• TABLE OF CONTENTS
HIDE
 Front Cover
 Title Page
 Table of Contents
 List of tables and figures
 Foreword
 Acknowledgement
 List of contributors
 Introduction
 Part 1: The physical, institutional,...
 Part 2: The determinants and effects...
 Part 3: Determinants of other factors...
 Part 4: Conclusions
 Reference
 Back Cover
 Reprint permission notice














Group Title: Adopting improved farm technology : a study of smallholder farmers in Eastern Province, Zambia
Title: Adopting improved farm technology
CITATION THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00085344/00001
 Material Information
Title: Adopting improved farm technology a study of smallholder farmers in Eastern Province, Zambia
Physical Description: xxvi, 409 p. : ill., map ; 23 cm.
Language: English
Creator: Celis, Rafael
Milimo, J. T
Wanmali, Sudhir
University of Zambia -- Rural Development Studies Bureau
Zambia -- National Food and Nutrition Commission
International Food Policy Research Institute
Publisher: International Food Policy research Institute
Place of Publication: Washington D.C
Publication Date: 1991
 Subjects
Subject: Agricultural innovations -- Zambia -- Eastern Province   ( lcsh )
Farms, Small -- Zambia -- Eastern Province   ( lcsh )
Genre: international intergovernmental publication   ( marcgt )
bibliography   ( marcgt )
non-fiction   ( marcgt )
Spatial Coverage: Zambia
 Notes
Bibliography: Includes bibliographical references.
Statement of Responsibility: edited by Rafael Celis, John T. Milimo, Sudhir Wanmali.
General Note: "Rural Development Studies Bureau (University of Zambia); National Food and Nutrition Commission; Eastern Province Agriculutral Development Project (Government of the Republic of Zambia); International Food Policy Research Institute (IFPRI)."
 Record Information
Bibliographic ID: UF00085344
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 25734692
isbn - 089629319X

Table of Contents
    Front Cover
        Front Cover
    Title Page
        Page i
        Page ii
        Page iii
        Page iv
    Table of Contents
        Page v
        Page vi
        Page vii
    List of tables and figures
        Page viii
        Page ix
        Page x
        Page xi
        Page xii
        Page xiii
        Page xiv
        Page xv
        Page xvi
        Page xvii
        Page xviii
        Page xix
        Page xx
    Foreword
        Page xxi
    Acknowledgement
        Page xxii
        Page xxiii
    List of contributors
        Page xxiv
        Page xxv
        Page xxvi
    Introduction
        Page 1
        Page 2
        Page 3
        Page 4
    Part 1: The physical, institutional, and policy environment
        Page 5
        Page 6
        The Eastern province of Zambia
            Page 7
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        Agricultural policies in Zambia, 1975-85
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        Policy constraints on the development of agriculture and small-scale enterprises in rural Zambia
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        Credit policies and agricultural credit in Eastern Province
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        Land tenure and agricultural development in Eastern Province
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        The institutional setting in Eastern Province
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        Distribution of businesses and service institutions in Eastern Province
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    Part 2: The determinants and effects of technology adoption
        Page 171
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        The use of improved agricultural technology in Eastern Province
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        Input use and productivity
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        The effects of adopting technology on the household use of labor
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        The effects of technological changes on food consumption and nutritional status in Eastern Province
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        Household expenditure behavior and household revenue determinants
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    Part 3: Determinants of other factors influencing technology adoption
        Page 309
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        Determinants of service use among rural households in Eastern Province
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        Improving agricultural extension to small farms
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    Part 4: Conclusions
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        Conclusions and policy recommendations
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    Reference
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    Back Cover
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    Reprint permission notice
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Full Text





ADOPTING IMPROVED FARM TECHNOLOGY:
A STUDY OF SMALLHOLDER FARMERS
IN EASTERN PROVINCE, ZAMBIA






PfER E. IHLDEBRAND


ADOPTING IMPROVED FARM TECHNOLOGY:
A STUDY OF SMALLHOLDER FARMERS
IN EASTERN PROVINCE, ZAMBIA

Edited by Rafael Celis, John T. Milimo,
and Sudhir Wanmali






















Rural Development Studies Bureau
(University of Zambia),
National Food and Nutrition Commission,
Eastern Province Agricultural Development Project
(Government of the Republic of Zambia),
International Food Policy Research Institute (IFPRI)

Washington, D.C.
1991
















































Published in 1991 by the

International Food Policy Research Institute
1776 Massachusetts Avenue, N.W.
Washington, D.C. 20036
U.S.A.


ISBN 0-89629-319-X











Contents



Foreword xxi

Just Faaland


Acknowledgments xxii

Rafael Celis, John T. Milimo, and Sudhir Wanmali


List of Contributors xxiv


1. Introduction 1

Rafael Celis and John T. Milimo


Part I. The Physical, Institutional, and Policy Environment

2. The Eastern Province of Zambia 7

John T. Milimo

3. Agricultural Policies in Zambia, 1975-85 21

Katongo Katongo

4. Policy Constraints on the Development of Agriculture
and Small-Scale Enterprises in Rural Zambia 62

Lundondo Mumeka








5. Credit Policies and Agricultural Credit in Eastern Province 93

Moses Banda

6. Land Tenure and Agricultural Development in
Eastern Province 129

John T. Milimo

7. The Institutional Setting in Eastern Province 138

Emmanuel C. W. Shula

8. Distribution of Businesses and Service Institutions
in Eastern Province 158

Sudhir Wanmali



Part H. The Determinants and Effects of Technology Adoption

9. The Use of Improved Agricultural Technology in
Eastern Province 173

Dayanatha Jha, Behjat Hojjati, and Stephen Vosti

10. Input Use and Productivity 202

Dayanatha Jha

11. The Effects of Adopting Technology on the Household
Use of Labor 213

Rafael Celis and Cindy Holleman










12. The Effects of Technological Change on Food
Consumption and Nutritional Status in Eastern Province 248

Catherine Siandwazi, Saroj Bhattarai,
and Shubh K. Kumar

13. Household Expenditure Behavior and Household
Revenue Determinants 268

Rafael Celis and Neal Bliven



Part III. Determinants of Other Factors Influencing Technology
Adoption

14. Determinants of Service Use Among Rural Households
in Eastern Province 311

Sudhir Wanmali and Jane He

15. Improving Agricultural Extension to Small Farms 348

Neal Bliven



Part IV. Conclusions

16. Conclusions and Policy Recommendations 389

Rafael Celis, John T. Milimo, and Sudhir Wanmali


References 397











Tables and Figures



Tables


Table 2.1 Population of towns in Eastern Province,
Zambia, by gender, 1980 9
Table 2.2 Area, population, and population density of
districts in Eastern Province, Zambia,
by gender, 1980 10
Table 2.3 Educational status in Eastern Province and
Zambia, 1980 12
Table 2.4 Educational status of heads of household in
Eastern Province and Zambia, by gender, 1980 12
Table 2.5 Percentage of persons with access to safe
drinking water in Eastern Province, Zambia,
by district 13
Table 2.6 Employment status in Eastern Province,
Zambia, by gender, 1980 14
Table 2.7 Major occupation of the working labor force
in Eastern Province and Zambia, 1980 15
Table 2.8 Marketed production of major crops in Eastern
Province, Zambia, 1978-86 16
Table 2.9 Share of Eastern Province in Zambia's
marketed production, 1980-88 17
Table 2.10 Reserves and location of mining in Eastern
Province, Zambia 18

