Ditch maize subsidies, IMF urges ZambiaBy XINHUA | Monday, July 30  2012 at  16:01

The International Monetary Fund (IMF) has advised the Zambian government to consider doing away with subsidies on maize, saying the huge subsidies were becoming too costly, the Post of Zambia reported on Monday.

In its country report for Zambia released last week, the Breton Wood Institution stated that the combined cost of subsidising maize growing and marketing grew from 1.2 per cent of Gross Domestic Product (GDP) in 2009 to 2.7 per cent last year.

According to the IMF report, Zambia's fertiliser support programme for the maize sector -- a government programme which provides small-scale farmers with farming inputs at a subsidized rate -- and its marketing system had become too costly and hampered diversification in the agricultural sector.

The IMF has stated that with more than 70 per cent of Zambia's employed population in the agriculture sector, agriculture development was critical for achieving inclusive growth and poverty reduction.

The organisation has since urged the Zambian government to formulate a broad-based reform strategy for the agriculture sector in order to reduce fiscal costs in the sector and remove government's involvement in maize marketing.

But the Zambian government has said it will continue to subsidise maize -- the country's staple crop -- and marketing to ensure the country's food security and to make a dent on high poverty levels, according to the Post.

"From the agriculture perspective, the subsidies which are done through the farmer input support programme have helped to bring stability to our staple food. The poverty levels in the rural areas at about 77 per cent are high and if the government doesn't subsidise agriculture it will abandon those 77 per cent," Agriculture Minister Emmanuel Chenda was quoted as saying by the paper.

According to him, it was a global trend for governments to subsidise agriculture sectors with other emerging and developed countries even subsidising cash crops like cotton and maintained that the government had no intention of abandoning subsidising maize production.