Indaba Agricultural Policy Research Institute Understanding the 2013/2014 Maize Harvest Ballard Zulu and Nicholas J. Sitko Agricultural Cooperating Partners , June 10th 2014 Indaba Agricultural Policy Research Institute

Introduction According to the 2013/2014 CFS, Zambia is forecasted to harvest 3.4 MMT this season, up from 2.5 MMT last season This was despite a season that had a late onset of rains & late government input delivery Is the increase of 900,000 MT real or the result of incorrect forecast data?

Understanding the Crop Forecast Survey The crop forecast is a statement of the most likely yield or production of a crop in a given year. Conducted prior to harvest (March to April) based on the expert judgement of farmers Most crops have reached physiological maturity Assumptions- weather conditions and damage during the remainder of the season will be about the same as the average over previous years A total sample of 680 SEAs (13,600 households) are drawn out of the 12,788 SEAs as defined by the Census (sampling frame).

Standard Enumerations Areas

High Level of Quality Assurance Use high standards of scientific sampling based on probability selection methods that are widely known and accepted Training is provided at all levels Enumerators, supervisors, trainers, data entry staff etc… Release of results is preceded by systematic data quality control and verification by a joint team from CSO and MAL with technical support from IAPRI and MSU

CFS results are confirmed by PHS

Source of growth in maize production In total maize production expanded by 32% between 2012/13 and 2013/14 22% due to yield increase 8% due to area expansion 2% due to the interaction of area and yield What were the conditions that facilitated this growth in yield? Improvements in prices and market conditions Increased use of commercially purchased inputs Aided by improved rainfall conditions

Real Mean Monthly Wholesale Maize Prices 2012-2013 Source: CSO

Fertilizer Trade Data Imports 270,765 317,523 448,040 397,727 545,384 2009 2010 2011 2012 2013 Imports 270,765 317,523 448,040 397,727 545,384 Exports 6,851 10,985 2,425 4,813 2,802 Non Agric use (Ammonium & Sodium Nitrate) 28,693 37,645 62,860 62,562 49,315 Domestic Availability 235,222 268,893 382,755 330,353 493,267 Source: Zambia Revenue Authority

Change in Smallholder Fertilizer Use By Source 2012/13 2013/14 Change in basal use (kg) Change in top dressing use (kg) % change basal % change top Kg basal Kg Top Dressing FISP/FSP/MAL (Direct from FISP or via a COOP) 723853 715530 721681 719693 -2172 4163 -0.3% 0.6% Cash purchase from private trader/retailer 773874 808230 913682 945837 139808 137607 18.1% 17.0% Loan purchase from out-grower scheme or others 40635 29133 69444 56679 28809 27546 70.9% 94.6% Purchase from cooperative or farmer association 32790 33632 59030 58205 26240 24573 80.0% 73.1% Source: CFS 2013/14

Rainfall Pattern Generally, the soil moisture was sufficient over most parts of Zambia and a substantial improvement was observed over the eastern parts of the country by first dekad of January. The water requirement satisfaction index (WRSI) which is a crop performance indicator of the degree to which a maize crop has been satisfied indicated very good yield prospects for the 2013/14 season. Source: MET

Soil Water Index for Maize in 2013/14 Source: MET

Contextual analysis supported by econometric modelling VARIABLES Log production se Female -1.674*** 0.433 Education 0.109*** 0.040 Log(adults) 0.178 0.133 Log(hectares) 1.210*** 0.222 Log(fert.kg: FISP) 0.037 0.068 Log(fert.kg: other) 0.092*** 0.021 Log(maize price @ t-1) 1.467*** 0.284 Rainfall 0.002 Rainfall2 -0.000* 0.000 Rainfall CV -0.692* 0.367 Observations 147 Number of dist 74   Household controls Inputs Prices Rainfall Dep. variable is the log of the district average of HH production/yield

Contextual analysis supported by econometric modelling  

Implications of the bumper harvest Regional surplus South Africa recorded a record white maize surplus of 1.8 million tons Malawi projected to have 3.9 million tons Tanzania, and Mozambique are anticipating adequate to surplus harvests Zimbabwe and Congo remain structurally deficit, but this deficit is shrinking. Zimbabwe reports nearly adequate supplies though likely due to conversion of other cereals to maize equivalents Implications: Zambian maize prices likely to trade at export parity. Given export opportunities and transactions costs SAFEX prices likely to set Zambia export parity

Anticipated Maize Prices Mean SAFEX white maize contracts September 2014 $185.20/mt December 2014 $190.85/mt March 2015 $211.05/mt Lusaka export parity prices (assuming 7 kwacha to the dollar) September 2014 66.57 per 50 kg bag December 2014 68.54 per 50 kg bag March 2015 75.61 per 50 kg bag

Anticipated Maize Prices Mean SAFEX white maize contracts September 2014 $185.20/mt December 2014 $190.85/mt March 2015 $211.05/mt Lusaka export parity prices (assuming 5 kwacha to the dollar) September 2014 47.55 per 50 kg bag December 2014 48.96 per 50 kg bag March 2015 54.01 per 50 kg bag

Conclusions Zambia’s 2013/14 CFS provides an accurate assessment of the nation’s crop production figures

Conclusion The bumper harvest was enabled by a combination of factors: Increased predictability about government’s intentions in the maize market Encouraged private sector investment in maize procurement and input credit, and drew commercial farmers back into maize production Higher spot market prices and emergent credit systems helped farmers intensify production through increased fertilizer use Good rainfall helped farmers reap higher yields from their investments in inputs.