Table 3.1 Economic indicators in Zambia, by sector,
1975-85 22
Table 3.2 Annual rates of growth of physical output, area,
and yield in Zambia, selected periods, 1975-85 24
Table 3.3 Proportion of total crop area devoted to
selected crops in Zambia, by province, 1975-85 27









Table 3.4 Guaranteed producer price index for selected
import-substitute and export crops, Zambia,
1975-86 35
Table 3.5 Nominal protection coefficient of government
producer prices and border prices in Zambia,
by crop, 1975-85 36
Table 3.6 Budgetary expenses in nominal terms, Zambia,
1979-86 40
Table 3.7 Budgetary expenses in real terms, Zambia,
1979-86 41
Table 3.8 Loans disbursed for short-term production and
long-term development in Zambia, by end use,
1980-85 44
Table 3.9 Number of farm units in Zambia, by type of
farm and province, 1980 45
Table 3.10 Disbursement of loans to farmers in Zambia,
by province, 1979-84 46
Table 3.11 Commercial bank advances and implicit credit
subsidies transferred to the agricultural sector
of Zambia, 1980-85 47
Table 3.12 Nominal and effective exchange rates, implicit
export tax and tariff rates, and overall trade
bias in Zambia, 1975-85 50
Table 3.13 Budget allocations to programs in the
agricultural sector, Zambia, 1981-86 54
Table 3.14 Financial operations of the central government
of Zambia, 1980-87 56
Table 3.15 Expenditures in nominal terms and ratio of
personnel emoluments to recurrent departmental
charges and of recurrent to capital expenditures,
Zambia, 1979-86 58
Table 3.16 Expenditures in real terms and ratio of
personnel emoluments to recurrent departmental
charges and of recurrent to capital expenses,
Zambia, 1979-86 59

Table 4.1 Contribution of the agricultural sector to
the gross domestic product, Zambia, 1972-86 74
Table 4.2 Employment in the agricultural sector and the
formal sector, Zambia, 1974-86 75









Table 4.3 Producer price of maize, Zambia, 1971-86 76
Table 4.4 Area cultivated with maize, Zambia, 1974-86 77
Table 4.5 Marketed production of maize in Zambia, by
province, 1970-83 78
Table 4.6 Storage facilities of the National Agricultural
Marketing Board, Zambia, by type of shed
and province, December 1986 85

Table 5.1 Commercial banks in Zambia, by founding
date and geographic distribution, 1988 95
Table 5.2 Sectoral financial institutions in Zambia,
by sector 96
Table 5.3 Commercial bank loans to the agricultural
sector of Zambia, 1961-85 97
Table 5.4 Nonbank financial institutions funding rural
and agricultural development in Zambia, by
date established and abolished, 1967-87 100
Table 5.5 Number and amount of agricultural loans
requested and approved in Zambia, 1979-84 104
Table 5.6 Number and amount of agricultural loans
requested and approved in Eastern Province,
Zambia, 1979-84 105
Table 5.7 Amount of agricultural loans approved in
Zambia, by type of term, 1979-84 107
Table 5.8 Number of agricultural loans approved in
Zambia, by type of term, 1979-84 108
Table 5.9 Number of agricultural loans approved in
Zambia, by end use, 1979-84 109
Table 5.10 Amount of agricultural loans approved in
Eastern Province, Zambia, by type of term,
1979-84 110
Table 5.11 Number of agricultural loans approved in
Eastern Province, Zambia, by type of term,
1979-84 111
Table 5.12 Number of agricultural loans approved in
Eastern Province, Zambia, by end use,
1979-84 112
Table 5.13 Geographic location of farmers receiving
agricultural credit in Eastern Province,
Zambia, by bank, 1988 113









Table 5.14 Participation and recovery of funds in the
Cooperative Credit Scheme in Eastern
Province, Zambia, 1975-86 115
Table 5.15 Participation in and funds disbursed by the
Cotton Credit Scheme in Eastern Province,
Zambia, 1985-88 117
Table 5.16 Participation in and funds disbursed by the
Soybeans Credit Scheme in Eastern Province,
Zambia, 1985-88 118
Table 5.17 Funds disbursed and recovered by the Cotton
Credit Scheme in Eastern Province, Zambia,
1985-87 119
Table 5.18 Funds disbursed and recovered by the
Soybeans Credit Scheme in Eastern Province,
Zambia, 1985-87 120
Table 5.19 Funds disbursed and recovered by the
Agricultural Finance Company in Eastern
Province, Zambia, 1970-81 122

Table 6.1 Patterns of acquiring the first four plots of
land, Eastern Province, Zambia, 1989 131
Table 6.2 Original owner of plots bought or inherited,
Eastern Province, Zambia, 1989 131
Table 6.3 Ethnic groups in Eastern Province, Zambia,
by descent system 132

Table 7.1 Allocation of public responsibilities in
Zambia, by institution 140
Table 7.2 Source of funding for selected projects in
Eastern Province, Zambia 144

Table 8.1 Structure of services in Eastern Province,
Zambia 159
Table 8.2 Number of establishments and persons
employed in businesses and service institutions
in Eastern Province, Zambia, by district 162
Table 8.3 Density of employment in businesses and
service institutions in Eastern Province,
Zambia, by district 163










Table 8.4 Time period in which businesses and service
institutions were established in Eastern
Province, Zambia, 1961-86 165
Table 8.5 Number of persons employed by businesses
and service institutions in Eastern Province,
Zambia, 1961-86 166
Table 8.6 Proportion of stocks picked up by shopkeepers
or delivered by suppliers in Eastern Province,
Zambia, by district 167
Table 8.7 Source of goods supplied to businesses in
Eastern Province, Zambia 168
Table 8.8 Major source of goods supplied to businesses
in Eastern Province, Zambia, by district 170

Table 9.1 Characteristics of agroecological zones in
Eastern Province, Zambia 175
Table 9.2 Proportion of farmers adopting improved
practices in Eastern Province, Zambia,
by region and zone 177
Table 9.3 Fertilizer use in the plateau region of
Eastern Province, Zambia, by zone 178
Table 9.4 Rates of application of fertilizers in
Eastern Province, Zambia, by zone 180
Table 9.5 Mean yield of hybrid and local maize in the
plateau region of Eastern Province, Zambia,
1982-87 182
Table 9.6 Area planted with maize in the plateau region
of Eastern Province, Zambia, by zone 182
Table 9.7 Use and ownership of oxen in the plateau
region of Eastern Province, Zambia, by zone 184
Table 9.8 Size of farms and adoption of technology in
the plateau zone of Eastern Province, Zambia 186
Table 9.9 Simultaneity of adoption: Contingency table 188
Table 9.10 Variables included in the analysis of the
determinants of adoption 190
Table 9.11 Probit maximum likelihood estimates of
instrumental variables 191
Table 9.12 Probit maximum likelihood estimates of the
adoption of fertilizer, hybrid maize,
cultivation with oxen, and new crops 192










Table 9.13 Significant variables determining the adoption
of technology in Eastern Province, Zambia 194

Table 10.1 Average enterprise budgets for local maize,
hybrid maize, and groundnuts in Eastern
Province, Zambia 203
Table 10.2 Average budget and returns to land and labor
of enterprises in Eastern Province, Zambia 205
Table 10.3 Marginal productivity of labor, oxen, and
fertilizer in Eastern Province, Zambia 209

