MEASURES TO IMPROVE WHEAT SECTOR

Lutangu Makweti*, Tembo Michael, Sydney Mututa, Kelvin Simpasa

Research & Production Department, Seed Co Zambia Ltd, Farm 683/RE, Mumbwa Road, Box 35310, Lusaka, Zambia.

makwetij@gmail.com

MAJOR CONSTRAINTS OF WHEAT PRODUCTION IN AFRICA - A CASE STUDY OF ZAMBIA

INTRODUCTION Agriculture remains the priority sector in achieving sustainable economic growth and reducing poverty in

Zambia. The growth of this sector is important for the attainment of the long-term vision for Zambia which is

to become “a prosperous middle income nation by 2030”. Wheat is an important emerging cereal crop in

Zambia where production and yields have steadily increased over the past 10 years. Wheat production is

concentrated in the four provinces namely Central, Copperbelt, Lusaka and Southern.

The Central province is the largest producing province with Mkushi contributing the largest production and

has great potential for expansion. Despite its good natural resources and good wheat yields of 6.2t/ha,

Zambia imports about 5,000 tonnes. Of the 5.88 million hectares of agricultural land, wheat cultivation

takes up only about 0.0064%. According to the 2010/2011 crop survey done by the Central Statistics

Office in conjunction with the Ministry of Agriculture and Cooperatives ; wheat production reached 237,336

tonnes and the estimated national consumption was of 221,020 tonnes . Despite these achievements , the

subsector is still characterised by a high cost structure arising from high production input costs such as

fertiliser (33-40% of variable costs), irrigation (7-23% of variable costs), finance (6-13% of variable costs),

fuels and oils (5-7% of variable costs) , seed (3-11% of variable costs) and transportation (7-8% of

variable costs).

PURPOSE OF THE STUDY The objective of the study was to assess the wheat production levels and trends in Zambia and also provide

an in depth analysis of the key issues and challenges faced by the wheat sector with a view to assist in the

formulation of favourable sector policies and strategies to promote long term growth of the sector.

METHODS & MATERIALS

RESULTS

1. Cost of Production: Wheat yields in Zambia are relatively high but the cost of production is high com-

pared to other regions, making it difficult to sale and compete on a regional level. On average, it costs

about U$ 1,800 /ha to cultivate wheat.

2. Suitable Varieties - Lack of high yielding disease resistant wheat varieties for rainfed areas.

3. Prices Variations - Due to high cost of production, local market prices are higher than those at the inter-

national market

4. Infrastructure - Lack of proper road network within the farming areas (Farmers have to maintain most of

the roads), lack of well distributed grain storage sheds & Dams. Currently farmers receive discounted pro-

ducer prices because they are distantly located from markets and the buyers are limited by the poor infra-

structure.

5. Finance - The interest rates on agriculture loans are very high. Range of 10-12% for a US$ loan and

about 14% for a Zambian Kwacha loan. These have a maximum repayment of 5 to 7 years.

6. Socio-economic considerations and government policies -

Government in 2012 announced the re introduction of grain levie which is likely to push the cost of pro-

duction upwards. High Value Added Tax on products is another example.

The Food Reserve Agency (FRA), which is state owned and responsible for ensuring food security in the

nation only buys maize from farmers and not wheat.

Commercial farmers do not benefit from subsidies.

Increase in minimum wage for workers, by more than 50% , increased the cost of production

The Value Added Tax (VAT) of 16 % is very high and farmers are not exempted. Only farmers buying

equipment between 50 to 100 horse power (Hp) are exempted from paying VAT. Equipment above

100hp is taxed .

Non availability of well structured Agriculture training schemes where farmers can be trained on how to

grow different crops like wheat. Many small scale farmers think wheat production is not for them.

There has been insufficient funds allocated by the government toward wheat research.

Wheat is considered as a minor crop despite high imports

CHALLENGES IN WHEAT PRODUCTION

IMPLICATIONS OF THE STUDY

Study Design Non-experimental design Qualitative & Quantitative Methods

Sampling Methods Purposive Sampling: 20 Commercial farmers, 5 from each of the producing

provinces

Method of Data Collection Questionnaires Policy Review and Observation

Research Instruments Structured questionnaires Interview schedules

Analysis Methods Quantitative: MS Excel

Quantitative: Thematic Analysis - Classification

0

500

1000

1500

2000

2500

Variable Cost per Ha in

(US$) by Level of Management Low Level

Variable Cost per Ha in

(US$) by Level of Management Medium Level

Variable Cost per Ha in

(US$) by Level of Management High Level

Table 1: Summary of Research Methodology

To achieve the production targets, the agriculture stakeholders propose

the following measures:

TAXATION MEASURES

I. Zero rate wheat, wheat flour and bread - Most imported wheat and wheat products are subsidized

which makes the locally produced wheat uncompetitive.

