Business

Create price stabilisation fund

MAIZE

ESTHER MSETEKA and KELLY NJOMBO, Lusaka
THE Economics Association of Zambia (EAZ) has advised Government to create an agricultural price stabilisation fund to cushion fluctuation

in the sector.
This comes in the wake of the Food Reserve Agency (FRA)’s proposed K60 as the price at which it will buy maize from farmers for this marketing season. It targets 500,000 tonnes of maize, 2,100 tonnes of paddy rice and 20,000 tonnes of soya beans.
A price stabilisation fund is a mechanism set up by a government or central bank for the purpose of containing extreme volatility in prices of selected commodities.
However, Zambia National Farmers’ Union (ZNFU) feels the price will negatively affect farmers’ income.
Reacting to concerns by ZNFU, EAZ president Chrispin Mphuka said the creation of the fund will act as a relief for farmers when commodity prices fall.
In an interview on Wednesday, Dr Mphuka said putting in place a price mechanism will enable various stakeholders involved in the supply and demand chain attain a fair bargain.
He said price variations will always be there in the agriculture sector due to market fundamentals.
“Government should find a long-term solution to ensure that we try to modulate price fluctuations so that they are not too high for consumers or too low for farmers.
“Price fluctuations are always there. When you have a bumper harvest, the prices will go down and up when there is a shortage. I think there should be a mechanism of finding a solution, maybe a fund which will help modulate prices,” Dr Mphuka said.
And Grain Traders Association of Zambia executive director Chambuleni Simwinga urged farmers to negotiate for the best price when selling their produce.
Mr Simwinga said there is need to sensitise farmers on economic basics that rule the sector.
He said there is nothing wrong with FRA’s proposed buying price because it is not the mandatory value as farmers are free to negotiate.
“There is excess produce on the market and the control price by FRA does not mean that is the price to sell the maize for a farmer. So we should move away from the notion of saying that we have government price control,” Mr Simwinga said.
He suggested that Government should stop setting any price as it allegedly causes confusion on the market.

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