Table 11.1 Average area cultivated and per capital labor
of households in Eastern Province, Zambia,
by technology package used 216
Table 11.2 Cultivation method and cropping technology
adopted in Eastern Province, Zambia, by
family composition 218
Table 11.3 Average annual hours worked per household
by family laborers in Eastern Province, Zambia,
by technology package adopted and activity 219
Table 11.4 Average annual hours worked per capital by
family laborers in Eastern Province, Zambia,
by technology package adopted and activity 221
Table 11.5 Average annual hours worked per capital by
hired and exchange laborers in Eastern
Province, Zambia, by technology package
adopted and activity 223
Table 11.6 Allocation of activities to household and other
laborers in Eastern Province, Zambia, by
technology package adopted 225
Table 11.7 Allocation of household and other labor to
activities in Eastern Province, Zambia, by
technology package adopted 228
Table 11.8 Determinants of hours that males work per
capital in households of Eastern Province,
Zambia, by technology package adopted and
activity 237










Table 11.9 Determinants of hours that females work per
capital in households of Eastern Province,
Zambia, by technology package adopted and
activity 239
Table 11.10 Determinants of household use of hired and
exchange labor in Eastern Province, Zambia 241

Table 12.1 Seasonal prevalence of undernutrition in
children and adults in Eastern Province,
Zambia, 1986 250
Table 12.2 Nutritional status of children under 10 in
Eastern Province, Zambia, by ecological zone,
level of adoption of hybrid maize, and month,
1986 251
Table 12.3 Nutritional status of children (January-February,
1986) in Eastern Province, Zambia, by gender
of the head of household and hybrid maize
adoption 254
Table 12.4 Daily per capital consumption of nutrients in
high- and low-adoption areas of the plateau,
Eastern Province, Zambia, by farm size, 1986 256
Table 12.5 Daily per capital consumption of nutrients in
high- and low-adoption areas of the plateau,
Eastern Province, Zambia, by season, 1986 258
Table 12.6 Food diversity in Eastern Province, Zambia,
by month and regional level of technology
adoption 260
Table 12.7 Average monthly number of episodes and
duration of illness in Eastern Province, Zambia,
by ecological region, hybrid maize adoption at
area and household level, and age of individuals 262
Table 12.8 Source of water for drinking and sanitation
in the plateau region of Eastern Province,
Zambia, by use of hybrid maize 264

Table 13.1 Consumer expenditure behavior of sample
households in Eastern Province, Zambia 270
Table 13.2 Average budget share for sample households
in Eastern Province, Zambia, by quintile
based upon per capital expenditure 272










Table 13.3 Marginal budget share for sample households
in Eastern Province, Zambia, by quintile
based upon per capital expenditure 273
Table 13.4 Regression results for determinants of the food
share of total consumption expenditure of
sample households in Eastern Province, Zambia 274
Table 13.5 Regression coefficients for determinants of the
food share of total consumption expenditure of
sample households in Eastern Province,
Zambia, by type of food 276
Table 13.6 Regression coefficients for determinants of the
food share of total consumption expenditure of
sample households in Eastern Province,
Zambia, by source of food 278
Table 13.7 Regression results for determinants of the
cash purchase share of total consumption
expenditure of sample households in Eastern
Province, Zambia, by type of good 280
Table 13.8 Mean annual gross revenue of households in
Eastern Province, Zambia, by locale and type
of activity 285
Table 13.9 Mean share of annual gross revenue of
households in Eastern Province, Zambia, by
locale and type of activity 286
Table 13.10 Mean gross revenues generated per labor hour
in Eastern Province, Zambia, by locale 288
Table 13.11 Regression results for the determinants of
revenue generated per hour of crop-related
activities of sample households in Eastern
Province, Zambia 289
Table 13.12 Regression results for the determinants of
revenue generated per hour of livestock-related
activities (excluding cultivation using oxen) of
sample households in Eastern Province, Zambia 291
Table 13.13 Regression results for the determinants of
revenue generated per hour of wage
employment of sample households in Eastern
Province, Zambia 293










Table 13.14 Mean annual per capital consumer expenditure
for food and nonfood items in Eastern
Province, Zambia, by locale 299
Table 13.15 Mean share of annual per capital consumer
expenditure for food and nonfood items in
Eastern Province, Zambia, by locale 299
Table 13.16 Mean annual per capital consumer expenditure
in Eastern Province, Zambia, by type and locale 300
Table 13.17 Mean share of annual per capital consumer
expenditure in Eastern Province, Zambia, by
type and locale 301
Table 13.18 Mean annual per capital consumer expenditure
in Eastern Province, Zambia, by item and locale 302
Table 13.19 Mean share of annual per capital consumer
expenditure in Eastern Province, Zambia, by
item and locale 304

Table 14.1 Results of test for homogeneity of variances 315
Table 14.2 Reported distances by road compared with actual 316
Table 14.3 Pattern of service use in Eastern Province,
Zambia, by type of service and mode of
transportation 318
Table 14.4 Pattern of service use in Eastern Province,
Zambia, by region and type of service 324
Table 14.5 Per capital consumer purchases in Eastern
Province, Zambia, by type of service and
region, 1985/86 325
Table 14.6 Pattern of service use in Eastern Province,
Zambia, by farm size, 1985/86 326
Table 14.7 Per capital consumer purchases in Eastern
Province, Zambia, by type of service and
farm size, 1985/86 327
Table 14.8 Description of independent variables used in
consumer purchase share regressions 329
Table 14.9 Average and marginal shares and elasticity of
consumer purchases in Eastern Province,
Zambia 330
Table 14.10 Regression coefficients for consumer purchase
share equations in Eastern Province, Zambia,
by type of service 331










Table 14.11 Elasticity and marginal consumer purchases
with respect to distance in Eastern Province,
Zambia 334
Table 14.12 Description of variables used in regressions
for inputs and output in Eastern Province,
Zambia 335
Table 14.13 Regression coefficients for purchases of inputs,
rental of agricultural implements, and demand
for loans equations in Eastern Province, Zambia 336
Table 14.14 Regression coefficients for output equation,
Eastern Province, Zambia 338
Table 14.15 Elasticity and marginal factor purchases of
services with respect to distance, Eastern
Province, Zambia 339

Table 15.1 Regression results for the probability that a
farmer will become a contact farmer 351
Table 15.2 Simulation results for the probability that a
farmer will become a contact farmer in
Kasendeka Branch (Lundazi Agricultural
District) 352
Table 15.3 Regression results for the probability that a
noncontact farmer will become aware in a
timely fashion that a group of contact farmers
is forming 354
Table 15.4 Simulation results for the probability that a
noncontact farmer will become aware in a
timely fashion that a group of contact farmers
is forming in Kasendeka Branch (Lundazi
Agricultural District) 355
Table 15.5 Regression results for the probability that a
noncontact farmer will receive information on
improved agricultural practices from any source 357
Table 15.6 Regression results for the probability that a
noncontact farmer will have a contact farmer
or a radio as the main source of information
on improved agricultural practices 358










Table 15.7 Statistically significant regression results for
the probability that a noncontact farmer will
receive specific advice on agricultural
operations, by source 362
Table 15.8 Regression results for the probability that a
noncontact farmer will receive specific advice
on agricultural operations 365
Table 15.9 Regression results for the probability that a
noncontact farmer will consider an extension
worker or contact farmer to be the best source
of additional information on improved
agricultural practices 368
Table 15.10 Regression results for the probability that a
noncontact farmer will consider a source
other than an extension worker, contact farmer,
noncontact farmer, or village leader to be the
best source of additional information on
improved agricultural practices 369
Table 15.11 Regression results for the probability that a
contact farmer will consider the
recommendations of the last contact farmer
meeting attended to be relevant to his or her
type of farming 371
Table 15.12 Regression results for the probability that a
contact farmer will be asked for advice by a
noncontact farmer 372
Table 15.13 Regression results for the probability that a
contact farmer will brief noncontact farmers
about recommendations discussed at the last
contact farmer meeting attended 373
Table 15.14 Regression results for the probability that a
noncontact farmer with an opinion will
consider a switch to training and visit to be
an improvement 375
Table 15.15 Regression results for the probability that a
contact farmer will adopt any recommendation
discussed at a contact farmer meeting 377


xviii










Table 15.16 Regression results for the probability that a
noncontact farmer with an opinion will think
membership in a contact farmer group enhances
the quantity or quality of crop production 380



