STAPLE FOODS VALUE CHAIN ANALYSIS - U.S. Agency for International

152 Pages·2010·3.55 MB·English

STAPLE FOODS VALUE
CHAIN ANALYSIS

COUNTRY REPORT - ZAMBIA

January 2009
This publication was produced for review by the United States Agency for International Development. It was
prepared by Chemonics International Inc.
The author’s views expressed in this publication do not necessarily reflect the views of the United States
Agency for International Development or the United States Government.
ACRONYMS AND ABBREVIATIONS
ACF Agricultural Consultative Forum
ACT Competitiveness and Trade Activity
AGCI African Growth and Competitiveness Initiative
AGOA African Growth and Opportunities Act
BOZ Bank of Zambia
CAADP Comprehensive Africa Agriculture Development Programme
CEE Citizens Economic Empowerment
CEEC Citizens Economic Empowerment Commission
CF Conservation Farming
CFU Conservation Farming Unit
COMACO Community Market for Conservation
COMESA Common Market of Eastern and Southern Africa
CPI Cost Price Index
CSO Central Statistics Office
DMMU Disaster Management and Mitigation Unit
DNA Deoxyribonucleic Acid
DRC Democratic Republic of Congo
EAC East African Community
ECZ Environmental Council of Zambia
FAO Food and Agriculture Organisation
FBS Food Balance Sheet
FEWSNET Famine Early Warning Systems Network
FISP Farmer Input Support Programme
FNDP Fifth National Development Plan
FoB Free on Board
FRA Food Reserve Agency
FSP Fertiliser Support Programme
STAPLE FOOD VALUE CHAIN ANALYSIS – ZAMBIA iii
FSRP Food Security Research Project
GART Golden Valley Research Trust
GDP Gross Domestic Product
GFRS Global Food Security Response
GMO Genetically Modified Organism
GTAZ Grain Traders‟ Association
Ha Hectare
IEHIA Initiative to End Hunger in Africa
Kg Kilogramme
LUSE Lusaka Stock Exchange
MACO Ministry of Agriculture and Cooperatives
MAZ Millers‟ Association of Zambia
MCTI Ministry of Trade Commerce and Industry
MFN Most Favoured Nation
MMD Movement for Multiparty Democracy
MOU Memorandum of Understanding
Mt Metric tons (Tonne)
NAMBOARD National Agricultural Marketing Board
NAPSA National Pension Scheme Authority
NEWU National Early Warning Unit
NFBS National Food Balance Sheet
NGO Non-Governmental Organisation
NMC National Milling Company
PAM Programme Against Malnutrition
PHS Post Harvest Survey
PQPS Plant Quarantine and Phytosanitary Services
R Rand
REWU Regional Early Warning Unit
STAPLE FOOD VALUE CHAIN ANALYSIS – ZAMBIA iv
RSA Republic of South Africa
SADC Southern Africa Development Community
SAFEX South African Futures Exchange
SAGIS South African Grain Information Service
SCCI Seed Control and Certification Institute
SI Statutory Instrument
SMS Short Message Service
SPS Sanitary and Phytosanitary
UNZA University of Zambia
VAT Value Added Tax
WFP World Food Programme
WRS Warehouse Receipt System
WTO World Trade Organisation
ZABS Zambia Bureau of Standards
ZAMACE Zambia Agricultural Commodity Exchange
ZANACO Zambia National Commercial Bank
ZARI Zambia Agricultural Research Institute
ZEGA Zambia Export Growers Association
ZESCO Zambia Electricity Supply Company
ZNFU Zambia National Farmers‟ Union

STAPLE FOOD VALUE CHAIN ANALYSIS – ZAMBIA v
Contents
ACRONYMS AND ABBREVIATIONS ................................................................................................... III
LIST OF FIGURES ......................................................................................................................................... X
LIST OF FIGURES ........................................................................................................................................ XI
EXECUTIVE SUMMARY ............................................................................................................................. 1
1. INTRODUCTION ................................................................................................................................... 6
1.1. THE CONTEXT OF THE STUDY ...................................................................................................... 6
1.2. THE SIGNIFICANCE, OBJECTIVES AND SCOPE OF THE STUDY .................................... 6
1.3. THE METHODOLOGY USED IN THE STUDY ............................................................................ 7
1.4. STUDY LIMITATIONS ........................................................................................................................ 7
1.5. STRUCTURE OF THE REPORT ........................................................................................................ 8
PART ONE: THE ECONOMY ............................................................................................................... 9
2. AN OVERVIEW OF ZAMBIA’S ECONOMY ................................................................................ 9
3. THE STATUS OF THE AGRICULTURE SECTOR ................................................................... 10
3.1. THE SIGNIFICANCE OF THE AGRICULTURE SECTOR ..................................................... 10
3.2. DYNAMICS OF GROWTH OF THE SECTOR ............................................................................ 10
3.3. MAIN COMMODITIES PRODUCED ............................................................................................ 13
3.4. MAIN CHALLENGES AND CONSTRAINTS ............................................................................. 13
3.5. AGRICULTURE SECTOR POLICIES ........................................................................................... 15
PART TWO: VALUE CHAIN ANALYSIS FOR SELECT STAPLE COMMODITIES ............ 18
4. THE MAIZE SUB-SECTOR .............................................................................................................. 18
4.1. MAIZE PRODUCTION ...................................................................................................................... 18
4.1.1. Production ..................................................................................................................................................... 18
