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September 19, 2012

Is Zambia's price subsidy to maize farmers sustainable?

In African countries where maize is the food starch of choice, everything to do with the crop's cultivation and marketing is deeply political. Unfortunately, this utterly dull-to-eat, increasingly hard-to-grow grain of relatively low nutritional value has been allowed to control the agricultural economics of several countries because of puzzling, mythic powers as 'the staple crop.'

Zambia is just one of many African countries enthralled by maize. So much so that the government is content to pay its maize farmers a higher purchase price than it then sells the maize for locally or abroad. Among the most important parts of Africa's Maize Mafia are farmers who must be paid prices attractive enough for them to continue growing enough of the crop to cover local needs.

But a contradictory part of that same mafia are the maize consumers (i.e. voters) who will remember maize prices at election time and reward/punish the ruling party accordingly. The maize consumers want/expect maize which is 'affordable.'

The contradiction of expectations between these two main groups often means the government subdizing maize to raise farm gate prices (above 'free' market) to keep farmers happy, but also subsidizing prices to consumers (below 'free' market) to keep consumers happy!

As long as it rains well for a good crop to be achieved and the government can find the money for this costly political balancing act, everybody stays more or less happy. But this is obviously a very unsustainable balancing act, as shown by how the balancing formula causes all sorts of distortions when there is a shortage or a surplus.

Zambia has enjoyed maize surpluses for several years. But if farmgate maize prices are allowed to fall too low in response to the glut, the farmers will not grow as much the following year, causing shortages which will drive up prices for maize consumers to levels that could cause disaffection with the ruling party.

The donor nations who support Zambia in various ways have recently been pointing out the unsustainability of this state of affairs, but even they recognize it is politically very difficult to stop maize subsidies.

The real pity is that so little effort is being paid to finding ways to reduce the dietary dependence so many Africans have developed for the dull-to-eat, poorly nutritious, ever-harder to grow (increasingly unpredictable rains, tired soils) crop of maize.

African Agriculture   


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