Figures


Figure 2.1 Republic of Zambia, Eastern Province, survey 8
locations

Figure 4.1 Prices indexes, Zambia, 1970-82 64
Figure 4.2 Purchasing power of primary commodity
exports compared with manufactured imports,
developing countries, 1970-82 65
Figure 4.3 Balance of trade, Zambia, 1970-82 66
Figure 4.4 External debt as a percentage of the gross
domestic product, Zambia, 1973-80 69
Figure 4.5 Outstanding external debt as a percentage of
the total value of exports, Zambia, 1970-82 70
Figure 4.6 Ratio of international reserves to disbursed
debt, Zambia, 1970-82 71

Figure 11.1 Average monthly hours that male family
laborers work in cropping activities in
Eastern Province, Zambia, by type of
cropping technology 230
Figure 11.2 Average monthly hours that female family
laborers work in cropping activities in
Eastern Province, Zambia, by type of
cropping technology 231
Figure 11.3 Average monthly hours that male family
laborers work in Eastern Province, Zambia,
by type of cropping technology 232
Figure 11.4 Average monthly hours that female family
laborers work in Eastern Province, Zambia,
by type of cropping technology 233










Figure 11.5 Average monthly use of hired labor in
households of Eastern Province, Zambia,
by type of cropping technology 234
Figure 11.6 Average monthly use of exchange labor in
households of Eastern Province, Zambia,
by type of cropping technology 235

Figure 14.1 Average distance traveled to use services
in Eastern Province, Zambia 319
Figure 14.2 Number of visits per household to use
services in Eastern Province, Zambia 320
Figure 14.3 Average distance traveled per visit to use
services in Eastern Province, Zambia, by
agricultural branch 321
Figure 14.4 Number of visits per household to use
services in Eastern Province, Zambia,
by agricultural branch 322











Foreword


One of the major objectives of research conducted at the
International Food Policy Research Institute is to determine the extent
to which policies stimulate or constrain technological change in
agriculture and their impact on the production and consumption patterns
of low-income people in the Third World. A majority of the
population in the Third World lives in rural areas where per capital
productivity is the lowest in the economy and where agriculture and
agriculture-related activities constitute the principal means of livelihood
for that population. Thus, the linkages between agricultural and
nonagricultural activities determine to a considerable extent the
effectiveness of Third World policies for economic development.
The papers presented in this edited volume contribute to a better
understanding of the nature and direction of these linkages. The focus
is primarily, but not inclusively, on growth and equity in Zambian
smallholder agriculture in the context of the increasing agricultural
productivity resulting from technological change. The analysis centers
on capacity of the regional and local economies to translate rapid
agricultural growth into sustainable development and on the
participation of the poor in that development.
In conducting this exercise, IFPRI has been privileged to
collaborate with the Eastern Province Agricultural Development Project
and the National Food and Nutrition Commission (both of the
government of the Republic of Zambia) and with the Rural
Development Studies Bureau of the University of Zambia. IFPRI is
particularly grateful to Nicholas Mumba, then the permanent secretary
of Eastern Province, to Alex Vamoer, executive director of the
National Food and Nutrition Commission, and to Jacob Mwanza, then
the vice-chancellor of the University of Zambia, for supporting this
collaborative effort.
The research effort was funded by the Swiss Development
Cooperation (SDC) of the Government of Switzerland. IFPRI is
grateful to SDC for their generous support.

Just Faaland
Director General











Acknowledgments



We wish to express our deep gratitude to the Zambian government
for the warm reception and encouragement that were and continue to
be given to this research project. We thank the Right Honorable Kebby
Musokotwane, who was prime minister in 1988, for noting the
significance of this project as he declared the Livingstone workshop-
cum-seminar open in December and the Honorable Rubben Kamanga,
Member of the Central Committee and Chairman of the Rural
Development Sub-Committee of the Central Committee of the United
National Independence Party, for expressing his support of this research
project. Rubben Kamanga gave his time and encouragement to the
project without hesitation, and the project researchers are grateful to
him.
We would like to thank Nicholas Mumba for his guidance both as
the then-permanent secretary of Eastern Province and as the current
permanent secretary of the Ministry of Agriculture. Our thanks are also
due to the Department of Planning of the Ministry of Agriculture as
well as to the Zambia National Commercial Bank, which participated,
and continues to participate, in the deliberations of this project.
The four principal institutions involved in this project are the
International Food Policy Research Institute, the Rural Development
Studies Bureau of the University of Zambia, the National Food and
Nutrition Commission, and the Eastern Province Agricultural
Development Project.
This study would not have been completed without the devoted
work of the individuals who collected and tabulated data in the field.
We would particularly like to mention our gratitude to the late
Emmanuel W. C. Shula, who spent two years in the field conducting,
coordinating, and supervising the surveys and then oversaw the entry
and tabulation of the data collected.
Together with Emmanuel Shula, the late Katongo Katongo was
responsible for useful contributions to the understanding of the macro
institutional environment within which the Eastern Province Study was
eventually based. In some respects, this volume is a small tribute to
their association with the study.










The editors of this volume are grateful to the 330 respondents who
provided the primary data on which the majority of papers in this book
are based, to the 20 enumerators who regularly collected data for the
13 monthly surveys and the opening and closing inventories, to the
driver who transported the enumerators and researchers, and to the
three data entry operators. They all contributed to the successful
completion of this project.
This research project was made possible by a generous grant from
the Swiss Development Cooperation, Government of Switzerland. We
are grateful to them for their sustained interest in this work.


Rafael Celis
John T. Milimo
Sudhir Wanmali


xxiii












List of Contributors



Moses Banda,
Zambia National Commercial Bank,
Box 33611,
Lusaka,
Zambia

Saroj Bhattarai,
International Food Policy Research Institute,
1776 Massachusetts Avenue, N.W.
Washington, D.C. 20036
U.S.A.

Neal Bliven,
International Food Policy Research Institute,
1776 Massachusetts Avenue, N.W.
Washington, D.C. 20036
U.S.A.

Rafael Celis,
CATIE,
Turrialba,
Costa Rica

Jane He
International Food Policy Research Institute,
1776 Massachusetts Avenue, N.W.
Washington, D.C. 20036
U.S.A.

Behjat Hojjati
International Food Policy Research Institute,
1776 Massachusetts Avenue, N.W.
Washington, D.C. 20036
U.S.A.









Cindy Holleman
International Food Policy Research Institute,
1776 Massachusetts Avenue, N.W.
Washington, D.C. 20036
U.S.A.

Dayanatha Jha,
International Food Policy Research Institute,
1776 Massachusetts Avenue, N.W.
Washington, D.C. 20036
U.S.A.

Katongo Katongo,
Planning Division,
Ministry of Agriculture
and Water Development,
Box 50197,
Lusaka,
Zambia

Shubh K. Kumar,
International Food Policy Research Institute,
1776 Massachusetts Avenue, N.W.
Washington, D.C. 20036
U.S.A.

John T. Milimo,
Rural Development Studies Bureau,
University of Zambia,
Box 32379,
Lusaka,
Zambia

Lundondo Mumeka,
International Food Policy Research Institute,
1776 Massachusetts Avenue, N.W.
Washington, D.C. 20036
U.S.A.


