Zambia: Benchmark maize price raised to deter smuggling

Surging maize prices in the Democratic Republic of Congo (DRC), Kenya, Tanzania, and South Sudan have created a lucrative trade for people to smuggle staple food out of Zambia.

For instance, 50kg of maize in Lusaka costs about $9 but fetches up to $47 in DRC cities. Such a huge gap encourages farmers to sell maize beyond the Zambian borders, where the army has done little to stem the smuggling that alarmingly heightened last January.

The deployment of Zambian soldiers tasked with deterring maize smuggling has led to new ingenious methods of export, including using coffins as containers and embedding maize in sand and stones transported on dump trucks.

Tough conditions

Last April, authorities indefinitely banned maize exports after soaring regional demand more than doubled the prices of domestic maize meal in some parts of Zambia, especially in border towns. This has seen the already rough living conditions of ordinary Zambians take a turn for the worse.

Zambia, which in recent years has become a key regional source of maize, is expected to reap 3.2m tonnes of maize this year, according to official government figures. 

The southern African country’s annual maize consumption is about 2.8m tonnes, which is used to cater for people, livestock, and industrial purposes.

Attempts by the government during the previous farming season to restructure inputs distribution by limiting wastage of subsidies, when the country was pushing for a $1.3bn loan programme with the International Monetary Fund (IMF), left many farmers in rural areas with poor yields as they failed to secure key inputs.

The 38-month deal with the IMF was seen as a crucial step in the quest to restructure Zambia’s debts and rebuild an economy ravaged by mismanagement and COVID-19. The country is yet to reach an agreement with its creditors, which include China and Eurobond holders.

‘Cost-reflective’ price

With a likely reduced maize output, Zambia, desperate to secure harvest from small-scale farmers who in most cases prefer to trade their grain for spot price, has raised the FRA purchase price and also opened the marketing season two months earlier than usual.

The FRA announced on 19 May that it plans to buy 500,000tn of grade A white maize at about 5,600 Zambian kwacha (about $295) per tonne, a 51% year-on-year jump.

Although Zambia does not apply price controls to maize trading, the FRA purchase price is tantamount to the benchmark price for private buyers.

“This price is cost-reflective and to a larger extent reflects what is happening in regional markets. It is intended to give farmers a return on their investment,” FRA board chairman Kelvin Hambwezya told journalists in Lusaka on 19 May.

“If we enter the market with a price that is not appealing to the farmer, we are going to lose the maize along the Zambian border lines.” 

Unfavourable weather

According to the government’s projections, the bulk of the 3.2tn of grain is expected to be produced in northern Zambia in close proximity to East Africa and Malawi, which suffer food shortages due to unfavourable weather conditions.

Recent floods in Malawi and Mozambique will likely push the regional demand for grain and could heighten the illegal export of maize through the greatly porous Zambian borders.

“By last March, maize buyers from Tanzania were already in the field in some rural districts in Northern and Muchinga provinces, paying farmers in advance to secure their harvest,” McPherson Milambi, a senior agriculture official in Northern Province, tells The Africa Report.

“Although this puts the traders in advantaged positions, it is illegal and a serious threat to our household and national food security. These traders are coming in hundreds and the number will get bigger as we go deeper into the season because our people are also desperate for cash.” 

Hambwezya said FRA wanted Zambia to maintain the export ban on maize but not maize meal as the cash-strapped country is desperate for foreign currency. “Our borders must remain closed until as a country we secure our strategic reserves,” Hambwezya said.

FRA is responsible for strategic grain reserves for human consumption while grain traders and other private buyers stock grain mainly for industrial use.

‘Double-edged sword’

While the new maize price is expected to push that of the mealie meal, authorities are betting on a “lesser evil” of expensive maize which it hopes to help stimulate production after most farmers refrained from cultivating maize last season.

“The new price will stimulate production for the 2023/2024 farming season, but most importantly, it ensures that the Zambian maize remains within the country,” Grain Traders Association chairperson George Liacopoulos tells The Africa Report.

“Malawi is struggling with adverse climatic conditions and the supply of maize from these countries has been poor and as a result, Zambia has become a target.” 

Andrew Chintala, the head of the Millers Association of Zambia, has voiced fears that the expected rise of mealie meal prices in the country could add to the public’s financial misery.

“This announcement is a double-edged sword – the farmers must be rejoicing but on the other hand, the consumers who expect cheap mealie meals will be affected,” he says. “But in the interest of moving forward as a sector, this is a step in the right direction.”