SAGNET Board Members at the recent meeting

 

Well-functioning grain value chains, operating with a stable policy environment, are essential for food security and livelihood creation in the greater East & Southern Africa regions. On average, the Southern African Development Community (SADC) produces 29 million tons of maize annually. However, recent adverse weather conditions – including the most severe drought since the 90’s – affected many of the maize producing countries in SADC, resulting in the need for imports from both regional and international sources. In 2016, there was approximately a 7 million MT maize deficit in SADC with the exception of Zambia which had a 600,000MT surplus. As a result of demand, there was an increased amount of maize flowing out of Zambia towards the borders of Zimbabwe, Democratic Republic of Congo (DRC) and Malawi in particular. At one point, there was an estimated 1,000MT moving to Malawi per week. The demand in turn drove up prices, with traders buying maize at between US$200 and US$280 per MT. The Food Reserve Agency (FRA), which has historically been the main purchaser of maize, was buying maize at around US$170 per MT. Concerns grew that this demand would result in price hikes and food shortages for Zambians as the FRA was struggling to buy maize from farmers, and this resulted in a ban on exports until April this year.

 

Such reactive policies are aimed at strengthening food security and mitigating prices for consumers. However, non-tariff barriers like import and export restrictions, market interventions like subsidies, ambiguity over the scale of the government’s role in food markets, as well as lack of engagement with the private sector in policy development come together to represent significant risks for private sector investors. This inhibits the growth of the agricultural sector and prevents diversification, negatively affecting food security and development.

 

The unstable operating environment has historically limited capital injection into grain value chains, depriving smallholders of services and market incentives. The SADC region has a great food production potential with the capacity to feed itself. To achieve this, there is a need for governments to work closely with private sector actors and farmer representatives to address the barriers to trade, which have a ripple effect on smallholder production.

 

With the support of FoodTrade East and Southern Africa and in partnership with agricultural players within SADC, the Southern African Grain Network (SAGNET) has been established. SAGNET has put in place the necessary infrastructure to support regional governments to work effectively with the private sector in grain trade and policy. The institution has carried out a review on the impact of trade restrictions, and will work with technical experts to propose appropriate food trade policy options that guarantee food security, economic growth and enhance trade. This will promote a structured market system that meets the need of smallholder farmers, the private sector and consumers. Agricultural outputs can be greatly increased by unlocking policy bottlenecks.

 

With the production of maize and other grains such as wheat in 2017/2018 anticipated at an above-average level in Zambia (mostly due to the ban, which bolstered domestic stock), Malawi and Zimbabwe, increased export opportunities can be expected. It is therefore essential that enabling regulations are put in place to protect national interests and ensure smallholder farmers as well as private sector players benefit.

 

SAGNET will work governments and development partners to promote legislation that will encourage investment in the sector. Food security can be enhanced by harmonising agricultural trade policies and building the capacity of farmer organisations to trade to the larger market.