XXV










Emmanuel Shula
Rural Development Studies Bureau,
University of Zambia,
Box 32379,
Lusaka,
Zambia

Catherine Siandwazi
National Food and Nutrition Commission
Government of the Republic of Zambia
Box 32669
Lusaka,
Zambia

Stephen Vosti
International Food Policy Research Institute,
1776 Massachusetts Avenue, N.W.
Washington, D.C. 20036
U.S.A.

Sudhir Wanmali,
International Food Policy Research Institute,
1776 Massachusetts Avenue, N.W.
Washington, D.C. 20036
U.S.A.


xxvi








Introduction


Rafael Celis and John T. Milimo



In late 1985, the International Food Policy Research Institute in
collaboration with the Rural Development Studies Bureau of the
University of Zambia, the National Food and Nutrition Commission,
and the Eastern Province Agricultural Development Project embarked
on a major research project in Eastern Province, Zambia. The study
sought to obtain a better understanding of the public policies that
govern the country's push to increase agricultural production and
improve the participation of smallholder farmers in it. In particular, the
study aimed to assess the impact that agricultural technology has on
productivity, use and distribution of land, agricultural and rural
employment both on and off farms, level and distribution of income,
and nutritional status and welfare of the rural population. It also aimed
to help the participating institutions improve their own research
capabilities. This document presents the results of that project, which
was the first major effort to collect primary data in Zambia.


RESEARCH METHODOLOGY

Eastern Province is one of the most developed agricultural regions
of Zambia. The bulk of the fieldwork was carried out between
November 1985 and December 1986. Additional surveys were
conducted during the first half of 1987, and a land tenure survey was
conducted in early 1989.
The basic research instrument was the field questionnaire. Separate
questionnaires were designed for each major aspect of the study and
administered to 330 respondents in 10 randomly selected locations.
Information was collected on the production, employment, income, and
expenditure characteristics of the households during a period of 12
months. Secondary data were also consulted on the physical,
socioeconomic, and policy environment that affects the sample
households.










SAMPLE FRAME

A sample of 330 households was drawn using sampling that was
stratified, clustered, systematic, and ordered. Within each of nine
agricultural districts, an administrative unit called a branch was chosen
randomly; within each branch, households were listed, ordered, and
systematically chosen according to four sampling variables: status of the
farmer, use of hybrid maize seed, use of oxen, and gender of the head
of household.' The four variables chosen covered the extension,
technological, and cultural issues that are important in Eastern
Province.


RESEARCH PERSONNEL AND INSTITUTIONS

The study was a collaborative venture between four institutions.
The International Food Policy Research Institute conceived the project,
procured funding from the Swiss government, and designed most of the
questionnaires. The institute had already been involved in a similar but
smaller collaborative research project with the National Food and
Nutrition Commission and the Rural Development Studies Bureau
during the early 1980s. The National Food and Nutrition Commission
is a public institution operating under the Ministry of Health and
charged with all aspects of nutritional issues in the country. Since 1972,
the Rural Development Studies Bureau, a unit of the University of
Zambia, has been conducting applied research on rural development in
the country. Its clients and sponsors include government ministries,
parastatals, bilateral aid agencies, and private companies. The Eastern
Province Agricultural Development Project was sponsored by the
World Bank and operated in Eastern Province between 1981 and 1988.


SA branch covers a cluster of roughly 10 villages, each with
approximately 25 households. A second branch was randomly added for
one district to improve the coverage of the four key variables. The
branches are Mphata (Mambwe Agricultural District), Nkhoka (Chama
Agricultural District), Choweya (Lundazi Agricultural District),
Kasendeka (Lundazi Agricultural District), Mtenthela (Chipata North
Agricultural District), Makangila (Chipata South Agricultural District),
Chipili (Chadiza Agricultural District), Sinda (Katete Agricultural
District), Chiwizi (Petauke Agricultural District), and Kamwala
(Nyimba Agricultural District).










One of its major activities was to promote the recently introduced
training and visit system of agricultural extension.
The Rural Development Studies Bureau assigned one research
fellow to work on the project full-time. He coordinated the project,
supervised the enumerators and data entry operators, and lived in
Chipata, the headquarters of Eastern Province, during the course of the
fieldwork, which extended from November 1985 to July 1987.
Research personnel from each of the three institutions regularly
supervised their portions of the study in the field. The Eastern Province
Agricultural Development Project, which was based in Chipata,
provided office space for the project and played an integral part in the
research itself. The research team was multidisciplinary, consisting of
agricultural and other economists, nutritionists, a public administration
specialist, geographers, and a social anthropologist.
The project hired 20 enumerators, 10 by the three institutions and
10 by the Eastern Province Agricultural Development Project. These
individuals were located in the 10 research locations between November
1985 and December 1986, after which they moved to Chipata, where
they completed the data entry.
In September 1987, soon after the field data were collected, the
preliminary findings were discussed at a workshop held at Mfuwe
Lodge in the South Luangwa National Park. More refined and detailed
results were presented at a workshop held at Livingstone in late 1988.
Both workshops were attended by government officials from Eastern
Province as well as from Lusaka. A final, smaller workshop convened
senior government policymakers and project researchers in Lusaka in
November 1989 to present and discuss the policy implications,
recommendations, and final research findings of the study. The papers
presented at these workshops form the contents of this volume.


ORGANIZATION OF THE BOOK

This book is divided into four parts: the first describes and
discusses the physical, institutional, and policy environment of Eastern
Province; the second analyzes the determinants and effects of adoption
of agricultural technologies; the third looks at issues of access to
agricultural infrastructure; and the fourth brings the main findings
together in a concluding chapter. The first part starts with an
introductory chapter on the study area and its physical features,
peoples, and major economic activities. The papers that follow analyze
Zambia's national agricultural policies and their impact on smallholder










agricultural development, policy constraints and contradictions, and
policies on pricing, marketing, subsidies, agricultural extension, credit,
exchange rates, trade, and land tenure. The performance and
effectiveness of the strategies related to these policies, especially those
governing credit and land tenure, are also examined. This part ends
with a chapter describing the public and private institutions operating
in the province.
Following these papers, which form a background to the main
analysis, the second and third parts present papers that discuss the
results of the analyses of the primary data. The second part begins with
a chapter on the adoption of agricultural technology, which is defined
as inorganic fertilizers, hybrid maize seed, and animal draft power.
These technologies affect a whole range of agricultural and
nonagricultural activities and indicators, such as the use of land, inputs,
and labor, agricultural productivity, allocation of labor, patterns of
household income and expenditures, and nutritional status. The third
part examines the patterns of access to a variety of service systems,
including the training and visit system of agricultural extension.
The fourth part contains a concluding chapter that summarizes the
results, policy implications, and policy recommendations presented in
the previous chapters, and looks at possible future areas of research.






Part I
The Physical, Institutional, and
Policy Environment










2
The Eastern Province of Zambia


John T. Milimo



Zambia's Eastern Province lies between longitudes 30*25' and
34*00' east and latitudes 10*30' and 1500' south. It is bordered by
the Republic of Malawi on the east and Mozambique on the south; the
Luangwa River separates it from the rest of Zambia on the western and
northwestern side. It encompasses 69,106 square kilometers of land
(see Figure 2.1).


