Zambia plans to liberalise food exports: minister

18 February 2010, Reuters
URL: http://af.reuters.com/article/topNews/idAFJOE61G08O20100217

Lusaka:  Zambia plans to revise agricultural policy to allow the export of grain surpluses to countries like the Democratic Republic of Congo and Angola, finance minister Situmbeko Musokotwane said on Wednesday.  "The government is becoming flexible to consider the export of food as part of the diversification programme because the Zambian market is small," Musokotwane said on state ZNBC radio.

Musokotwane said Zambia's dependence on copper, which accounted for 90 percent of the southern African country's merchandise exports as of November 2009, had resulted in economic volatility over the last decade.  "This dependence leaves our economy vulnerable to external shocks such as international commodity prices, exchange rates and global trade volumes," he said.

Under Zambia's current agricultural policy, decisions on whether or not to allow food exports are mainly based on whether or not the country achieves a grain surplus or deficit rather than multi-season planning, discouraging new long-term investment in the sector, analysts say.

Musokotwane said large-scale farming investment had fallen in Zambia, Africa's largest copper producer, because the policy environment for agricultural exports was uncertain.  Musokotwane said the DRC and Angola relied heavily on food imports from neighbouring countries but Zambia, which expects a food surplus this season, had not taken full advantage of these markets.

Razia Khan, Standard Chartered Bank's head of research for Africa said earlier this month that Zambia's policy uncertainty was holding back its diversification efforts as export growth remained overly dependent on copper mining.  Khan said in a research paper on Zambia that when exports are prohibited, food surpluses drive down domestic prices, acting as a disincentive to producers to invest in capacity.