2012 Agricultural Sector Budget Analysis

8/3/2019 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)

4


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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

6


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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

10


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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

13

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

19

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

30

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

0

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

Documents

2012 Agricultural Sector Budget Analysis