PHYSIOGRAPHY AND SOIL

The province has two distinct physiographic regions; the plateau,
with an elevation of 900 to 1,500 meters, and the Luangwa Valley,
with an elevation of 400 to 600 meters. The valley contains a mixture
of alluvial soils that are medium in texture and suitable for crops such
as rice, cotton, and drought-resistant sorghum and millet. The plateau
soils are "well to moderately well-drained, of light to medium acidity,
and with moderate natural fertility" (Fourth National Development Plan
1989, 619). These soils are generally suitable for maize, groundnuts,
cotton, sunflower, tobacco, and soybeans. Between the plateau and the
valley lies an escarpment with little human habitation. Annual rainfall
ranges from 850 to 1,050 millimeters.


ADMINISTRATION

Chipata, the provincial headquarters, is situated some 25 kilometers
from the Zambia-Malawi border. The province is divided into six
administrative districts: Chadiza, Chama, Chipata, Katete, Lundazi, and
Petauke. Each district is administered by a District Council, which is
chaired by a district governor and served by an executive secretary.
Like all provinces, Eastern Province is headed by a member of the
ruling political party's Central Committee. That person is assisted by
a provincial political secretary for political affairs and by a permanent
secretary for administrative affairs.











Figure 2.1--Republic of Zambia, Eastern Province, survey locations




Kilometers
40 0 40 80 120)


\ Chama


SNkhoka
-- Tarmac road Branch

-- Gravel road (|
Chaweya i
-------- Other motorable track Branch

E Survey location (branch) ,' Lun
I Kasendeka
o Administrative HQ town Branch

Other administrative HQ










POPULATION

According to the 1980 census of population the province held
650,902 persons, or 12 percent of Zambia's total population. Its
population density, 9.4 persons per square kilometer, was higher than
the nation's, 7.5 persons, but its growth rate was much lower (2 and
3 percent, respectively). Although population density is high, the
province is largely rural; in 1980, only 10 percent of its population
lived in urban areas compared with 40 percent of the nation's (see
Tables 2.1 and 2.2).




Table 2.1-Population of towns in Eastern Province, Zambia, by
gender, 1980


Town Male Female Total


Chadiza 1,192 1,128 2,320
Chama 1,985 1,037 3,022
Chipata 16,180 16,110 32,291
Kacholola 1,018 1,153 2,171
Katete 3,169 3,335 6,504
Lundazi 2,044 2,039 4,083
Nyimba 720 701 1,421
Petauke 3,672 3,859 7,531

Total' 29,980 29,363 59,343

Source: Zambia, Central Statistical Office, 1980 census ofpopulation
and housing, preliminary report (Lusaka, Zambia:
Government Printer, 1981), 12.
Note: Data on some towns, such as Sinda, were unavailable, so the
total differs from that of the province's urban population of
63,100 persons.










Table 2.2-Area, population, and population density of districts in
Eastern Province, Zambia, by gender, 1980


Persons per
Population Square
District Area' Male Female Total Kilometer


Chadiza 2,574 21,303 23,576 44,879 17.4
Chama 17,630 15,792 19,567 35,359 2.0
Chipata 11,986 97,435 107,303 204,738 17.1
Katete 3,989 44,236 49,972 94,208 23.6
Lundazi 14,241 53,114 61,539 114,653 8.2
Petauke 18,686 72,263 84,802 157,065 9.3

Total 69,106 304,143 346,759 650,902 9.4

Source: Compiled from information contained in Zambia, Central
Statistical Office, 1980 census of population and housing,
vol. 1 (Lusaka, Zambia: Government Printer, 1985), 1, 5.
SSquare kilometers.


In Eastern Province and Zambia as a whole, females outnumber
males. For every 100 females, the province has 88 males and Zambia
has 91. Within urban areas, however, the reverse is true, and males
slightly outnumber females. In small towns of Eastern Province, 50.5
percent of the population is male, while 49.5 percent is female, and in
urban areas of Zambia, the respective figures are 50.7 and 49.3 percent
(Zambia, Central Statistical Office 1985a, 1:1). This suggests that men
tend to migrate from rural to urban areas both within Eastern Province
and within Zambia as a whole. They also migrate from Eastern
Province to urban areas of other provinces with the country.
Corresponding to the low ratio of males to females, 38 percent of
all households in the province are headed by women, the highest
incidence in the country (Zambia, Central Statistical Office 1985a,
1:285). The national figure is only 28 percent. In rural areas of Eastern
Province, the percentage of female-headed households is even higher:
39 percent (Zambia, Central Statistical Office 1985a, 1:286).
The average household is smaller in the province than in the










nation: 4.3 persons compared with 5.0 (Zambia, Central Statistical
Office 1985a, 1:285). Nevertheless, the sample population represented
in this study has even larger households than the national average: 6.0
persons. The province has the lowest life expectancy in the country. In
1980, males were expected to live 44.3 years and females, 45.5 years.
The corresponding national figures are considerably higher: 50.4 years
for males and 52.5 years for females (Zambia, Central Statistical Office
1980; 1985b, 57).
The population density in the plateau districts of Chadiza, Katete,
and Chipata is higher than that in the valley and escarpment regions of
Chama and parts of Lundazi and Petauke districts (Table 2.2).
Population densities tend to be high in areas that have relatively well-
developed socioeconomic infrastructure, especially roads. In Eastern
Province, the infrastructure is better developed on the plateau than in
the valley. As much as 25 percent of the province's total population
lives within 7.5 kilometers of the main roads that connect Lusaka to
Chipata, Chipata to Lundazi, and Chipata to the border with Malawi.


TRANSPORTATION

Eastern Province has 1,876 kilometers of roads, the longest of
which is the Great East Road linking the province to Lusaka. Classified
as a grade 1 tarmac road, it begins in Chipata and continues to Mwami
at the Zambia-Malawi border post. Chipata is also linked to Lundazi,
a district headquarters, by a tarmac road that needs much repair.
Most other roads are made of gravel and are unclassified. One
connects Chipata to Chadiza; another links Chipata to Lundazi and
Chama and then joins the Great North Road near Isoka in Northern
Province; and yet another links Chipata to South Luangwa National
Park via Mambwe.


EDUCATION

Eastern Province has one of the lowest educational levels in
Zambia, and women in the province have less education than men (see
Tables 2.3 and 2.4). Although the average female head of household
in Zambia is better educated than her counterpart in Eastern Province,
she remains less educated than men, either in the province or in
the nation as a whole. Male heads of household in the province have
more education than female heads of household overall. Moreover, many










Table 2.3-Educational status in Eastern Province and Zambia,
1980


Educational Status Eastern Province Zambia

(percent)
None 54.1 37.5
Primary education (1-7 years) 43.7 42.7
Secondary education 6.6 16.3
College or university 0.1 0.3
Not indicated 3.9 3.2

Total 100.0 100.0

Source: Compiled from information contained in Zambia, Central
Statistical Office, 1980 census of population and housing,
vol. 2 (Lusaka, Zambia: Government Printer, 1985), 246,
255.


Table 2.4-Educational status of heads of household in Eastern
Province and Zambia, by gender, 1980


Eastern Province Zambia,
Educational Status Females Males Females

(percent)
None 70.0 45.4 58.8
Primary education (1-7 years) 22.5 42.1 30.9
Secondary education 2.4 9.2 6.4
College or university 0.0 0.1 0.1
Not indicated 5.1 3.2 3.8

Total 100.0 100.0 100.0

Source: Computed from information contained in Zambia, Central
Statistical Office, 1980 census of population and housing,
major findings and conclusions, vol. 2 (Lusaka, Zambia:
Government Printer, 1985b), 246, 255.










women in the province have no education at all; almost three out of
four have not attended school, compared with slightly more than two
out of four in the nation.


