improvement and disease control policy to help create demand for the bumper maize harvest that was being achieved.
He also noted some delays by government to appoint an agent to act as a licensing authority for the warehouse receipting system.
“Government has achieved some positive strides in the enacted agricultural credits Act No. 35 of 2010 which creates a legal framework for a warehouse receipting system. This Act also recognises the warehouse receipt (issued on deposit of specific commodity into certified warehouse) as a document of title.
However, government is yet to appoint an agent to act as licensing authority as provided in the Act,” Tembo said.
“This further delays the process of certifying storage infrastructure. Certified storage ensures that only good quality commodity is stored. The other much awaited piece of legislation is the Commodities Exchanges Bill which will provide a legal framework for the operation of commodities exchanges and their stakeholders. These interventions will facilitate the progression of Zambia's agriculture sector.”
The government recently announced a maize bumper harvest of well over three million tonnes, a reasonable jump compared to last season’s production, and promised that its agent, the FRA, will purchase all the maize from the small-scale farmers.
Labels: AGRICULTURE, BRIAN TEMBO, MAIZE, ZAMACE
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COMMENT - I say, pass a law to make all maize traded through ZAMACE, which would maximize 'price discovery'.
Private sector, market will decide appropriate price for maize – Tembo
Written by Chiwoyu Sinyangwe in Chisamba
Monday, May 25, 2009 3:11:08 PM
ZAMBIA Agriculture Commodities Exchange (ZAMACE) has wondered why there is so much controversy surrounding the announced FRA maize floor price of K65,000 per 50 kilogramme bag when the market is flooded with many players.
And Ministry of Agriculture chief agricultural economist Hargreaves Sikwibele has said frequent change of ministers has delayed the implementation of the agriculture marketing Act.
ZAMACE executive director Brian Tembo said it was not justifiable that the Food Reserve Agency (FRA) floor price could be used as a yardstick for national maize price because there were many other players in the country that could buy the staple crop at even higher prices.
Tembo told delegates last weekend during the ZAMACE capacity building workshop sponsored by Common Market for Eastern and Southern Africa (COMESA) in Chisamba that FRA was a small player that could not influence the national price.
“We have close to two million tonnes of maize for this marketing season and FRA is only buying 110,000 tonnes which is just about 10 per cent of our total output and they are buying outside the line of rail. So I don’t see how that can be the national price,” Tembo said. “Who is going to buy the remaining 90 per cent along the line of rail and at what price? It is the private sector and the market will definitely decide its appropriate price.”
Tembo also defended ZAMACE’s use of the United States dollar in daily trading contrary to the regulations of the Bank of Zambia (BoZ).
“ZAMACE does not only conduct its business locally. For instance, we recently closed a deal for maize for a Zimbabwean firm and the commodity came from South Africa...so our use of dollars is to ensure we use the most convertible currency internationally. And besides, for local transactions, we can easily convert,” he said.
Tembo also said ZAMACE, which has been in existence for about two years and is one of the pioneer agriculture commodity exchange markets in the Southern Africa region, was looking at enhancing integrity and transparency in the manner commodities were trading both involving commercial farmers as well small holder farmers.
And Sikwibele said the agriculture marketing Act that would streamline the marketing of agriculture commodities in the country was currently being drafted into a bill at Ministry of Justice and was expected to be tabled during the next sitting of the National Assembly.
“This Act has been delayed for about four years now because each time there is a change of minister means that we have to re-present the document for him to approve...but sometimes, before he could finish, he is removed and so the process stalls,” said Sikwibele.
Labels: BRIAN TEMBO, HARGREAVES SIKWIBELE, MAIZE, ZAMACE
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Rupiah’s approach is wrong – Nkombo
Written by Mwala Kalaluka and Joan Chirwa
Wednesday, February 11, 2009 10:00:16 AM
MAZABUKA UPND member of parliament Garry Nkombo has said the approach that President Rupiah Banda has taken over the genetically modified organism (GMO) maize saga is wrong for a head of state.
