10th November, 2015 - ZNFU Weekly Update and Agro-watch

The views expressed on this blog are the author's own, and do not reflect the views of Concern Worldwide. 

Bits and pieces of the weekly farm news that's fit to use from Agro-Watch, vol. 44 and the Friday Brief. As usual, my additions in red:

Agro-Watch 

Highlights [maize]

• Malawi’s grain marketing agency, ADMARC, adjusted their maize selling prices end of October from 3,000 Malawian Kwacha to K4, 000 per 50Kg bag (approx.US$7.19/50kg bag or Zambian Kwacha 93.5/bag). Maize prices have been rising on the Malawian market due to sporadic supplies with other private traders quoted to be selling for as high as K8, 000/ 50kg bag (≈US$14.38/50kg bag or ZMW187 per 50kg bag).
• With the close of the FRA maize purchase season on 31st October 2015, Zambia’s food reserve agency purchased a total of 596,081MT during the 2015/16 marketing season. Original target was 500,000MT, but their overruns were far less than last year's spectacular 400,000MT purchase ... I suspect the deepening currency crisis and the govt.'s lack of money have as much to  do with this as the smaller amounts available on the market. Pressure has continued to mount from the Millers for government to release maize on the local market at subsidized prices to lower [mealie-meal] prices . They are pressured by Zambia's very substantial urban population (and consequently, the Government ... everyone remembers that Kaunda's downfall was hastened by unavailability of food). So many Zambians purchase mealie-meal, it gets a bit worrisome. The initial indication that maize would be offloaded at K85/50kg bag has been put on ice as government reviews the matter further.
• Indicative local offer prices were averaging ZMW1.6/Kg with the highest offer pegged at ZMW2.3/kg on the ZNFU market price information system.
• Maize mealie-meal 25kg in Mayukwayukwa is selling at K130~140; 10kg is K50~55.

Friday Brief

CENTRAL REGION

METEOROLOGICAL DEPARTMENT CAUTIONS FARMERS

Meteorological Department in central province has urged farmers to approach this season with caution as weather forecasts are showing normal to below normal rains. Felix Imbwae who is the Provincial Meteorological officer for Central Province said this when ZNFU officers visited him at his office. He further said that farmers should consider planting drought resistant varieties and early to medium maturing ones. And Mr. Imbwae has urged farmers to go for conservation farming practices as they remain the best option in times of less rainfall. I wonder which practices; I've realized recently that almost everyone sees (literally) CA as planting basins. Soil cover is an afterthought, and crop rotation an outright puzzle. 

HEAVY DOWNPOUR SENDS FARMERS IN PANIC MOOD

Heavy rains that characterized most parts of central province have sent farmers mostly small scale into serious panic. The start of the rain season has found most farmers unprepared due to challenging circumstances. Funny, it starts pretty much the same time every year. How did this catch farmers unawares? Some farmers have indicated that they expect a challenging farming season due to high inputs prices and delayed FRA payments. Which of course, you can't do without ... right? Meanwhile, some farmers have complained that tractor owners have also taken advantage of the prevailing situation and adjusted prices for Land Tillage upwards. Last year most farmers in the province were charged between k300 to k400 for land tillage per hectare but now it’s between K500 to K650. Ah, the "Dollah" strikes again. Price of everything has climbed, sort of like a run on the bank. Everyone complains when the kwacha (and prices) rises in response to the dollar as they have the same amount of kwacha, albeit it is worth much less.

EASTERN REGION

PETAUKE FARMERS BEMOAN HIGH FERTILIZER PRICES

Farmers in Petauke District have lamented the rapid escalation in fertilizer prices and have since asked the government to intervene in the matter. Not so much the independent yeoman farmers of the Jefferson ideal. Farmers have described the situation as a hindrance to the growth of agriculture sector in the country, adding that if the situation is left unchecked then many rural households will languish in poverty because many of them depend on farming. Again, is there no way to do it without fertilizer? Fertilizer prices have increased by over 100% from last year’s prices. A bit of a stretch, but yes, it has gone up at least 50%. A check by ZNFU in the district found that D Compound was trading at k 420.00 while Urea at K 375.00. I'm surprised it's not worse ... in the West, these are more like K450 and K400.

