The Zambian government’s maize purchases are on track following the opening of the 2014/15 marketing season in August. Purchases by the Food Reserve Agency (FRA) stood at 360,000 MT as of early September, representing close to three-quarters of its target. The rapid collection of maize, which was expected to end by September 15th, has been spurred by an increase in the producer price from 70 kwacha per 50-kg bag to 75 kwacha per 50-kg bag this season.
The deluge of maize deliveries has overwhelmed FRA’s limited storage facilities, especially given the bumper crop from the Northern Province. In a bid to alleviate the strain, FRA has commissioned a Chinese company to build a 25,000-tonne silo in Kasama, and has inked a 73 million kwacha ($6.1 million) deal with US-based Advanced African Solutions to construct storage facilities, although these projects will only have an impact next marketing season.
However, it remains unclear whether the FRA has the funds to push these deals forward, given the macroeconomic constraints facing Zambia owing to plunging copper prices and the weak Kwacha. Moreover, budgetary constraints have raised the concerns of the Zambia National Farmers Union (ZMFU) who fear that the FRA will struggle to pay farmers on time, as occurred in the 2013/14 season.
Delayed payments could negatively impact the outturn in 2015/16 as farmers will struggle to purchase inputs for planting of the crop in November. Farmers are already being squeezed by higher costs for imported inputs (especially fertilisers) owing to the plummeting Kwacha, which has slumped 27 percent this quarter, making it the worst performing currency out of more than 150 tracked by Bloomberg.