THE government has removed subsidies on maize sold to millers as the country's maize production is expected to drop by 11 per cent this year, says agriculture minister Robert Sichinga.
And Sichinga says the Food Reserve Agency (FRA) will this year maintain its KR65 buying price for maize from small-scale farmers.
Announcing the crop forecast survey for the 2012/2013 farming season and the food balance status for the 2013/2014 marketing season, Sichinga said the government had decided to remove the KR5 maize subsidy it provides to millers through maize sold to them by FRA.
This means mealie-meal prices will increase once millers agree on the price structure.
The government buys maize at KR65 and sells it at KR60 to millers.
Sichinga said the government realised the subsidy was unsustainable after spending KR2.2 billion on it in the 2011/2012 season.
"In 2010, the amount of subsidy was KR2, 632 million, while in 2011, it was KR3,21 million. FRA is currently carrying a debt estimated at about KR2.2 billion, carried over from 2011 and 2012 marketing season. The treasury does not have a budget line to meet this expense. And after careful analysis of the empirical evidence before us, it is self-evident that it is inevitable that something has to give.
Therefore, Cabinet has very reluctantly authorised the removal of the miller/consumers subsidy," he said.
"The implication of the removal of the subsidy is that the price of our staple food, mealie-meal, will inevitably rise."
Millers have already proposed to increase the price of mealie-meal by more than 20 per cent following the hike in fuel prices.
Following the subsidy removal, Sichinga said a multi-sectoral and multi-disciplinary team comprising stakeholders was being constituted to work out detailed modalities, and the pricing structure for mealie-meal would soon be announced.
And Sichinga said maize production is expected to fall by 11 per cent this year as poor weather and worm infestation impacted on yields.
He said the 2012/2013 maize output is seen at 2.532 million tonnes from 2.853 million tonnes in the previous season.
Zambia's annual maize requirements for human consumption, strategic reserves, stock feed and the brewing industry, is estimated at 2.534 million tonnes.
The country experienced delays in rains in some growing areas this season, while an outbreak of army worms forced farmers to replant their maize crop, which is seen to have contributed to the projected fall in maize output.
Sichinga added that 500, 000 tonnes of maize would be bought by FRA for strategic reserve purposes.
Under the Farmer Input Support Programme (FISP) implementation this coming season, Sichinga announced several changes which include the implementation of the electronic voucher system (E-voucher) and the exchange of maize for fertilizer.
He said beginning this coming farming season, farmers' contribution to FISP would be increased from KR50 per bag to KR100.
For those farmers that would not have cash, Sichinga said they could still take two 50kg bags of maize as soon as the marketing season commences in exchange for a 50kg bag of fertiliser.
This barter system, however, will be restricted to 659,000 farmers countrywide while the other 241, 000 farmers will access the fertiliser normally through the e-voucher system.
Sichinga said the government would continue to subsidise 100 per cent the 10kg seed pack in order to encourage farmers not to reduce their production of maize while diversifying into other crops.
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