Download - 2012 Agricultural Sector Budget Analysis
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2012 Zambian Agriculture Sector
Budget Analysis
Presented by Auckland Kuteya and Christopher KamboleACF/IAPRI Budget Breakfast Meeting
Pamodzi Hotel, LusakaNovember 30, 2011
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Outline of Presentation
PF Manifesto and Agriculture
Overview of Zambias Ag. Sector
Zambia Ag. Development Goals Ag Sector Challenges in Zambia
2012 Ag Budget Analysis
Recommendations
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What is in PF Manifesto for the Ag.
Sector ?
Crop diversificationextend government support tocrops beyond maize
Depoliticize FISP by involving traditional authorities
Review FRA Act to rationalize its operations andpromote private sector participation
Introduce legislation to ensure security of land tenure in
customary areas Strengthen Ag. research through decentralization
Develop and rehabilitate infrastructure
-livestock, irrigation facilities, feeder roads
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Overview of Zambias Ag. Sector
Rapid population growth
- Population 13 million (64% rural) in 2010
Stubbornly high rural poverty rate: 80% High food and income inequality in urban areas
Rapid urbanization & increasing demand for food
Stagnant agricultural productivity (yields)
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Why invest in Agriculture?
Agriculture is a powerful poverty fighterNo country has ever achieved mass poverty
reduction without a prior substantial boost in broadbased agricultural productivity (Timmer, 2005)
Latin American experience shows that it is possibleto achieve agricultural productivity growth on largefarms without having much impact on poverty rates.
Need to raise broad based productivity ofsmallholder farmers in order to fight poverty.
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Agricultural growth and poverty
reduction in Zambia
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Agricultural growth and poverty
reduction in China
0
50
100
150
200
250
300
350
400
450
1980
1985
1990
1995
Agriculturalproduction
index
0
5
10
15
20
25
30
Percentin
pov
erty
Agricultural production
Rural poverty
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Drivers of Agricultural Growth
(NEPAD/CAADP)
i. Research, technology and extension for both cropsand animals
ii. Soil fertility management
iii. Animal disease control & animal nutritionimprovements
iv. Irrigation to reduce uncertainty & raise inputresponse
v. Reliable & competitive Marketsvi. Strategic infrastructure development
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Zambia Ag. Development Goals:
SNDP/CAADP/MDG
i. Reduce poverty through broad-based incomegrowth for those in Ag sector
ii. Attain 90% household food security and cut hunger
by 50% by 2015iii. Increase Ag Sector Growth from 1% to 7-10% per
annum
iv. Increase Ag contribution to GDP from 18-20% to
25%
v. Increase Ag. contribution to foreign currencyearning from 3-5% to 10-20%
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Ag Sector Challenges in Zambia
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Agricultural Sector Challenges
Stubbornly high rural poverty rate: 80%
Many smallholder households are land constrained (aparadox in a land abundant country)
Nearly 50% of rural farm HHs are net buyers of maize
Highly concentrated patterns of maize surplusgeneration
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Agricultural Sector Challenges
Stagnant agricultural productivity (yields)
Zambian smallholders highly vulnerable to weathershocks
Under investment in key agricultural drivers
Unpredictable government intervention in maizemarket stifling private sector participation
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2012 Ag Budget Analysis
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PersonalEmoluments
12.6%RDC8.5% Grants
0.7%
PovertyReduction
Programmes50.4%
CapitalExpenditure
5.6%
Ag Show0.4%
Ag DevPrograms
22%
Arrears0.3%
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Real Size of Overall Agricultural Budget20002012
0
300
600
900
1200
1500
1800
2100
2400
2700
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
ZK'Billion
YearMAL - Allocation MAL - Actual (2011-interim )
An Increase of 31% if weignore supplemental fundingto FRA and FISP
A decline of 41.9% if weconsider supplementalfunding of K1,449 Billionmostly to FRA and FISP
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Agricultures Share of Zambian National
Budget 2000- 2012
0
2
4
6
8
10
12
14
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012%
Sh
areoAgriculture
Year
Allocation Actual (2011 - only up to Oct)
0.2% drop if we ignore
supplemental funding to
FRA and FISP in 2011
Includes supplementalfunding of K1,449 Billionmostly to FRA and FISP
CAADP Target
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Overall Agriculture Sector BudgetKey Spending Components
Key Component %
Personnel Emoluments (PEs) 12.60
Recurrent Departmental Charges (RDCs) 8.51
Grants and other payments 0.72
Poverty Reduction Programs (PRPs) 50.36
Capital Expenditure 5.63
Agricultural Development Programs (mostly funded by donors) 21.56
