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Marketing and Trade in Food Staples Presented by Chance Kabhage FSRP ACF Agriculture Policy Dialogue with High Level Government Officials Protea Lodge 14 15 August 2009 The Challenge of FRA Pricing ZKW85 000 9 0 0 0 0 8 0 0 0 0 70 0 0 0 landed cost from South Africa 6 0 0 0 0 50 0 0 0 4 0 0 0 0 FRA purchase price 3 0 0 0 0 2 0 0 0 0 Lusaka wholesale price 10 0 0 0 2000 2001 2002 2003 2004 2005 YEAR 2006 2007 2008 2009 2500 00 2 50 2000 00 2 00 1500 00 1 50 1000 00 1 00 500 00 00 50 500 00 00 Net sellers 28 0 Net buyers with maize production 37 9 Mean cropped area Ha 000 Kwacha 2008 SS Big Picture Empirical Results Characteristics of Small MediumScale Farm Households Maize Production Sales and Assets all Linked Net buyers with Not in market no maize 23 4 production 10 7 Farmer Category Net sales not in 000 Kwacha Value of assets Gross value of maize production Cultivated land area 2008 07 08 Crop Marketing Season Fundamentals of Maize Prices Zambia has a maize surplus Prices will reflect foreign export market prices less marketing costs Export parity price Zimbabwe at Zambian farm gate K40 000 or 160 Zambia has a maize deficit Prices will reflect foreign market prices plus the cost of importing RSA import parity Lusaka 270 Fundamentals of Maize Prices Big difference between import and export parity price levels Reflects transport and other costs Farmers will Benefit from high import parity price levels but Will have to be able to compete at export parity price levels Needed Investments to reduce transport and marketing costs Investments to increase farmer productivity Not solving the problem Maize price subsidies Example How underinvestment in infrastructure causes uncompetitive output prices negatively affecting productivity Fertilizer Price Formation Thailand vs Sub Saharan Africa 2006 X X 49 X 80 High prices caused by poor infrastructure Contribute to low productivity Trigger public market interventions Divert resources away from public investments in



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