4.2. MAIZE CONSUMPTION ................................................................................................................... 20
4.2.1. Domestic Consumption Production vs. Consumption................................................................. 20
4.2.2. Maize Exports and Imports .................................................................................................................... 21
4.3. VALUE CHAIN MAPPING ...................................................................................................................... 22
4.4. CONSTRAINTS AND OPPORTUNITIES ................................................................................................. 25
4.4.1. End market analysis .................................................................................................................................. 25
4.4.2. Vertical linkages ......................................................................................................................................... 27
4.4.3. Horizontal linkages ................................................................................................................................... 28
4.4.4. Supporting markets/services .................................................................................................................. 29
4.5. QUANTITATIVE ANALYSIS ................................................................................................................... 30
5. WHEAT.................................................................................................................................................... 32
5.1. WHEAT PRODUCTION .................................................................................................................... 32
5.1.1. Production ..................................................................................................................................................... 33
5.2. WHEAT CONSUMPTION ................................................................................................................. 34
5.2.1. Domestic Production vs. Consumption ............................................................................................. 34
5.2.2. Wheat Imports.............................................................................................................................................. 35
5.3. VALUE CHAIN MAPPING ...................................................................................................................... 38
5.4. CONSTRAINTS AND OPPORTUNITIES .................................................................................................. 40
5.4.1. End market analysis .................................................................................................................................. 40
5.4.2. Vertical linkages ......................................................................................................................................... 42
5.4.3. Horizontal linkages ................................................................................................................................... 42
5.4.4. Supporting markets/services .................................................................................................................. 42
5.5. QUANTITATIVE ANALYSIS ................................................................................................................... 42
6. RICE ......................................................................................................................................................... 44
STAPLE FOOD VALUE CHAIN ANALYSIS – ZAMBIA vi
6.1. RICE PRODUCTION .......................................................................................................................... 44
6.1.1. Production ..................................................................................................................................................... 44
6.2. RICE CONSUMPTION ....................................................................................................................... 44
6.2.1. Domestic Production vs. Consumption ............................................................................................. 44
6.2.2. Rice Exports and Imports ....................................................................................................................... 45
6.3. CONSTRAINTS AND OPPORTUNITIES .................................................................................................. 48
6.3.1 End market analysis .................................................................................................................................. 48
6.3.2 Vertical linkages ......................................................................................................................................... 48
6.3.3 Horizontal linkages ................................................................................................................................... 49
6.3.4 Supporting markets/services .................................................................................................................. 49
6.4. QUANTITATIVE ANALYSIS ................................................................................................................... 49
7. SORGHUM ............................................................................................................................................. 52
7.1 SORGHUM PRODUCTION ..................................................................................................................... 52
7.1.1 Projections for the period 2009 – 2013 ............................................................................................ 52
7.1.2 SORGHUM CONSUMPTION .............................................................................................................. 53
7.1.3 Sorghum Exports and Imports .............................................................................................................. 54