HEALTH

The province has 10 hospitals (2 general and 8 district), 84 health
centers (81 in rural areas and 3 in towns), 1 leprosarium, and 16
mobile health clinics. The province has 1 trained nurse for every 1,200
persons and 1 doctor for every 21,070 persons (Fourth National
Development Plan 1989, 627). The health services emphasize primary
health care. By 1988, nearly 440 community health workers had been
trained to help run the primary health care program. According to the
1990 census, the province has 1 community health worker for every to
1,925 persons. In addition, 331 registered traditional healers treat
ailments as they have been doing for generations. Their efforts
supplement those of the modem health sector.
A major problem that compounds health issues is the scarcity of
safe and clean drinking water. The Fourth National Development Plan
reported that "more than 50 percent of rural population have no access
to safe and clean water" (Fourth National Development Plan 1989,
625). In Chadiza District, this figure is a mere 17 percent of the
population (see Table 2.5).


Table 2.5-Percentage of persons with access to safe drinking water
in Eastern Province, Zambia, by district

District Percentage


Chadiza 17.0
Chipata 63.0
Katete 44.0
Lundazi 30.0
Petauke 56.0

Source: Fourth National Development Plan, The Fourth National
Development Plan (Lusaka, Zambia: Government Printer,
1989), 625.










ECONOMIC ACTIVITIES

According to the 1980 census, the province's labor force consists
of 218,768 persons, 45 percent of whom are actually working. Persons
categorized as unemployed include housewives, students, the sick, and
the disabled. Since housewives are considered part of the inactive labor
force, it is not surprising that 68 percent of the women in Eastern
Province fall in this category.
The majority of men and women are self-employed (61 percent),
while only slightly over one-quarter are formally employed (26 percent;
see Table 2.6). One would, perhaps, have expected more women than
men to be self-employed since women are more involved in small-scale
economic enterprises than men (Milimo and Fisseha 1985, 52). This
is not the case, however, since only 57 percent of women, compared
with 63 percent of men, are self-employed. The difference between the
expectation and the reality may have a statistical cause. The Central
Statistical Office does not include housewives as part of the active labor
force, while Milimo and Fisseha (1985) do if they are involved in a
business. The largest occupational category by far, in both Eastern
Province and Zambia as a whole, employs persons in agriculture,
forestry, fishing, hunting, and production (74 and 41 percent,
respectively; see Table 2.7). This is the only category in which Eastern
Province employs a higher percentage of workers than the nation.


Table 2.6-Employment status in Eastern Province, Zambia, by
gender, 1980


Employment Status Male Female Total

(percent)
Employer 0.7 0.2 0.5
Employee 31.7 11.6 25.8
Self-employed 62.6 56.8 60.9
Not stated 5.0 31.4 12.8

Source: Compiled from information contained in Zambia, Central
Statistical Office, 1980 census of population and housing,
vol. 2 (Lusaka, Zambia: Government Printer, 1985), 61,
70.










Table 2.7-Major occupation of the working labor force in Eastern
Province and Zambia, 1980


Occupation Eastern Province Zambia

Professionals, technicians, (percent)
and related occupations 4.9 8.2
Administrators and managers 0.6 1.3
Clerical and related staff 1.7 4.5
Salespersons 2.3 8.3
Service workers 5.0 9.6
Workers in agriculture, forestry,
fishing, hunting, and production 73.8 40.7
Transportation workers, equipment
operators, and laborers 7.9 19.8
Unclassified workers 0.4 1.6
Unstated occupations 3.4 6.0
Total 100.0 100.0

Source: Compiled from information contained in Zambia, Central
Statistical Office, 1980 census of population and housing,
vol. 2 (Lusaka, Zambia, 1985), 181, 190.


AGRICULTURE

Agriculture, forestry, and fishing involve almost three-quarters of
the province's labor force. A total of 1.3 million hectares are under
cultivation in the province, and this is only 35 percent of the total
amount of arable land. Thus more than 2.5 million hectares of arable
land are not in use.
The province's main agricultural products are maize, groundnuts,
cottonseed, tobacco, sunflower seed, and livestock. Eastern Province
is the largest producer of groundnuts, one of the three largest producers
of maize, the staple cereal of Zambia, and the fourth largest producer
of livestock in the country (see Table 2.8 for the production of major
crops from 1978 to 1987). The province increased its production of
maize, groundnuts, and cottonseed and contributed an impressive
amount of the nation's production of pigs, sheep, goats, sunflower, and
maize between 1978 and 1986 (see Table 2.9).










Table 2.8-Marketed production of major crops in Eastern
Province, Zambia, 1978-86


Year Maize Groundnuts Cottonseed

(tons)

1978 69,447 1,672 2,838
1979 46,563 2,241 3,432
1980 66,577 1,455 3,750
1981 106,581 912 1,855
1982 114,610 741 1,485
1983 143,857 940 2,625
1984 166,671 1,046 4,769
1985 176,775 6,194 n.a.
1986 224,339 8,178 n.a.


Source: Fourth National Development Plan,
Development Plan (Lusaka, Zambia:
1989), 621 and following.
n.a. Not available.


The Fourth National
Government Printer,


INDUSTRY

Food processing constitutes one of the major industries in the
province, which has two large milling plants owned by the Eastern
Province Cooperative Union: E. C. Milling in Chipata processes maize,
and the Oil Processing Plant at Katete processes groundnuts and
sunflower. The Oil Processing Plant is supposed to produce all the
cooking oil required by the province, but has never been able to do so
because machines are constantly breaking down and the supply of oil
seed, mainly sunflower, is inadequate to meet the demand for edible
oils. Other privately owned hammer mills scattered throughout the
province supplement the efforts of the Chipata-based E. C. Milling,
which is unable to meet the demand for processed maize.










Table 2.9-Share of Eastern Province in Zambia's marketed
production, 1980-88


Crop


Percentage


Maize 22.3
Cottonseed 14.3
Tobacco 10.9
Paddy rice 6.1
Sunflower 23.4
Cattle" 9.8
Sheep and goatsb 31.0
Pigsb 61.5

Source: For crops, Fourth National Development Plan, The Fourth
NationalDevelopment Plan (Lusaka, Zambia: Government
Printer, 1989), 569; and for livestock, Development
Research Center of Zambia, An assessment of the status of
the livestock sector and its role in the development of
Zambia's agriculture (Lusaka, Zambia: DRC, 1988), 8, 14,
16.
S1983-87.
b 1984-86.




Luangwa Industries Limited, the country's only bicycle
manufacturing plant, is another fairly large economic venture. Other
industries operate in the informal sector of the economy. Some plants
produce farm implements, such as hoes, axes, plowshares, plows,
wheelbarrows, and scotch carts. Other plants use the abundant, high-
quality forest products to manufacture furniture, mats, and baskets.
These plants operate on a small-scale basis and sell their products in
provincial markets.










MINING

Although Zambia as a whole is well known for its mining industry,
little mining takes place in Eastern Province. Only small quantities of
minerals have been discovered there, and less than 1 percent of the
labor force is devoted to mining. In Zambia as a whole, 6 percent of
the work force is involved in mining, compared with 22 percent in
Copperbelt Province, whose main industry is mining. Table 2.10 shows
the types of minerals found in Eastern Province and the stage of mining
operations reached.




Table 2.10-Reserves and location of mining in Eastern Province,
Zambia


Type of
Mineral Location District Reserves Comments

(tons)

Phosphate Chilembwe Petauke 1,600 Ready for mining
Agricultural
lime Hofmeyer Petauke 50,000 Ready for mining
Graphite Kaumba Chama 4,000 Ready for mining
Aquamarine Lundazi Lundazi n.a. Mininginprogress
Aquamarine Msoro Chipata n.a. Deposits known
Tourmaline Nyimba Petauke n.a. Mininginprogress
Barite Chasefu Lundazi 400 None
Gold Sasare Petauke 11,780 None

Source: Fourth National Development Plan, The Fourth
National Development Plan (Lusaka, Zambia:
Government Printer, 1989), 170 and following.