KATETE RECEIVES HEAVY RAINS

Katete district this week on 3^rd of November 2015 received heavy rains. The rains which lasted for over 3 hours covered the entire district and this caused panic among farmers especially those that have not yet received their payment from the Food Reserve Agency where they supplied their maize. Not much structural agency assigned to farmers, but you see them stuck in the same ruts all the time. Always grow maize. Always sell maize to FRA. Always delayed wait for FRA to pay. Further delays waiting for FISP to arrive. Repeat annually for 8 years. Similarly Nyimba and Petauke districts also received some measured quantities of rains in most parts. 

NORTHERN REGION

FARMERS ANXIOUSLY AWAIT FISP DISTRIBUTION COMMENCEMENT

With the onset of rains, farmers in Mungwi are beginning get worried over the delay in the distribution of FISP inputs to various camps. The chairperson of Mungwi DFA, David Ng’andu has said that the delay in the distribution will negatively affect farming this season. And the DFA chairperson has expressed sadness (my heart does not go out to the better-off farmers who won't get subsidized inputs intended for the poor to whom my heart does go) at the reduced fertilizer allocation to the district at a time when the number of potential beneficiaries is increasing. [The] Government in Zambia is perceived by rural folks as a big yawning pocket full of money, largely because of its poor transparency in terms of how money is spent, and historically, Zambia's full-court press of socialism during the one-party state days. 

So far only Urea fertilizers have been delivered while D compound and seed have not yet been delivered to the district. That's helpful, they need Urea (top-dressing) around Christmas, but the seed and D needs to be around by two weeks ago. Again ... same thing every year. 

LUAPULA REGION

FARMERS BEMOAN DELAYED FRA PAYMENTS

Farmers in Mansa district have expressed disappointment over the delayed payments for the maize they supplied to the Food Reserve Agency (FRA).  The farmers have complained that the Agency had not adhered to the stipulated marketing modalities of paying them within two weeks after delivery of the commodity. Please tell me you notice the same theme I've noticed for over 8 years, and understand why I bemoan and am saddened by the state of farming in Zambia. 

September 28th, 2015 - Presidential Address to Parliament (19th Sep)

The views expressed by the author are his alone and do not reflect the views of Concern Worldwide. 

Notes from ZNFU Agro-Watch, volume #37 (Sep 22nd) ... author's comments in red. 

Cost of Agricultural Inputs Making Zambia Uncompetitive:

H.E Edgar Lungu The Republican President, His Excellency Edgar C. Lungu, opened the 5th session of the 11th National Assembly on Friday 18th September 2015. In his maiden speech, the President stated that Zambia needed to capitalize on its resources in order to become a regional agricultural hub and a global exporter of processed agricultural products. Some of the salient point made, with respect to agriculture, in the 74 paged speech include:

• Zambia’s high cost of production needed to be addressed. The dependence on imported inputs is making the country’s agricultural produce uncompetitive. There is thus need for more investment in local manufacturing of agricultural inputs. My guess is that they are referring to fertilizers which are inherently costly due to the fact that Zambia has a) no oil [it comes off tankers from Dar-es-Salaam], and b) a limited capacity to produce nitrogenous fertilizers, which in lieu of better farming practices, are to the average farmer the equivalent of a powerful drug to an addict. Without fertilizers and hybrid maize (also largely pegged in dollars, which is currently killing my project), there is essentially little hope of a marketable surplus barring expenditure in land and labour resources.

• The piloting of the Electronic Voucher System in 13 districts under the Farmer Input Support Programme; Only about five years or so after they FIRST promised to use it ... wonder how it will go this time around? The idea is good, but disliked by local party politicians, as it deprives them of a major opportunity for "gift-giving" at the rural level. 

