Rational:
The recent spike in global prices for food commodities has raised a lot of concern about its potential impact on national economies especially those that are agriculturally based like in Zambia. The general consensus is that the increase in commodity prices can be advantageous for food producers while detrimental to consumers.
At a recent ACF stakeholder meeting an analysis of the underlying causes of rising world food prices revealed a host of structural and cyclical factors. On the demand side the increasing world population and their shifting dietary habits, dedication of agricultural land to production of bio-fuels and increased volatility and risks due to speculation have contributed to this development. Factors on the supply side include foremost the rise in input costs due to increased fuel costs, low stock reserves in tandem with export limitations as well as unfavourable weather conditions in some major exporting countries, which in future will even increase due to effects of global climate change. The depreciation of the US dollar against most major currencies has also accentuated the rise in world food prices denominated in dollars. The accumulation of several factors led to the current price spikes, however it is predicted that prices in the short to medium term will remain higher than the 2007 level. In Zambia, however, food prices are not unusually high when examined in inflation-adjusted kwacha, due to the kwacha’s appreciation against the dollar over the past several years. The cost of imported inputs such as fertilizer has risen faster over the past 18 months than the rise in food costs, having potentially adverse effects on the demand for fertilizer. Input costs are closely tied to fossil fuel prices and thus are expected to rise further.
In order to safeguard against future price shocks and ensure food security Zambia needs to enhance the productivity and production stability of its agricultural sector. The main constraints to achieve these goals are:
unpredictable export policies
poor access to markets especially in remote areas
inefficient service delivery systems
poor rural infrastructure network
limited public investments into the sector
poor agronomic practices especially amongst smallholder framers
low capacity for basic and adaptive agricultural research and poor research outreach
limited private investments into the sector