The VAT zero-rating of wheat, flour and bread will result in a decline in the price of these products and

stimulate demand especially among the majority of the population falling in the low income groups and

would lead to increased local production.

II. Zero rate simple agriculture equipment - To ensure access to inputs and equipment at a reduced cost

all the inputs and equipment should be at VAT zero rated including import taxes.

Zero rating items like sprayers, harvesters, other machinery intended for cleaning, shelling, sorting, or grad-

ing seed or grain would have an immediate positive impact on the production costs and on the final con-

sumer price of wheat.

INVESTMENT IN INFRASTRUCTURE

I. Road Network-Government should give priority to rehabilitation of roads in existing farming areas.

The road levy which is imposed on diesel, which is widely used on farms, should be directed towards feeder

roads so that farmers become linked to markets. This measure alone would have a significant impact on im-

proving producer prices paid to farmers by private buyers. .

II. Rehabilitation of the railway network– reduce transport costs and ease pressure on trunk road usage

which would increase the lifetime of the road network.

This action would improving the competitiveness of exports by reducing transport costs

Movement of agricultural products from surplus producing regions to deficit areas or into export markets

could be handled more efficiently and ease agriculture marketing than at the current situation.

III. Grain storage facilities-Expenditure on rehabilitation of storage facilities and investment in new storage

sheds should be on the priority list.

Cut down on losses and encourage farmers to defer some of the sale transactions.

Public Private Partnership (PPP) infrastructure development for marketing and storage should also be en-

couraged so that storage infrastructure is put in place at a reduced cost.

IV. Research and Extension- Improving farmers’ access to new production technologies

Raise awareness on new release of high yielding wheat varieties resistant to major diseases

(leaf rust, Helminthosporium spp., Fusarium spp., and Alternaria triticina)

Allocate funding to research and development in the agriculture sector as this will play a significant role in

the diversification process.

V. Financing: credits/loans– Bank of Zambia (Government managed bank) should consider reducing

its operational cost .

Borrowing rates and banking costs must be lowered. this will consequently result in reduced commercial

banking lending rates.

VI. Re Capitalization of Nitrogen Chemicals of Zambia Fertilizer plant- This used to be the source of af

fordable fertilizer to Zambian farmers. but now, the plant cannot produce because of limited finances

needed to buy the raw materials and pay the workers.

Identification of the major challenge that ranked highest among the interviewed farmers which was the cost

of production and the competitiveness of the crop on the international market.

Access to markets, non availability of high yielding disease resistant varieties that can be grown under

rainfed conditions.

Inconsistent government policies contributed in affecting the wheat sector. These policies include low budget

allocations to research especially wheat research and VAT, import and export taxes.

Recommended measure to improve wheat sector if implemented will effectively contribute to

Reduced costs of production and this will encourage more farmers especially small scale farmers to take

up wheat farming.

Enhanced breeding of wheat varieties for rainfed areas that are high yielding and disease resistant.

Farmers will be encouraged to grow wheat during rainy season, (no need for irrigation) reduced cost.

Supporting Zambian government strategy to encourage crop diversification as a way of ensuring that

the agriculture sector is not dependent on maize only but on other crops such as wheat.

Proposed further studies on the small scale farmers’ scale than commercial farmers to determine their

interest in growing other crops like wheat.

Policy formulation that encourage farmers in the wheat sector.

ACKNOWLEDGEMENTS I would like to thank Sydney Mututa, Kelvin Simpasa and Michael Tembo who helped in the data collection and organising farmer interviews. Special thanks go to SeedCo management for the use of company resources to conduct this research. I am thankful to the Head of Research, Herbert Masole who was very helpful and encouraged me to write this paper. Others include Dr Amor Yahyaoui, Dr Ana Pontaroli, Dr Tom Payne, Elastus Mambwe, Jr. and Juunza Lwi-indi who helped in editing my abstract and poster. Glory to God for the great things He has done in my life. A very special thank you to Mayamiko Banda, my family and friends for all the support.

REFERENCES A.R Klatt (1987), Wheat Production Constraints in the Tropical Environments-A Proceedings of the International Conference January 19-23,

1987 Chiang Mai. Thailand.

Wheat Value Chain Final Report (2011), Meas Consultancy and training service Ltd, Commissioned by Agriculture Consultative forum., Lu-

saka Zambia.

Zambian National Farmers Union (ZNFU) http//:www.znfu.org

OBJECTIVES OF THE STUDY Identify major challenges in wheat production

Contribute to the formulation of favourable policies and strategies that will help promote long term growth

of the wheat sector

Contribute to the adoption of new technologies toward the enhancement of wheat production in Zambia

and the region