• Directive to the the ministers responsible for Finance and agriculture to come up with a mechanisation Programme for small-scale farmers working in Collaboration with the private sector and civil society. This is with the aim of making small-scale farmers more self-sufficient; Admirable, but always curious ... those who can afford mechanization typically use it; those who can't, don't. How will the private sector work around that? Also, how does that lend itself to self-sufficiency? 
• Government will bring about 5,000 ha of land under irrigation each year to mitigate against the effects of climate change. 
• The movement of the Department of Cooperatives to the Ministry of Commerce, Trade and Industry from the Ministry of Agriculture and Livestock;
• Government plans to establish 13 milling plants nationwide to be managed by ZNS and Zambia Cooperative Federation (wait ... how will this help the private sector? A return to government-subsidized, artificially low-cost (and likely poorly run) milling companies will effectively subsidize consumption, pulling production along with it. Mono-cropping 25, crop diversity -10.
• Government plans on doubling the number of livestock breeding centers from the current 10 to 20 by 2023. The Breeding centers will be for mostly goats and sheep, targeting the huge goat and sheep market in the Middle East. Hope no one informs Rwanda, Burundi, Uganda, South Sudan, Kenya, Ethiopia, Tanzania, or Kenya of this plan, as they are a bit closer and have in some cases, ocean access. Are we going to truck or fly these goats? 
• The Sanitary and Phyto-sanitary Standards should be strengthened and strictly enforced to ensure that agricultural produce being sold on the market are safe and of good quality. I would ask, what's in it for the farmer to achieve phyto-sanitary acceptable foods? 
• Government is in the process of establishing two fish hatcheries in each province in order to support growth of fish farming. Further, government will establish one community fish fingerling nursery in each District and also train 1,400 fish farmers in fish Feed production. This is with the target of the nation reaching fish self- sufficiency in the next three years through an annual production of 80,000 tons of fish from fish farming and 90,000tons from natural fisheries. Okay, I hope they find some new rivers or lakes out there, because Luapula is fished out and the Barotse Floodplains are not that far behind. I also wonder if they are going to revamp Dept. of Fisheries into a going concern.

The republican President further stated that the country would soon ratify the Tripartite Free Trade Area which would make Zambia part of the largest Free Trade Area in Africa and that the nation was part of the negotiations for the Continental Free Trade Area which would offer a bigger market access to Zambian Entrepreneurs and innovators.

On Energy, H.E Chagwa Lungu indicated that despite the low water levels in Lake Kariba and the Kafue River the power shortage has been occasioned by Zambia's inability over the years to attract new investment in Electricity generation on account of the low electricity Tariffs. Government hopes that the revision of retail tariffs upwards from an average of 5.64 to 10.35 cents per kilowatt hour will attract more investments in the energy sector, particularly for those interested in renewable energy sources such as solar, wind and waste-energy projects. Hmmm ... those low tariffs purchased a lot of nice cars over at ZESCO. Also wonder if it's the slipping exchange rate which puts import costs (of which much of ZESCO infrastructure is reliant upon) way to high for them to afford conductors, transformers, etc.

In addressing the concerns over Zambia slipping back into a debt trap, the Republican President stated that the Zambian economy has grown from a US$ 3 Billon GDP in 2005 to a US$28 billion today and that the country was well within the acceptable international threshold of 40% of the Gross domestic product. He further stated that the nation had borrowed for long term investments that would spur national growth. In other words, China needs to get back on-track and purchase copper at $6,000/ton or we're in for it.

The theme of the President’s address was “Embracing a Transformational culture for a smart Zambia Now.” No time like the present.

August 14th, 2015 - The Food Reserve Agency (FRA) floor price set at K70 x 50kg bag

Zambia's Food Reserve Agency (FRA) announced its floor price yesterday, which I heard over the ZNBC news whilst enjoying a meal of rice and beans that was positively resplendent with cooking oil.

To clarify from what mi amigo Dr. William Burke told me years back, it's not really a true "floor price", or more appropriately (?), a "price floor" ... FRA's floor price is more appropriately, a pan-territorial price for a fixed weight / volume, the ubiquitous 50kg maize grain bag purchased by FRA at an approved depot or satellite depot anywhere in Zambia. This year it is ... drumroll ... K70 per 50kg bag, of which they will purchase a supposed maximum of 500,000 metric tonnes.

