September 7th, 2015 - Into the furnace

The views of the author are his alone and do not necessarily represent the views of Concern Worldwide.

The Zambian Kwacha has been on something of a climb lately; we’re used to it creeping upwards, but over the past two weeks it went from 7ish to almost 10. It is a bit breath-taking to watch a currency drop 40% of its value in less than a month. The timing is crummy for us, as farm input prices are figured in dollars; this means the kwacha equivalent of a $10,000 tender on Aug. 15^th, for example, is now worth $6,000. We are likely to have a big underspend at the end of the year simply from inflation. We also run the risk of suppliers breaking off contracts, a worrying prospect given the time it takes to do everything by the book. A brief aside, but larger NGOs are notoriously obligated to document the living daylights out of everything, and procedures typically are quite convoluted and usually paper-based. They are ostensibly designed to keep things accountable and transparent; what I know of them is that they keep things from happening quickly or simply.

The government, or rather, the President, has responded appropriately by declaring two new districts in Northwestern Province. The government also took a big chunk of its latest Eurobond to pay against obligations (much against civil servant emoluments that have been delayed) with the hope that pumping hard currency into the economy will slow the fall. It has a bit of wishful thinking involved; forces much larger than Zambia, e.g., the slowdown in the Chinese economy and hence, the lower demand for copper, means less revenues from the resource that erstwhile scholars such as moi consider much more of a curse than a blessing.

In the meantime on the maize front, the Food Reserve Agency raised its price for a 50kg of maize from K70.00 to K75.00 on what appeared to be a spur-of-the-moment announcement by the President at the Lusaka airport. This was something worth pondering a few weeks ago when K7.00 ZMW was equal to $1USD, hence a bag of maize equalled $10.00; now, K10.00 = $1USD, so that same bag is worth $7.50; wonder how much will end up in the market, which adjusts its prices a bit more vigorously.

ZESCO continues to be the punch-bunny for the public’s angst against the government, as ZESCO is a parastatal. If you scroll back through my older posts, I likely explain what a parastatal is multiple times, but just in case: parastatals are government-run companies. A Zambian technocrat would likely get upset over my semantics, as in the one-party state days, parastatals were government-owned and -run. Anyway, there are few of them left after the orgy of liberalization in the late 90’s that along with the AIDS pandemic left the Zambian landscape a wasteland. Unfortunately, they hung on to ZESCO; Zambia (used?) to get loads of foreign currency by selling power, and it’s a patronage thing … working in ZESCO appears to be a golden ticket given the number of nice cars in there parking lots, and the fact that they have parking lots.

Travelled to Mongu today on the Shalom bus; as usual, it was a numbing, nine hour assault on my senses with endless loop of either gospel or rhumba playing at full volume in order to be heard over the engine and the noise of the dry wind coming through cracked windows to keep the bus from becoming unbearable. Was unnaturally hot in Mongu at 16:30 when we arrived; I later checked our station and found out it peaked around 37° C (99° F) just before that. We are in for it in a big way if it’s already that hot … can’t imagine what October will be like.

August 15th, 2015 - ZNFU Weekly Friday Brief (Week #33)

Excerpts from the ZNFU Weekly Friday Brief, Week 33
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There is an inescapable sense of doom in this one ... the combination of uncertainty over ZESCO and the worry about the next season's rainfall pattern leave me with a bit of a sense that the world is tearing loose from it's moorings. This has been abetted by me finding out Sesame Street is headed to HBO this morning; the surrender of this planet to the worship of money.

As usual, if any ... Author's notes in red:

FRA MAINTAINS MAIZE PURCHASE PRICE…

The Food Reserve Agency (FRA) has maintained its maize purchase price for the 2015/16 marketing season at K70 per 50kg bag or K1, 400 /MT.  The agency will be buying a 40kg bag of rice at K60. The agency has further stated that it would start the purchase of grain next week Monday 17^th August 2015. Eligible farmers will be paid over the counter through identified Financial and Banking institutions after presenting official purchase documents as a way of uploading accountability and governance in the use of public resources. 

Public resources are usually released to the farmers after 4 to 8 months if we're going off past performance of the FRA.