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Overall Ag Budget Comparison Allocatedfunding in 2011 and 2012
2011 Allocation 2012 Allocation
ZK Billion % ZK` Billion %
Personel Emoluments (PE) 183.31 13.36 205.89 12.60
Recurrent Departmental Charges 132.13 9.63 139.01 8.51
Grants and Other Payments 8.03 0.59 11.81 0.72
Poverty Reduction Programso/w FISP
FRA
Other PRP Allocations
664.45485.00150.00
29.45
48.4573.0022.59
4.41
822.94500.00
300.00
22.94
50.3660.76
36.45
2.79
Capital Expenditure 59.64 4.35 91.98 5.63
Agricultural show 5.16 0.38 5.87 0.36
Agricultural Development Programs 186.03 13.56 352.24 21.56
Allocation to other ministries 124.54 9.14 - -
Arrears (Mostly PE related) 8.21 0.6 4.37 0.27
TOTAL 1371.5 100 1,634.11 100.00
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Overall Ag Budget Comparison Allocated/Releasedfunding in 2010 and 2012
2010 Allocation 2010 Released 2012 Allocation
ZKBillion %
ZK`Billion % ZK` Billion %
Personnel Emoluments (PE) 154.59 12.70 173.10 8.22 205.89 12.60
Recurrent Departmental Charges 131.50 10.80 84.36 4.01 139.01 8.51
Grants and Other Payments 5.55 0.46 6.63 0.31 11.81 0.72
Poverty Reduction Programso/w FISP
FRA
Other PRP Allocations
551.47
430.00
100.00
21.47
45.29
79.97
18.13
1.90
1808.751204.09
589.01
15.65
85.9066.57
32.56
0.87
822.94500.00
300.00
22.94
50.3660.76
36.45
2.79
Capital Expenditure 40.92 3.36 27.70 1.32 91.98 5.63
Agricultural show 2.50 0.21 2.86 0.14 5.87 0.36
Agricultural Development Programs 247.00 20.29 2.30 0.11 352.24 21.56
Allocation to other ministries 84.07 6.90 0.00 0.00 - -
Arrears (Mostly PE related) - - 0.00 0.00 4.37 0.27
TOTAL 1217.60 100 2105.70 100.00 1,634.11 100.00
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% Composition of MAL Poverty
Reduction Programmes in 2010
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FISP
78%
FRA
18%
Other
4%
Allocated
FISP
66%
FRA
33%
Other
1%
Released
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What does data say?
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Nation Wide Random SurveysCFS/PHS/SS 99/00 = 364 SEAs
CFS 2006/07 onward = 660 SEAs
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FISP Expenditure & Maize Yields
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FISP fertilizer received per farm
household in 2010/11
22Source: CSO Crop Forecast Survey, 2011
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23Source: CSO/FSRP- Supplemental Survey, 2008
Sellers only,
18.6%
Neither Buy nor
sell, 22.9%Buy and Sell
(net sellers),
8.9%
Buy and sell
(net buyers),
4.1%
Buyers only,
45%
Nearly 50% of rural HHs are net buyers of maize
Smallholder Farmers Maize Market Position
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Ratio of RDCs to Personnel Emoluments
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*
RDCs/PEs
Year
Increase inOperational Funds
from 2010
*Not actual (Allocation)
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0.201.22.2927,971
(61.6%)
Households not
selling maize
1.71.32.03.4499,530
(33.2%)
Rest of maize
sellers
8.68.13.04.378,384
(5.2%)
Top 50% of maize
sales
Gross rev.,crop sales
(million kw)
Gross rev., maizesales
(million kw)
Hafarmed
(ha)
Farmsize (ha)N=
Source: CSO Crop Forecast Survey, 2011 25
Highly concentrated patterns of maizesurplus production
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FRA Expenditure vs. Poverty
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Since smallholder maize sales are so concentrated,Food Reserve Agency (FRA) price-raising policieshave highly regressive effects on income
distribution
Higher maize prices hurt the majority of thepopulation who are net maize buyers and relativelypoor farmers
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Recommendations
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Enactment of the Agricultural Marketing Act
Effectively reform FISP and FRA
Streamline the FRA activities
Flexible FISP programme covering other farminputs (crops and livestock)
Use of E-voucher with private sector procuring and
distributing the inputsLeverage private sector resources
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% of small and medium-scale farm sector,by acres cultivated, 2010/11
39.6
33.1
23.5
3.3 0.50
5
10
15
20
25
30
35
40
45
0-0.99 ha 1-1.99 ha 2-4.99 ha 5-9.99 ha > 10 ha
%o
ffarm
s
Source: CSO Crop Forecast Survey, 2011
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FISP fertilizer received per farm
household in 2010/11
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14.3
30.6
45.1
58.5
52.6
0
10
20
30
40
50
60
70
0-0.99 1-1.99 2-4.99 5-9.99 10-20%
FarmersReceivingFISPFertilizer
Total Area Cultivated in Ha (maize + other crops)
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FISP fertilizer received per farm household, by acrescultivated, 2010/11
24 69
140
310
346
0
50
100
150
200
250
300
350
400
0-0.99 ha 1-1.99 ha 2-4.99 ha 5-9.99 ha > 10 ha
FISP fertilizer received per hh
Kgsreceived
perhh
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Average yields of key commodities compared to global average
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0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
MT/HA
2001/02 2003/04
2005/06 2007/08
2009/10 Global
Source: CFS datasets various years with Global figures obtained from COMESA 32