Opening Meeting

Lusaka (Zambia), April 22, 2015

CUTS slams subsidy policy
New Vision, April 27, 2015

The Consumer Unit Trust Society (CUTS) International has observed that the provision of subsidised maize in 2011 to millers did not translate in benefits for consumers as mill-to-retail marketing margins increased significantly in the period when subsidy was provided.

CUTS International-Lusaka Programme Officer Annie Siame said the ‘subsidy’ policy excluded some millers from the programme, especially informal, small and medium-scale millers, who offered competition to the larger millers.

Speaking at the CREW Project 4th National Reference Group meeting yesterday, Siame observed that the procedure applied in fertiliser procurement only enabled the participation of a limited number of private fertiliser suppliers thereby stifling competition.

CUTS Initiated the Project entitled ‘Competition Reforms in Key Markets for Enhancing Social and Economic Welfare in Developing Countries’ being implemented over a period of three years from November 2012, with support from DFID (UK) and BMZ (Germany).

Presenting findings from the research CUTS conducted on Competition Reforms in the Maize Sector, Siame revealed that Food Reserve Agency (FRA) floor prices have helped in the reduction of the variance of wholesale prices and thus helped in inducing market price stabilising effects.

“FRA Prices are set at a high level, which positively impacted only a handful (28 percent) of Zambian farmers who are net-sellers of maize – while negatively affecting nearly half of the farming community (48 percent) and having no impact on the remaining 24 per cent,” she said.

“High prices offered by FRA for maize increase revenue burden on Govt., already bearing high costs in subsidising fertilisers (FISP programme). It also induced farmers towards a culture of mono-cropping and reduced private sector engagement in the sector.”

Siame further said that in exploring whether a pro-competitive procurement regime of maize can be promoted in Zambia, it was discovered that procurement prices of FRA are higher than the market prices.

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