ZESCO LTD URGED TO INCREASE EMERGENCY MEASURES

The power outlook from now until the next rainy season remains gloomy. ZESCO revealed at a meeting with farmers held on 13^th August 2015 that participation in load shedding measures to curb demand has to come from everybody. The mines who are currently not being load shed have been engaged by ZESCO and are expected to furnish ZESCO with details on how they will contribute to reducing their demand for power in two weeks because the country’s generation is on the brink of a shutdown.  From the information shared at the meeting, it was evident that a shutdown at Kariba could occur in early October, if the mines maintain a business as usual stance because then only 68.9 days of power (oh snap) is what is available under this scenario. However, with all participating in load shedding including the mines, generation at Kariba stretches into November resulting in 98.5 days of power becoming available. Wow, the reservoirs don't usually start to fill until New Years' ... particularly when the are as silly low as they are now.

  

Going forward, additional power is expected to come from Itezhi Tezhi, 120 MW in early November and in January 2016, 150MW is expected from Coal Generation by the IPP at Maamba while another 150MW is expected to follow in March 2016 from the same source. However, these being new generation plants, the time frames could vary suddenly as circumstances keep evolving.  In addition, 174 MW emergency power has been secured from Mozambique (wait a minute ... isn't Cabora Bassa downstream of Kariba Dam?) and this will be available until December. Meanwhile, ZESCO indicated that a forecast of power (under different scenarios) for Zambia and the region will only be ready by end August, 2014 (2016) although one of the big unknown factors will be the rainfall pattern for this year.

After deliberations, it was resolved that ZESCO should concentrate on importing as much power as it can to cover the deficit and that ERB should look at the pricing mechanism without delay. There was a general feeling that paying more for imported expensive power given the current circumstances is better than the huge costs associated with running generators.  In addition, engage Government to take immediate measures to reduce the cost of diesel by removing the added taxes so that the cost of running generators reduces. Further, the negative impact of load shedding on the agricultural sector should be clearly stipulated to policy makers because poor performance of the agriculture sector has ramifications on the country’s food security and job levels. This would manifest in rising inflation and macroeconomic instability because as production of food gets affected by load shedding, imports will have to fill the gap and this will put more pressure on the exchange rate.

Just a note ... commercial farmers in Zambia produce a great deal of wheat, some barley, and sugar thanks to the wonder of irrigation. However, pivot irrigation schemes require a great deal of electricity, or all that wheat, barley and sugar won't grow. See next heading below ...

With this gloomy picture, all industries should contribute towards reducing the downside risks of the power deficit on the economy by equitably cutting back on demand for power but priority should be attached to safeguarding producing of food for the nation.    ZESCO Ltd was also requested to step up the visibility of their sensitization campaigns on demand side management in order to reduce wastage of power which is observed in many public places. The Union will be engaging the authorities for action in these areas.

AREA UNDER WHEAT CULTIVATION MOVES UPWARDS IN 2015

The wheat commodity committee met yesterday, 13^th August 2015 to review the preliminary wheat and barley production estimates for 2015 and the current marketing season.  Through remote sensing technology, the preliminary totals are under wheat and barley in Zambia has been estimated at 47,829 hectares. The meeting was informed by the consultant engaged to estimate Zambia’s winter crops production through satellite imagery that separation of the wheat from the barley fields would only be done over the next few weeks as the crops approach maturation and hence will emit more distinct signals. It was highlighted that whilst some farms had reduced their wheat area planted due to expectations of load shedding and reduced water levels, there were new entrants in wheat production especially in Serenje area. It was further noted by the farmers that millers and traders had slowed down in their local wheat purchases as only about 60% of the crop was commitment whilst about the same time last year, 97 percent of the crop was committed. Information from the traders indicated that millers are only signing up contracts with traders for wheat delivered up to January on assumption that millers will be allowed to import wheat again. The meeting resolved that in the event of a deficit, the period for any imports should be between 1^st April, and 31^st July, 2015 in order to allow for all the local wheat to be committed.