7.1.4 Value Chain Mapping .............................................................................................................................. 54
7.2 CONSTRAINTS AND OPPORTUNITIES .................................................................................................. 55
7.2.1 End market analysis .................................................................................................................................. 55
7.3 QUANTITATIVE ANALYSIS ................................................................................................................... 57
8. MILLET ................................................................................................................................................... 58
8.1 MILLET PRODUCTION .................................................................................................................... 58
8.1.1 Projections for the period 2009 – 2013 ............................................................................................ 58
8.2 MILLET CONSUMPTION ................................................................................................................ 59
8.2.1 Domestic Production vs. Consumption ............................................................................................. 59
8.2.2 Millet Exports and Imports .................................................................................................................... 59
9. BEANS ...................................................................................................................................................... 60
9.1 BEANS PRODUCTION ...................................................................................................................... 60
9.1.1 Bean Exports and Imports ...................................................................................................................... 60
9.2 VALUE CHAIN MAPPING ...................................................................................................................... 61
9.2.1 Value Chain Map ....................................................................................................................................... 61
9.2.2 End market analysis .................................................................................................................................. 62
9.2.3 Vertical linkages ......................................................................................................................................... 62
9.2.4 Horizontal linkages ................................................................................................................................... 63
9.2.5 Supporting markets/services .................................................................................................................. 63
9.3 QUANTITATIVE ANALYSIS .................................................................................................................. 63
10. PULSES (PIGEON PEA, COW PEA, CHICK PEA) ............................................................... 64
10.1. PULSE PRODUCTION .................................................................................................................. 64
11. THE CASSAVA SUB-SECTOR .................................................................................................... 65
11.1 CASSAVA PRODUCTION ............................................................................................................... 65
11.1.1 Projections for the period 2009 – 2013 ............................................................................................ 66
11.2 CASSAVA CONSUMPTION ............................................................................................................ 67
11.2.1 Domestic Production vs. Consumption ............................................................................................. 67
11.2.2 CASSAVA Exports and Imports............................................................................................................ 68
11.3 CONSTRAINTS AND OPPORTUNITIES .................................................................................................. 68
11.4 MATRIX OF FUNCTIONS AND ACTORS ............................................................................................... 69
11.4.1 End market analysis .................................................................................................................................. 69
11.4.2 Vertical linkages ......................................................................................................................................... 70
11.4.3 Horizontal linkages ................................................................................................................................... 70
12. GROUNDNUTS ................................................................................................................................. 71
STAPLE FOOD VALUE CHAIN ANALYSIS – ZAMBIA vii
12.1 GROUNDNUT PRODUCTION ........................................................................................................ 71
12.2 GROUNDNUT CONSUMPTION .................................................................................................... 72
12.2.1 Domestic Production vs. Consumption ............................................................................................. 72
12.3 VALUE CHAIN MAP ............................................................................................................................... 72
12.4 CONSTRAINTS AND OPPORTUNITIES .................................................................................................. 73
12.4.1 End market analysis .................................................................................................................................. 73
