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Zambia Staple Food Market Fundamentals

  • Market Fundamentals
  • Zambia
  • December 2017
Zambia Staple Food Market Fundamentals

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  • Executive Summary

  • Executive Summary
    • The objective of this report is to document the basic market context for staple food production and marketing in Zambia with a focus on maize, the country’s key commodity.
    • The information presented stems from a literature review, secondary data, and a field assessment. In-country research took place in October 2014 and included market visits and a three-day stakeholder consultation workshop held in Lusaka.
    • Zambia’s economy is largely dependent on its mining industry, especially the export of copper. Following a period of rapid growth, the country’s economic growth rate fell in 2013 and remains sluggish, driven by a drop in international copper prices. The subsequent decline in revenue from copper exports also led to currency depreciation and inflation in recent years.
    • Zambia’s gross domestic product (GDP) has grown steadily since 2001, with a growth rate remaining above 5 percent for most of the past decade. However, the agriculture sector’s contribution to GDP declined from 16.0 percent in 2001 to 12.6 percent in 2012. Although agriculture is not the main driver of the Zambian economy, it is the most important sector for employment and supports the livelihood of over 66 percent of the population.
    • Despite economic growth, poverty rates remain high (over 60 percent of the population is poor), especially in rural areas. While Zambia’s political environment is relatively stable and calm, electricity, transport, and storage infrastructure drawbacks continue to limit the country’s ability to improve living standards across all socioeconomic levels of the population.
    • Maize, cassava, wheat, rice, sweet potatoes, groundnuts, and mixed beans represent the main food staples in the country in terms of area planted and production volume. Higher-value, commercial cash crops such as cotton, tobacco, and sugar are also produced and are among Zambia’s main agricultural exports.
    • On aggregate, Zambia is surplus in terms of domestic food availability. Most food production in Zambia takes place at the smallholder and subsistence level, with low use of agricultural inputs, and in rainfed conditions. The presence of one rainy season provides one main harvest for predominantly rainfed crops, including maize. For these type of products, seasonality plays a major role in food availability and trade, while other heavily irrigated food crops, such rice and wheat, can be and are harvested and marketed throughout the year, depending mostly on stocks, import levels, and prices. Finally, cassava, while also rainfed, can be harvested throughout the year due to the crop’s growth cycle and resilience. Cassava is harvested depending on household food needs and is mostly consumed within the household and not marketed.
    • Besides production-related aspects, several other factors influence the performance of agricultural markets due to their impact on food availability, access, and/or trade. In broad terms, these factors are:
      • Geographic/climatic: the unimodal rainfall pattern leaves the country vulnerable to long-term supply implications from the annual harvest. Weather irregularities can therefore have very significant effects on the supply level for the entire following marketing year, as well as subsequent years.
      • Physical: insufficient and inadequate infrastructure, mostly roads, irrigation systems, and storage facilities impede the staple food value chain growth and functionality at various levels, from productivity to distribution.
      • Institutional: substantial government intervention in the agriculture sector (purchase of staple foods, subsidized sales of staple foods on the market, input subsidies, and extension services) serves as a source of demand for some producers and affects prices in the markets. High public spending on these programs is a heavy financial burden on the national agriculture budget.
      • Political economy environment: uncertainty in trade policies (including export bans), as well as in the domestic public market interventions (including timing and price levels of purchases and sales of maize on markets), creates disincentives, volatility, and biases within the food markets.
      • Regional context: structural deficiency in neighboring deficit countries, surplus levels in other East and Southern African regional exporter countries, price differentials, trade policies, and regional integration to a large degree dictate the magnitude and direction of flows of staple foods between countries.
    • Zambia is second only to South Africa as the main staple food exporter and source of regional food supply and trade. Staple foods are exported to neighboring structurally deficit countries (mostly Malawi and the Democratic Republic of the Congo (DRC)). Factors affecting production and overall supply in the broader region impact production and trade dynamics in Zambia. In addition, regional integration mechanisms (such as the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA)) facilitate the access of Zambian goods in the regional market.
    • White maize, the nation’s most produced and consumed staple food, is produced mostly in Eastern, Central, and Southern Provinces and is exported formally and informally to several countries in the region. White maize is consumed across the country fresh or as dried (grain, flour) product, and is also used for the brewing of local drinks. The maize value chain is very complex and involves multiple actors, both private and public, large- and small-scale, formal and informal. The public sector is a big market actor and is involved in both purchasing and selling on the market, as well as setting trade policy. Zambia both became and sustained its role as an important source of maize for the Southern Africa region in the past decade.
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