FISP: A DRAIN ON COUNTRY’S ECONOMIC RESOURCES?

By Happy Mulolani The Farmer Input Support Programme (FISP) is a government financed programme that has been in existence for over a decade to ensure small-scale farmers access agricultural inputs and fertilizer at a subsidized price. Government’s aim through this programme, over the years, has been to attain and increase agricultural productivity and production, which would ultimately contribute to household food security. During an Agricultural Stakeholder Indaba held at Government Complex in Lusaka, FISP was one of the key issues that was brought forth for discussion. Indaba Agricultural Policy Research Institute (IAPRI) Executive Director, Chance Kabaghe, who was the first Executive Director the Food Reserve Agency (FRA) said when FRA was initially established, its mandate was to purchase farmers’ maize and also maintain strategic food reserves for the country. It was envisaged that the Agency would only purchase 500,000 metric tonnes of maize as strategic reserves. It is worth noting that a significant number of FISP beneficiary farmers sell their maize to FRA as a means of income generation. However, IAPRI Researcher, Anthony Chapota explained during the indaba that the in as much as the programme’s objectives were well intended and appropriate, the cost of the programme is a drain on the economic resources of the country thereby affecting other sectors of the economy. Dr Chapota says the funds spent on purchasing farmers’ maize crop has been more than what is budgeted for and to that effect, government has overspent on purchasing, which is usually done in excess of the targeted quantity of 500,000 metric tonnes. However, one uncertain question worth asking is whether maize bumper harvests are a curse or blessing for Zambia? It is noted that Zambia has the potential to become a breadbasket for the region. Since 2010, Zambia has been recording maize surpluses. Some experts and researchers have argued that FRA seems to have departed from its intended target of maize purchases, which is ultimately meant for strategic food reserves in the long-term. This is evidenced from last marketing season, where FRA budgeted and announced a target of 500,000 metric tonnes of maize and instead bought 1,031,303 metric tonnes. According to Dr. Chapota, the intentions by government have been good but the result has had negative effects on maize marketing. He highlighted the fact that the FRA market participation has been increasing over time thereby depriving private sector participation. In the long run, government has ended up buying beyond the budgeted target, resulting in delayed payments coupled with reduced private sector participation due to uncertain clear policy by government. Furthermore, the high mealie meal prices have also been frustrating to the country despite the massive bumper harvest, which does not seem to have been translated into a plus for the country. Despite this negativity, the country has a high potential of exporting to other countries given the deficit of maize in the Southern Africa region. Given the FRA targeted purchase target of 500,000 metric tonnes, within a short space of months FRA had already met its projected target. However, there were still surplus maize in various parts of the country and the government announced that they would purchase the entire maize surplus. This is likely to result in an estimated loss of K823, 481,893 to the treasury through FRA. “The estimated loss is almost double the total budget for Zambia’s health sector in 2015 and almost equal to the education sector,’’ explains Dr. Chapota. Given the fact that Zambian maize is not competitive, it would be prudent to consider discounting the FRA depot price to increase demand. Dr. Chapota also says it is prudent to consider quoting FRA prices in kwacha in view of the devaluation of the kwacha and by doing so, maize in Zambia becomes more competitive in the region. According However, Dr. Chapota pointed out that what was required was to have short-term policy options to an IAPRI Factsheet, government has spent huge amounts on FISP and FRA leaving very little resources to invest in other productive sectors that would stimulate agricultural growth and this has stifled diversification as maize has remained centric in the Zambian setting It is worth noting that FRA and FISP account for almost half of Zambia’s total agricultural budget and more than 97 per cent of Poverty Reduction Programmes. IAPRI Researcher, Ballad Zulu is also of the view that government expenditure on FISP is huge and is benefiting more the larger farmers, noting that more funds are spent on maize purchases, which discourages crop diversification, the value of horticulture and livestock. “Funds need to also be spent on exploiting other sectors with potential other than the emphasis being on maize alone,’’ said Mr. Zulu. Furthermore, Mr. Zulu said the Sixth National Development Plan (SNDP) is tailored towards poverty reduction through broad based interventions. He said despite the bumper harvest the country has experienced, there has been persistent rural poverty, adding that small scale farmers are producing two tons per hectare yet they are supposed to produce between 5 to 8 tons per hectare. In this vein, policy measures that are both medium and long term have to be put in place in order to address all these concerns. It is therefore, imperative that government considers the enactment of the Agricultural Marketing Act, which can play a part in limiting FRA’s role in maize marketing and also encourage the private sector participation.