12.4.2 The consumer price ................................................................................................................................... 73
12.4.3 End market characteristics .................................................................................................................... 73
12.5 VERTICAL LINKAGES ............................................................................................................................ 74
12.6 HORIZONTAL LINKAGES ....................................................................................................................... 74
12.7 SUPPORTING MARKETS/SERVICES ...................................................................................................... 74
12.8 QUANTITATIVE ANALYSIS ................................................................................................................... 74
PART THREE: THE BUSINESS ENABLING ENVIRONMENT FOR TRADE IN
AGRICULTURAL COMMODITIES ....................................................................................................... 76
13. THE POLICY ENVIRONMENT .................................................................................................. 76
13.1 PRICING AND MARKETING POLICIES .................................................................................... 76
13.1.1 Role of Government in pricing and marketing of staple foods ................................................ 76
13.2 PRODUCTION AND POST HARVEST STORAGE FACILITIES .............................................................. 77
13.3 SUPPLY OF INPUT SERVICES ................................................................................................................ 78
13.4 ROLE OF THE PRIVATE SECTOR IN MARKETING OF STAPLE FOODS ............................................. 78
13.5 BUSINESS ENABLING ENVIRONMENT ................................................................................... 79
13.5.1 Tariffs .............................................................................................................................................................. 79
13.5.2 Tariff applicable on imports of staple foods from the region and outside the region ... 79
13.5.3 Concerns of traders on application of the tariffs when importing products from EAC,
COMESA, SADC and Rest of the World. .............................................................................................................. 80
13.5.4 Views of stakeholders on whether the tariff applied on imports from third countries
(EAC CET) is appropriate and if not their proposal of alternative tariff ............................................... 80
13.5.5 Non-Tariff Charges ................................................................................................................................... 83
13.5.6 Traders’ and regulatory authorities’ opinion on the effects of the non tariff charges .. 84
13.5.7 Recommendations to address the concerns ..................................................................................... 85
13.6 REGIONAL STRUCTURED TRADING SYSTEM PLATFORM ........................................... 85
13.6.1 The Food Balance Sheet .......................................................................................................................... 85
13.7 CONTENT OF THE NFBS ....................................................................................................................... 86
13.7.1 Procedure for construction of the food balance sheet ................................................................ 86
13.7.2 Role of the private sector (national consultative mechanism on food balance sheet) ... 87
13.7.3 Application of the food balance sheet as a policy tool ............................................................... 88
13.7.4 Dissemination of information on the food balance sheet .......................................................... 88
13.8 PERCEIVED NEED FOR A REGIONAL FOOD BALANCE SHEET ......................................................... 88
13.8.1 Appropriate mechanism for assembling regional food balance sheet ................................. 89
13.9 POLICY USE FOR THE REGIONAL FOOD BALANCE SHEET .............................................................. 89
13.10 WAREHOUSE RECEIPT SYSTEM ..................................................................................................... 89
13.11 THE COMMODITY EXCHANGE ........................................................................................................ 89
14. THE REGULATORY FRAMEWORK ....................................................................................... 91
14.1 CUSTOMS DOCUMENTATION AND CLEARING PROCEDURES ................................... 91
14.1.1 Customs documents and clearance procedures and release time .......................................... 91
Procedure for Exporting .............................................................................................................................................. 91
14.2 STANDARDS ........................................................................................................................................ 92
14.2.1 Standard specification .............................................................................................................................. 92
14.2.2 Application of the standards – for exports ...................................................................................... 93
14.2.3 Application of the standards – for imports ...................................................................................... 93
14.2.4 Challenges faced by ZABS in facilitating cross border trade ................................................. 94
STAPLE FOOD VALUE CHAIN ANALYSIS – ZAMBIA viii
14.2.5 ILLEGAL IMPORTS ................................................................................................................................. 94
14.2.6 Application of the standards – for Exports ...................................................................................... 94