The meeting bemoaned the decision by government to issue an additional 11,000MT of wheat import permits and urged that the 31^st August 2015 deadline for all wheat imports to cease should be strictly adhered to and import duty should be reinstated on imports. Government should further be encouraged to adopt the stance taken by South Africa where when global wheat prices fall to a certain threshold, the import duty is revised further upwards to avoid injury on local producers. Earlier on in the year, the Minister of Agriculture and Livestock approved the importation of 75,000MT of wheat duty free. As at end of July, ZRA data revealed that about 59,600MT of wheat had been imported into the country. I sometimes wonder if white "milk" bread is creeping up the charts of Zambia's staple foods.

WATER BLUES HITS MASAITI

Water shortage has hit Masaiti district (up in the Copperbelt where rain is usually decent) with most streams drying up. This development has raised fears mostly among livestock farmers who depend on natural streams for domestic and livestock use. In Michinka area a number of wells have also dried up and people are now walking long distances to fetch for this rare commodity.  Farmers in the area have since appealed to the relevant authority to consider drilling boreholes to mitigate the problem. 

KABOMPO FARMERS WELCOME FRA AS BUYER OF LAST RESORT

Farmers in Kabompo district of North-western province are eager to see the start of the marketing season. This follows the announcement of the maize price by the Food Reserve Agency. Farmers that were spoken to say this exercise has long been awaited as most of them had their maize stacked at satellite depots for over a month now. Speaking when he visited the ZNFU office, Kabompo District Farmers Association chairman Mr. George Munyingu said it was good that the FRA maize price has been announced. Mr. Munyingu has since implored the Government to consider buying the commodity from the rural farmers that have limited options of where to sale their produce.  Mr. Munyingu said buying from the rural farmer will help them with secure markets particularly that the only available millers can only be found about 350 Km away.

Mr. Munyingu said transporting one by 50kg bag on such a distance, costs K15.00 making the cost of production to go high. Mr. Munyingu further hopes that the farmers will be paid on time to enable them plan better for next season.

MUMBWA FARMERS URGED TO WATCH MAIZE MARKET TRENDS

The ZNFU Director, Mr. Richard Lisimba has urged farmers to hold on to their maize crop and only release enough to offset their outstanding loans so that they are paid back on time. This was said during the AGM for Mumbwa DFA that was held on 12^th August, 2015. He informed the meeting that due to poor rains experience in the just ended season, the crop yield was also poor thereby reducing the availability of the commodity on the market. He gave an example of Mongu where the commodity was already trading at K90/50kg bag on the open market.

Meanwhile 47 satellite FRA depots in Western Province have been opened that will be used to purchase maize and rice meant for strategic reserves this marketing season. This came to light when the ZNFU visited the Provincial Marketing Coordinator Mr. Lubasi Nawa at his office in Mongu. Didn't know there was any maize to buy this year ... need to find out where these depots are.... do know they're paying around K80 for a 40kg bag of rice.

July 21st, 2015 - YA-BAA!! Load Shedding and deforestation

Not surprisingly, the load shedding by the Zambia Electricity Supply Company (ZESCO) is having something of a cultural effect; if someone is dozing, it is "load shedding". The car not starting: load shedding. Slow service: load shedding.

There was a good depiction of the double-whammy people got last week from Choklit over at the Post newspaper, which was having a frenzy over the sitting government ... they are now full-on over the load shedding, though I am puzzled how government could fix that one (e.g., they would literally have to make rain happen five months early).

The most worrying prospect for me over the same is the amount of charcoal burning that rural people are engaging in due to the increased use of it in towns. The introduction and surprisingly fast implementation a few years ago of pre-paid (e.g., "pay-as-you-go") electricity meters by the same ZESCO started an increase in the use of charcoal in urban kitchens (typically where meters are located). The ability to make budget estimates on the spot likely switched any number of people away from electric for cooking or heating water, which are the most expensive in terms of power usage. Also, charcoal has some heating utility that electric generally lacks (yes, it is Africa, but Lusaka sits at 3,600 - 3,800 feet above sea level; trust me, it gets chilly). However, the increased lack of power and the irregular supply, particularly around dinner, has driven the multitudes straight into the arms of charcoal. Needless to say, the price has reached around K90 ($12.00USD) per standard bag in the trading centers that ring the approaches to town, meaning the rural poor with the capability are pretty much going to eschew other activities to make ("burn") charcoal.