Conclusion FISP fertilizer does not appear to have contributed to the production increase, possibly due to late delivery. Lower prices for cotton and soya also drew more land into maize production.

Recommendations The private sector and Zambian smallholders show an incredible ability to respond to positive policy developments. To build on this GZR must: Immediately announce FRA’s intention to only purchase the current shortfall between its carry over from last year and what is needed for the nation's strategic reserve requirements (~400,000 tons) Announce the FRA purchase price and intended areas of activity. These should be in remote rural markets Announce the price at which FRA maize will be sold to the market. If private sector prices remain below this level FRA maize should be directed at needy populations Maize exports will have no restrictions for the entirety of the 2014/15 marketing season

Thank you

Maize production trends Source: CFS various years

Crop Expected Production 2012/2013 2013/2014 % change Maize 2,532,800 3,350,671 32.29 Maize (for seed) 35,190 28,968 (17.68) Sorghum 14,971 11,557 (22.80) Rice 44,747 49,640 10.93 Millet 23,942 30,504 27.41 Sunflower 33,733 34,264 1.57 Groundnuts 106,792 143,591 34.46 Soya beans 261,063 214,179 (17.96) Cotton 139,583 120,314 (13.80) Irish potatoes 22,038 33,833 53.52 Mixed beans 56,411 61,749 9.46 Bambara nuts 4,842 7,140 47.45 Cowpeas 4,143 5,301 27.96 Sweet potatoes 188,355 150,158 (20.28) Wheat 273,584 201,504 (26.35) Barley 11,524 8,425 (26.89) Popcorn 7,203 4,377 (39.23) Virginia Tobacco 21,195 26,105 23.16 Burley Tobacco 8,704 9,564 9.88

Crop Area planted (ha) 2012/2013 2013/2014 % change Maize 1,312,402 1,419,326 8.15 Maize (for seed) 6,903 5,926 (14.16) Maize (for silage) 1,682 1,759 4.56 Green Maize 293 220 (24.82) Sorghum 23,112 17,335 (25.00) Rice 38,520 40,974 6.37 Millet 33,834 39,535 16.85 Sunflower 66,515 66,616 0.15 Groundnuts 207,249 249,432 20.35 Soya beans 124,858 116,515 (6.68) Cotton 172,160 133,975 (22.18) Irish potatoes 1,757 0.14 Mixed beans 104,177 110,739 6.30 Bambara nuts 5,155 6,765 31.23 Cowpeas 7,873 7,952 1.01 Sweet potatoes 48,454 47,689 (1.58) Wheat 41,810 28,161 (32.65) Barley 1,528 1,130 (26.07) Popcorn 5,562 6,280 12.90 Virginia Tobacco 11,348 15,292 34.75 Burley Tobacco 7,091 7,297 2.90

Crop Yield (MT/ha) 2012/2013 2013/2014 % change Maize 1.93 2.36 22.32 Maize (for seed) 5.10 4.89 (4.15) Sorghum 0.65 0.67 2.57 Rice 1.16 1.21 4.44 Millet 0.71 0.77 8.67 Sunflower 0.51 0.85 Groundnuts 0.52 0.58 10.71 Soyabeans 2.09 1.84 (12.05) Cotton 0.81 0.90 10.87 Irish potatoes 12.54 19.23 53.35 Mixed beans 0.54 0.56 3.26 Bambara nuts 0.94 1.06 12.27 Cowpeas 0.53 25.78 Sweet potatoes 3.89 3.15 (19.06) Wheat 6.54 7.16 9.41 Barley 7.54 7.46 (1.09) Popcorn 1.30 0.70 (46.38) Virginia Tobacco 1.87 1.71 (8.71)

Crop Expected Sales 2012/2013 2013/2014 % change Maize 1,336,141 1,912,533 43.14 Maize (for seed) 29,671 28,124 (5.22) Sorghum 4,000 2,384 (40.41) Rice 21,432 29,751 38.82 Millet 6,959 11,020 58.36 Sunflower 659 2,026 207.46 Groundnuts 44,661 64,773 45.03 Soya beans 244,882 194,833 (20.44) Irish potatoes 20,983 32,749 56.07 Mixed beans 29,733 34,871 17.28 Bambara nuts 1,245 2,340 87.94 Cowpeas 1,176 1,687 43.46 Sweet potatoes 85,473 83,381 (2.45) Wheat 267,317 195,004 (27.05) Barley 11,524 8,425 (26.89) Popcorn 5,475 4,420 (19.28)