ANALYSIS: FRANCIS MAKASA
EVERY year, farmers dispute the maize purchasing price set by the Food Reserve Agency (FRA), as they claim to make losses. Meanwhile, interest groups on both supply and demand sides such as farmers’ representatives and millers claim not to be consulted in fixing of the price as the FRA disputes the claim. Is this year’s maize purchasing price by the FRA going to be any different?
Coming from a difficult 2018/19 farming season ravaged by droughts, floods and the fall armyworms in which some farmers could not harvest anything, many smallholder farmers have this year obtained good yields. Farmers therefore hope that the FRA can purchase the staple crop at a price that would enable them to make reasonable profits and help them recover from previous shocks.
Since their only major income comes once in a year upon selling their produce, maize farmers need to recoup expenses and also get reasonable profit after the sale. This is especially in view of the devastating effects of the novel coronavirus disease of 2019 (COVID-19), which has destroyed business enterprises, which are the alternative sources of income.
Because of the poor road network and the remoteness of rural communities, agricultural marketing by smallholder farmers in Zambia remains a big constraint. Hence for maize marketing, such farmers rely heavily on the grain purchases by FRA. Though the agency often delays payments it, however, ultimately pays the farmers.
Meanwhile, the buyers from the private sector who go to remote areas to buy the commodity are often regarded as exploiters who allegedly take advantage of the farmers’ desperation and buy the commodity at low prices.
Government, including most political representatives, often discourages farmers from selling their maize to such individuals, who are often called derogatory names such as “briefcase businessmen”. It is for this reasons, therefore, that smallholder farmers prefer to sell their maize to FRA.
Perhaps the major problem in maize marketing is that FRA seems to fix prices at which it wants to buy the maize, while the farmer, who is the producer, remains a price taker! Meanwhile, it is the producer and nobody else who best knows the cost of production and who should therefore set the price at which to sell the produce.
However, FRA often contends that it consults the farmers’ representatives in fixing the price. But when farmers grumble about the price, the farmers’ representatives quickly argue that they were not consulted. This always creates animosity between farmers and Government, which is represented by FRA.
In the recent past, the FRA maize price was also far much below the reigning respective maize prices in the subregion. This fuels speculation that perhaps the maize that is allegedly cheaply purchased from the Zambians was exported at a lucrative profit by a favoured few, thereby exploiting the hard-working smallholder farmers.
Indeed the FRA maize purchasing prices for a 50 kilogram bag have in the recent past farming seasons not been inspiring, as suggested by the following statistics: K85 for the 2015/16 season, K60 for the 2016/17 season, K75 for the 2017/18 season and K110 for the 2018/19 season.
Perhaps it is time the nation reverted to the “normal” business practice whereby producers, the smallholder farmers, set the maize purchasing price for the buyer (FRA) instead of them being price takers. It therefore implies that the farmers’ representatives must not “socially distance” themselves from setting the maize purchase price.
However, they must know that this is not an opportunity for arbitrary pricing of the commodity, but that the price must be informed by the average cost of production. Hence, any price arrived at must be reasonably justified so that players in the sector can come to some semblance of consensus. Admittedly, markets are not perfect, but there must be some concrete basis to support the price.
The farmers’ representatives must also consider the minimum acceptable maize productivity levels as they set the price so that farmers whose productivity is at or above acceptable productivity levels are rewarded and incentivised. Prices set in this fashion will not only enhance farmers’ profitability but also motivate them to strive for higher productivity levels.
It is important that the maize purchasing price by FRA is set in such a transparent and cordial manner to create trust between the two parties (farmers and FRA) to enhance food security. Meanwhile, much as this price may not necessarily be termed ‘floor price’, it remains a useful guide for negotiations with any other buyer.
The author is a sustainable agriculture and rural development professional.