Editor's Comment

Scrapping FISP subsidies way to go

IN YESTERDAY’S edition, we ran a story in which Bank of Zambia governor Denny Kalyalya is proposing the removal of farm input subsidies under the Farmer Input Support Programme (FISP).
Dr Kalyalya argues that farm input subsidies are unsustainable and an obstacle to the country’s economic growth.
The governor is also concerned about the projected arrears on the subsidies which are expected to increase four-fold to K2.3 billion from K500 million in 2014.
“During the last four years, government financing of the purchase of strategic reserves by FRA and support for FISP have been consistently above approved budgetary allocations,” Dr Kalyalya said.
Dr Kalyalya pointed out that this is unsustainable for an economy like ours, which has been posting low growth rates and is faced with challenges of raising sufficient domestic revenue.
While we appreciate the reason FISP was introduced – which is to increase the supply of agricultural inputs to small-scale farmers and contribute to increased household food security and income – it is indisputable that the venture is a huge drain on government coffers.
For the year 2017, Government has allocated K2.9 billion for FISP, which, going by the past trends and the governor’s projections, may not be enough to meet the FISP demands.
This means Government will still be required to source for additional funds to meet the demand.
But the question is, where will Government get the money in view of other competing needs and failure to raise sufficient domestic revenue?
While we acknowledge the importance of subsidising production, we also need to be realistic on sustainability and economic growth.
Looking at the way we are going, where year in year out we are incurring arrears, it is evident that farm input subsidies are unsustainable.
It is also clear that in the past 14 years the programme has been running, it has struggled to achieve the purpose it was intended for – to empower poor households.
The FISP programme was intended that beneficiaries graduate every two years. However, this has not been the case as farmers have continued to be dependent on FISP for as long as the programme has been in existence.
The programme has not helped to improve small-scale farmers’ maize production and household income and that is why farmers have perpetually continued to be dependent.
It is also a sad reality that there have been elements of abuse in the implementation of the programme.
This is why we have the subsidised farm inputs ending up in the hands of well-to-do farmers at the expense of intended beneficiaries – poor households.
There have also been cases of rampant thefts. For instance, Northern Province police commissioner was yesterday quoted in the media saying police had recovered 349 bags of basal and top dressing fertiliser believed to have been stolen from FISP consignments.
It has also been established that some of the beneficiaries do not use the inputs for the intended purpose but instead sell them at a giveaway price. This is why 14 years down the line, poverty levels continue to be stubbornly high, especially in rural areas.
While it is also true that there are people that genuinely need this support, there is need for mindset change among beneficiaries if the programme is to register significant impact.
However, this does not rub off the fact that the venture is costly, and in its current state, our economy cannot sustain it.
Actually, subsidies are more common in stronger and prospering economies and used as spill-over benefits to citizens.
But in an economy like ours, subsidies can instead stifle growth.
As unpopular as the proposal by Dr Kalyalya may be, removal of farm input subsidies is a necessary and unavoidable ‘evil’ that Government needs to consider to save the coffers and subsequently the economy.
Removing subsidies will also help push the crop diversification agenda forward.
Small-scale farmers who cannot afford inputs can be encouraged to grow other crops like cassava and others which do not need fertiliser.

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