July 15th, 2015 - ZNFU Notes, Fuel Prices and FRA

Excerpts from the weekly Agro Watch, Volume 28 2015

My notes in red.

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Fuel:

Diesel and petrol Prices hit K8.59 and K9.87 respectively. The Energy Regulation Board (ERB) has adjusted the pump price of petroleum products by K1.13 for petrol; K1.00 for diesel; K0.72 for kerosene and has maintained the price of low sulphur diesel (diesel), effective midnight of 13th July 2015. Consequently, the prices will now be as follows: Diesel pump price increases to K8.59 from K7.59; while Petrol pump price increases to K9.87 from K8.74. The ERB attributes the increase in oil prices to depreciation of the local currency (Kwacha) against major convertible currencies such as the US dollar. This is despite the fact that crude oil prices on the world market have continued to fall currently at US56.76 per barrel.

Maize:

• In Zambia, the Permanent Secretary for Ministry of Agriculture and Livestock has maintained that Government would only purchase 500,000MT of maize for the Strategic Reserve (they said the same thing last year and ended up buying 900,000MT).
• Ministry of Agriculture has urged farmers to take advantage of private sector maize buyers as opposed to waiting for FRA floor price. (It's not a "floor price" ... what that term means is the absolute minimum at which maize can be purchased is the floor price. What the Food Reserve Agency (FRA) does is set a pan-territorial [nationwide for all depots, satellite depots, etc.] price for a 50kg bag of white maize at 12% moisture content. In 2014, the price was raised from K65.00 / bag [the price from 2010] to K70.00 per bag ... this year's price remains to be seen.)
• FRA has reported that current maize stocks for strategic reserve stands at 393,393MT, and that the Agency will only buy maize in 4 provinces namely: Luapula; Muchinga; North Western and Northern Provinces. (I would have to check, but at least three of those voted for the ruling party in the last election). FRA indicated that the above provinces are not adequately covered by the private sector buyers compared to other provinces along the line of rail (Funny ... Eastern and Western Province don't have railroads. Of course, Western also lacks maize outside of Kaoma.)
• Local average maize price have continued to strengthen backed by the strong demand and limited supply of the commodity. The grain average price for the previous week was pegged at K1, 195/Mt. Prices of the commodity delivered to Lusaka are now averaging K1450/MT. The graph below shows average local maize price trends. (Kind of an obvious one ... the demand for maize in Zambia is equivalent to saying "the demand for oxygen").