Hmm. As CSPR says, nothing exciting. No change from last year, especially considering two factors:

1. USD to ZMW exchange rate ... a year ago, the Zambian Kwacha (ZMW) was trading around K6.1 to $1.00, so a bag of maize was worth approximately $11.50. Today it just closed at K7.90 to $1.00 (gulp), meaning a bag of maize is worth about $8.86. This is a kick in the slegs to farmers who don't get subsidized maize support, as fertilizer and seed prices are often estimated in USD and then converted to ZMW. 
2. IT BARELY RAINED THIS YEAR IN THE SOUTHERN HALF OF THE COUNTRY. That means we have less maize and the FRA is paying less (in dollars) for it.

However, this is a glimmer of hope for us nut-jobs who harp on about diversification; in its own groping way, the government appears to be backing away from its deathgrip on Zambia's maizescape. It's likely (though no standing government would admit it) that their handling of maize through the FRA has been a significant distortion [read: wandering disaster] of the food market and a spectacular loss of taxpayer's money (state-to-state / donor aid usually lands in research and extension in some garbled way like moi).

We'll see ... my prediction is that maize cropping will drop somewhat depending on how well they stick to the quota of 500,000 MT, and if they are at their usual snail's pace of paying the farmers around December / January. FISP is still intact and far more of an expression of government largesse in rural areas, so it will likely stand politically.  

In the meantime ... maize grain is selling at K110 / 50kg (packed to 60-65kg) on the open market. Guess hunger and Adam Smith are moving the dial on their own ... 

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 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"). 

Kwacha Re-basement (aka. the Death of the Pin)

The Post had as is the pattern of the British papers on which it's modeled, a blaring headline reading:

ATMS RUN OUT OF CASH IN LUSAKA

It's worthwhile to note that as development goes, this story would have been non-existent five years ago (they were always out of cash) or eight (when there were literally a handful of ATMs in the country). 

The run on the machines is somewhat related to the time of year ... it is Christmas, and Zambians joining Planet Capitalism are following the well-trod path of purchasing gifts, particularly for their own children to enjoy and the parents of others to envy.

However, as an unidentified bank official pointed out, "It's not just the usual heightened festive season spending, I think there is also the fears of the kwacha rebasing."

Zambian money currently looks something like this:

 

Denominations range from K50, K100, K500, K1000, K5000 (shown above with front and reverse), K10000, K20000, and K50000. The 'th' sound is different in Bantu languages, so all the currencies with three zeroes are colloquially suffixed as 'pin'. Therefore, a K20000 note is "20 pin" and so on. The current exchange rate is K5,300 to $1.00 USD; essentially, the currency hasn't changed since in the introduction of the K50000 note nine or ten years ago.

Now, for reasons I'm not sure of expressing given my status as a guest in this country (but expressed within this document from the Bank of Zambia), they are killing the pins. Three zeroes will be hacked off each note, ergo K5000 becomes (kwacha rebased) KR5.





The smaller denominations (equal to or less than K1000) will become coins named identical to their predecessors, the "ingwe". Given the prevalence of transactions at value K2,000 and at K100,000, new notes (KR2 and KR100) will also be released.







Internationally, the currency code for the old kwacha is ZMK; on Tuesday

It's somewhat worrying how the transition is simply not getting through to people; I'm sure in the rural areas, people are digging deep holes and stuffing calabashes full of money down them (which will doubtless attract termites by the thousand score). Supposedly, on 1st January, 2013 (next Tuesday), all shops / marketeers will need to post prices in both currencies, and if possible, start paying out the new currency when at all possible. The opportunities for chicanery will be endless ... fake exchange commissions, inflated prices for small items, etc. It will certainly do wonders for already booming calculator sales.

I wonder how it will pan out when paying out bribes to the cops ... will they demand K or KR?

My reaction? Wait. Watch. Pulled out money well in advance. Sleep. Rewrite all my documents with the new values. Y2K all over again.