And Pelum Zambia research and organisation development officer Martin Bertram has warned that allowing GM maize into Zambia will have far reaching consequences on crop production.
Meanwhile, Zambia Agricultural Commodities Exchange (ZAMACE) executive director Brian Tembo has advised the Food Reserve Agency (FRA) to purchase maize through the exchange to promote transparency.
Featuring on Muvi TV's The Matter at Hand programme on Monday night, Nkombo said the recent questionable importation of GMO maize by the FRA may have been an 'organised' crisis.
"I think that the truth has no disguise, no matter how much you want to conceal it, the truth will always come out," Nkombo responded to questions from the programme's presenter Augustine Lungu.
"Government officials tend to have a syndrome of not willing to give full disclosure. They forget their core responsibility that they have a duty to answer to the people who put them there...when you light a fire you have to be sure beyond any reasonable doubt that something is going to burn."
Nkombo said President Banda should have kept away from the matter as much as possible instead of coming to the defense of the people behind the procurement of the GMO maize.
"There is a difficulty in the manner in which the procurement of what was supposed to be non-GMO maize was procured. The procurement may have been an organised crisis. Who is fooling who? Under five months ago, and I have got documents and it is now public knowledge, the government exported maize to a foreign country. Come on, what type of foresight is that?" he asked. "Mark Daniels and GIA International started tying up in the month of December...is it not coincidence that already the head of state, I saw him on TV saying that him and his other family members had nothing to do with it. Come on, it is close to call."
Nkombo said there should be no room for fooling people on this matter, which could have serious and unascertained health implications on the Zambian people.
He urged President Banda to allow the people that had created the mess to answer for themselves.
"What the head of state should have done is to allow the direct players defend themselves. When something has gone wrong, it has gone wrong. There is no disguise to the truth," he said.
"President Banda should have kept his dignity and keep away from this matter, clearly from this matter because the individuals who are involved in this matter are old enough to answer for themselves."
Nkombo said it was vexing that despite Ministry of Agriculture officials travelling to South Africa to ascertain the quality of the maize, no independent superintendent was taken before transportation of the consignment.
He pointed out that it was extremely difficult to manually detect GMO maize, as it tasted just like any other maize, and he commended the local laboratory specialists for acting quickly and effectively.
Nkombo said it would be imprudent for President Banda's administration to backtrack on the country's non-GMO consumption stance just to please their friends in GIA International and Mark Daniels Zambia Limited, who are the suppliers of the maize in question.
Nkombo said the policy not to allow the consumption of GMO, especially in the Zambian staple food, was a machination of the MMD government and he recalled that the late president Levy Mwanawasa, on whose legacy President Banda had ridden onto his presidency, had put his foot down on GMOs.
"I heard the President say we have to open the debate on GMOs, for expediency's sake. I think the answer is no. I think we need to be more transparent," Nkombo said. "You cannot U-turn on your own policy."
Last Friday, FRA board chairperson Costain Chilala disclosed that over 75 per cent of the 35,000 metric tonnes imported last week by the agency had been sent back to South Africa because it was GMO type. However, Chilala could not state the exact quantities of maize that had been sent back.
Sources at Ministry of Agriculture linked President Banda's son, James, to the maize importation but when contacted James said; "I don't care what anyone prints."
And President Banda said he was not aware of his son's involvement in the importation of maize.
"I've checked because I have seen in the papers. So I understand it has nothing to do with my son. This particular maize, which is coming in now, I don't know who brought it in and how. Regarding my son, as far as I'm concerned I gave you all my sons. Does it mean that anybody who is related to me should cease to participate in whatever is happening in this country? Is this the first time my son has lived? He's been around for a long time and I think quite successful even when I was not President or Vice-President," President Banda said before departure for Tanzania on Monday.
Labels: BRIAN TEMBO, GARY NKOMBO, GMO, MAIZE, MARTIN BERTRAM, PELUM ZAMBIA, RUPIAH BANDA, ZAMACE
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