allAfrica.com: Zambia: Rising Food Prices - Opportunities for Country (Page 1 of 2)

IS it possible that Zambia can take advantage of the current global food price rise and use it to reduce poverty and accelerate national development?

Should Zambia, like many other countries, respond to this challenge with self-interest by limiting or totally banning exports of foodstuffs that are essential to our population?

Will that sustain food security in Zambia?Is such a move economically and ethically justified? How can a country which has just begun to enjoy robust economic growth above five per cent like Zambia position itself to be a beneficiary rather than a victim of such changing tides and swings of the global economic and development pendulum?

When you think of these questions, you realise that the odds and stakes are high; the political choices are equally delicate and serious, while the economic and human development prospects are on a balance.

Zambia can continue to perform well economically if such an opportunity coupled with the rising copper prices is handled carefully. If not careful and with poor choices, Zambia could fail to make the most of this opportunity and experience slow economic growth.

Yet, food prices are not the only challenge affecting Zambia and the global community at the moment. Events in the energy sector and the exchange rate have also come into play.

The problems in the energy sector have clearly arisen out of poor planning that lead to deficient power output for existing and rising demand for energy. This has materialised even more so in the last seven months; crippling the ability of sectors to increase productivity.

In the case of the free-floating exchange rate, the Zambian Kwacha has enormously gained strength against major currencies. This has been good development for those on one side of the coin. Importers of raw materials and those with financial support for capital investment through importing equipment are content.

Unfortunately on the other side of the coin, this remains a bitter pill to swallow for both export manufacturers and exporters of non-traditional commodities, especially in agriculture.

Being a country with a relatively good weather pattern and good arable land with surplus labour in close proximity, this can be our opportunity to harness our potential from the current rise of food prices.

But how can this be done?

Contemplation and research on this issue at the Jesuit Centre for Theologcal Reflection (JCTR) has informed us that the answer will mainly lie in two major goals that Zambia should strategically have in order to respond to the challenge of rising food prices: to ncrease and sustain production of agricultural food crops, and fill our reserves and export the rest.

The main problem has been in implementing policies to make agriculture a core sector for trade. By doing so, growth and development will survive beyond mining.

Food prices are subject to the cost of inputs as the recent concern of rising oil prices and fertiliser prices has shown.

We will focus on fertiliser rather than the impact of rising oil prices because oil deserves independent analysis. The cost of fertiliser has increased four-fold in Zambia, reaching an average of K200,000 (in some cases K250, 000 in North-Western Province) from K60, 000 in 2007.

As food costs are in part being driven by the market shift to using food crops in the production of environmentally friendly fuels, increasing fertiliser costs are as a result of a competing demand between the energy and food sectors.

Factors influencing this have been an increase in demand for natural gas in the energy sector as an alternative to electricity. This is because consumers in some markets find gas environmentally friendlier, cheaper and more reliable than traditional energy sources.

Since natural gas is used as an input for the manufacture of fertiliser, accounting for up to 80 per cent of the production costs, there is subsequently competition between the food and energy sector for the same input.

Secondly, major fertiliser mining firms that supply the market have not been able to adjust short-term supply to meet growing market demand to supply enough fertiliser for the food and energy sectors.

This time-lag will only be able to adjust once the expansion of mines' output capacities increase, new mines open and fertilier demand stabilises.

The third is the costs of transportation of fertiliser which are increasing as a result of escalating fuel prices, then factored into the selling price which is borne by farmers.

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