July 13th, 2015 - ZNFU Notes (Waiting for the FRA; Load Shedding)

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*Excerpts from Friday Brief, Week 28 (10-July-2015*
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LOAD SHEDDING AFFECTS MILK PROCESSORS

A number of processors have bemoaned non adherence to the load shedding schedules by ZESCO as some have gone without power for more than 8hours.This has resulted in increased production costs as processors resort to generators and other expensive alternative sources of power . Most processors have had challenges in collecting milk from Milk Collection Centres (MCCs) as they cannot offload and process milk already at the plant due to power outages by ZESCO. This has in turn has affected MCC operations as they fail to receive milk from the farmers. Dairy Association of Zambia (DAZ) is in the process of undertaking a survey to establish the exact impact of power outages members.

2014/15 FRA CROP MARKETING PREPARATIONS COMMENCE IN SESHEKE

Preparations for the 2014/15 crop marketing season by FRA have commenced in Sesheke district. The Agency has already deployed its field staff to 29 satellite depots besides other logistical arrangements that are being put in place. Initially 18 satellite depots were planned to be opened, but then, the lobbying done by the DFA in collaboration with Ministry of Agriculture convinced the Agency to increase the number by 11 satellite depots.

In another development, the District Commissioner’s office has assured the people of Sesheke district that relief food will soon be given to people who are badly hit with hunger.

FARMERS ANTICIPATING A CHALLENGING MARKETING SEASON

Farmers in Solwezi district are worried by the slow pace at which logistics are being put in place by the FRA for this year’s crop marketing season. The farmers have observed that there is delay in the announcement of the maize flour price and the official opening of the crop marketing season. The farmers have further complained that the late preparations might result into more complications when the marketing exercise begins.

NORTH WEST FARMERS IN DESPERATE WAIT FOR FRA MARKET

Maize Farmers in the north western part of the country are anxiously waiting for the opening of the maize marketing exercise by the Food Reserve Agency (FRA). A check by the ZNFU at different marketing depots in the province found that several farmers have already taken their Maize produce there in readiness for the start of the marketing exercise

July 10th, 2015 - ZNFU Notes

Lately this has been making the rounds on social media

The guy in charge of load shedding at ZESCO:

I find it somehow fascinating that Homer was chosen, but it's somehow appropriate ... ZESCO's in a bit of an overwhelming situation where they can't fake it and make it.

The immediate issue is due largely to the poor rains the past rainy season vs. power demand. However, others I've spoken blame it on the short-term thinking chronic of parastatals (e.g., government run utilities) ... power generation capability of anything other than household scale (itself the realm of solar) in Zambia is still based entirely on rather dated hydro facilities, and that ZESCO is at fault for not following up on these opportunities in the past ... it means our forests will take an almighty bigger beating for charcoal as the farmers who were shorted by the same rains scramble to make up for lost money by turning on the forests. It may also push some positive change ... more fuel-efficiency, diversity of sources, etc. In the case of Conservation Agriculture, these are great years for getting farmers on board with the technology; it's literally a "join or die" mentality. It's either adopt CA or don't have food ... particularly with another ENSO event looming (see below):

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Excerpts from the ZNFU Weekly Agro Watch (Volume 27)
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El Niño threatens the start of 2015/2016 season in the region

The US Geological Survey has suggested a greater possibility of an El Niño by the start of the 2015/2016 season as sea surface temperatures (SSTs) continue across most of the Pacific Ocean continue to rise. Based on historical trend analysis, El Niño conditions would likely result in below-average rainfall. In previous El Niño years, countries affected include, southern parts of Zimbabwe, southern parts of Malawi, northeastern South Africa, and southern and central Mozambique. Based on recent experiences during the 2014/15 season (when similar positive SST conditions were predicted) several areas in the region ended up experiencing a late start of season and erratic rains during the October to December period, resulting in below-average rainfall. However, it should be noted that in some El Niño years, including the 1997/98 season, the region received above-average rains and above-average harvests.

MAIZE

• Zimbabwe is facing maize deficit of over 900,000 metric tons according to Fewsnet assessment in July 2015.
• Malawi, Congo DRC and Angola are facing maize deficits and will rely on informal Zambian maize grain imports between July and December 2015.