15.2 SANITARY AND PHYTOSANITARY REQUIREMENTS ..................................................... 95
15.2.1 Sanitary and Phytosanitary Measures ............................................................................................... 95
16. TRADE (IMPORT AND EXPORT) RESTRICTIONS ........................................................... 97
16.1 SEASONAL EXPORT/IMPORT RESTRICTIONS .................................................................................... 97
16.2 VIEWS FROM FARMERS, TRADERS AND PROCESSORS ON THE IMPACT OF THE BAN ON
INVESTMENTS, PRODUCTION AND TRADE. ..................................................................................................... 98
16.2.1 Seasonal Import restriction .................................................................................................................... 99
16.2.2 NON-TARIFF BARRIERS ....................................................................................................................100
PART FOUR: CONCLUSIONS, POLICY IMPLICATIONS AND RECOMMENDATIONS
.......................................................................................................................................................................... 101
17. MAIN CONCLUSIONS ................................................................................................................ 101
18. POLICY IMPLICATIONS .......................................................................................................... 101
19. RECOMMENDATIONS .............................................................................................................. 103
ANNEXES ..................................................................................................................................................... 106
ACKNOWLEDGMENTS ......................................................................................................................... 141

STAPLE FOOD VALUE CHAIN ANALYSIS – ZAMBIA ix
LIST OF FIGURES
Table 1 Maize plantings, production and sales ___________________________________ 18
Table 2 Maize production vs consumption balance _______________________________ 28
Table 3 Zambian maize exports into the region __________________________________ 21
Table 4 Informal maize meal exports __________________________________________ 21
Table 5 Maize imports from the region ________________________________________ 22
Table 6 Informal maize import from the region __________________________________ 22
Table 7 Maize functions matrix ______________________________________________ 24
Table 8 Maize end-market characteristics ______________________________________ 25
Table 9 Maize Value Chain _________________________________________________ 39
Table 10 Wheat Planting, production and prices _________________________________ 33
Table 11 Wheat Production vs Consumption Balance _____________________________ 35
Table 12 Durum Wheat imports from the region _________________________________ 35
Table 13 Wheat imports excluding durum ______________________________________ 36
Table 14 Wheat flour imports from the region ___________________________________ 36
Table 15 Wheat flour exports to the region _____________________________________ 38
Table 16 Wheat functions matrix _____________________________________________ 38
Table 17 Wheat end-market characteristics _____________________________________ 40
Table 18 ZAMACE grades premiums for wheat _________________________________ 41
Table 19 Wheat Value Chain ________________________________________________ 43
Table 20 Rice planting production and prices ___________________________________ 44
Table 21 Rice Production vs Consumption balance _______________________________ 44
Table 22 Exports of rice in husk, milled or broken into the region____________________ 45
Table 23 Imports of rice into the region ________________________________________ 45
Table 24 Total Rice imports _________________________________________________ 46
Table 25 Rice functions matrix ______________________________________________ 47
Table 26 Value chain for rice ________________________________________________ 51
Table 27 Sorghum planting, production and prices _______________________________ 52
Table 28 Sorghum and Millet combined Production vs Consumption Balance __________ 53
Table 29 Sorghum imports from the region _____________________________________ 54
Table 30 Sorghum exports to the region _______________________________________ 63
Table 31 Sorghum matrix of functions _________________________________________ 54
Table 32 Sorghum End-market characteristics ___________________________________ 56
Table 33 Sorghum Value chain analysis _______________________________________ 57
Table 34 Millet planting, production and prices __________________________________ 58
Table 35 Beans plantings, production and prices _________________________________ 60
Table 36 Beans regional imports _____________________________________________ 70
Table 37 Beans value chain _________________________________________________ 71
Table 38 Beans value chain analysis __________________________________________ 73
Table 39 Cowpeas plantings, production and prices_______________________________ 64
Table 40 Cassava plantings, production and prices _______________________________ 66
Table 41 Cassava Flour Production vs Consumptions Balance ______________________ 67
Table 42 Cassava matrix of functions _________________________________________ 69
Table 43 Groundnuts plantings, production and prices ____________________________ 71
Table 44 Groundnuts imports ________________________________________________ 82
Table 45 Groundnut Value Chain_____________________________________________ 74
Table 46 Tariffs applicable to trade ___________________________________________ 79
Table 47 Import parity template ______________________________________________ 94
Table 48 Food balance sheet 2008/09 _________________________________________ 97
STAPLE FOOD VALUE CHAIN ANALYSIS – ZAMBIA x