TRADE

Agricultural products provide the bulk of goods traded within the
province and between the provinces and the rest of the country. Most
of the agricultural products marketed by Eastern Province are sold
within the province itself. Surplus maize and groundnuts are sold to
other provinces, and in 1989 maize was sold to Malawi.
Most of the business community is of Asian origin, and Asians
dominate the trade in goods other than farm products. They own most
of the shops in Chipata. The National Imports and Exports Company
also has shops in Chipata and most of the district headquarters. It plans
to open five more business premises in the province during the 1989-93
period of the National Development Plan.


TOURISM

Endowed with one of Africa's richest concentrations of wildlife,
the province has a great potential to develop tourism. Although wildlife
is found in the Luangwa Valley, which covers parts of Northern,
Central, and Eastern provinces, the South Luangwa National Park can
be reached mainly through Eastern Province, where a gravel road
connects Chipata with the park headquarters at Mfuwe. Many tourists
fly to Mfuwe from Lusaka's modem airport.
A number of tourist lodges, some privately owned and others
belonging to a parastatal, operate in the park and together have more
than 170 beds. The current development plan has earmarked the
Chipata-Mfuwe road for tarmac surfacing, which should make the game
park more accessible. The large-scale Luangwa Integrated Resource
Development Project is seeking to involve the community in efforts to
conserve wildlife. This project allows the local community to determine
quotas for various types of animals that the Department of Wildlife
decides to cull in a given year. Once fully operational, the project will
make game meat available to the local population, thus curbing small-
time poaching of game.
Apart from the South Luangwa National Park, Eastern Province
has no other major tourist attractions. Hotel accommodations for
ordinary travelers are often limited, and the few motels that exist in the
provincial and some of the district headquarters are frequently occupied
by permanent residents.
As can be seen from the description above, Eastern Province is
agriculturally one of the more developed provinces of Zambia. It is










argued that for the realization of this potential, certain policy
interventions will be necessary. It is one of the objectives of the
analysis that is contained in the subsequent chapters to indicate the
nature of these interventions and, further, to also indicate its policy
implications for economic development of Eastern Province.



REFERENCES

Development Research Center of Zambia. 1988. An assessment of the
status of the livestock sector and its role in the development of
Zambia's agriculture. Lusaka, Zambia: DRC.

Fourth National Development Plan. 1989. The Fourth National
Development Plan. Lusaka, Zambia: Government Printer.

Milimo, John T., and Yacob Fisseha. 1985. Rural small-scale
enterprises in Zambia: Results of a countrywide survey. Rural
Development Studies Bureau Report 25. Lusaka, Zambia:
University of Zambia, Rural Studies Bureau.

Zambia, Central Statistical Office. 1981. 1980 census ofpopulation and
housing, preliminary report. Lusaka, Zambia: Government
Printer.

1985a. 1980 census ofpopulation and housing. 2 vols. Lusaka,
Zambia: Government Printer.

1985b. 1980 census of population and housing, majorfindings
and conclusions. Lusaka, Zambia: Government Printer.

1989. Monthly digest ofstatistics: January-June 1989. Lusaka,
Zambia: Government Printer.









Agricultural Policies in Zambia, 1975-85


Katongo Katongo


The analysis of agricultural policies in Zambia is mainly concerned
with whether policies increase income, particularly among poor farming
households, make basic foods more accessible, and generate foreign
exchange. It examines whether policies establish a trade-off between
agricultural exports and import substitutes and whether they maintain
a balance between the production of crops for food and for cash. To
address these concerns, policy analysts examine policies related to
pricing, marketing, subsidies, credit, trade, exchange rates, land
tenure, and research and extension. They also examine how public and
private institutions market inputs and other factors, transform products,
and deliver essential services to different types of producers and
whether their approaches are successful.
This paper takes a qualitative, analytical approach rather than a
rigorous quantitative approach to analyzing these issues. It does not
examine in detail how various policies complement or conflict with one
another nor their total impact. Nevertheless, it does address these issues
in broad terms, using data compiled from secondary sources published
by government and private agencies. Although the adequacy and
accuracy of such data are limited, their usefulness is not.


PERFORMANCE OF THE AGRICULTURAL SECTOR

The agricultural sector performed poorly between 1975 and 1985.
The production of agriculture, forestry, and fisheries remained stable,
averaging 15 percent of the country's total gross domestic product. The
large-scale commercial subsector contributed an average of 38 percent,
while the subsistence subsector contributed 62 percent of the
agricultural gross domestic product between 1975 and 1983. The rural
labor force grew at an annual rate of 2 percent. The subsistence sector
absorbed 97 percent of the labor force, while the commercial sector
employed the remaining 3 percent (see Table 3.1). The subsistence
sector not only contributed a large share of the agricultural gross
domestic product, but employed much of the rural labor force.
The average amount of food produced annually increased 2 percent
per capital between 1975 and 1985, while cereal imports rose from
93,000 metric tons in 1984 to 247,000 metric tons in 1985 (World









Table 3.1-Economic indicators in Zambia, by sector, 1975-85


Agricultural GDP as a Contribution Labor Force
Year Percent of Total GDP* Commercial Sector Subsistence Sector Rural Commercial Sector Subsistence Sector
(percent) (number) (percent)
1975 12.9 35.9 64.1 942,400 3.8 96.2
1976 n.a. n.a. n.a. 957,800 3.3 96.7
1977 16.4 38.1 61.9 983,900 3.0 97.0
1978 16.1 37.1 62.9 1,003,500 3.0 97.0
1979 14.9 35.4 64.6 1,034,000 3.0 97.0
1980 14.2 36.9 63.1 1,049,000 3.0 97.0
1981 15.9 40.2 59.8 1,072,400 3.3 96.7
1982 13.7 37.6 62.4 1,087,700 3.1 96.9
1983 14.2 44.4 55.6 1,127,600 3.1 96.9
1984 14.5 n.a. n.a. n.a. n.a. n.a.
1985 14.5 n.a. n.a. n.a. n.a. n.a.
Average 14.7 38.2 61.8 n.a. 3.2 96.8
Source: Computed from various statistical bulletins of Zambia's Central Statistical Office; Cooperative Savings Scheme,
Projections of labor force, 1969-84 (Lusaka, Zambia, 1976); and Zambia, Central Statistical Office, Monthly digest of
statistics (Lusaka, Zambia, October/December 1982).
a GDP, gross domestic product.
n.a. Not available.










Bank 1987). This apparent contradiction between the increase in the
average index of food production and the increase in imports of
both commercial and noncommercial food may be the result of annual
variations in agricultural production. For example, agricultural output
was low in the base year period of 1975 due to a drought.
Table 3.2 presents the rate at which output, area, and yield grew
for selected crops between 1975 and 1986. Based on data from annual
statistical bulletins, this information shows the impact that various
policy instruments have on efficiency, growth, and distribution and the
changing composition of crops at the national and provincial level.
In output, area, and yield, beans were the dominant food crop
between 1975 and 1980. Between 1981 and 1986, however, beans
declined in all categories of growth except yield, which grew at a
dramatic rate of 78 percent.
The expansion of area was the main source of growth in physical
output, with the exception of wheat. The area devoted to beans, cotton,
sorghum, soybeans, rice, and sunflower expanded the most. Only
cotton and, to a lesser extent, sorghum and rice registered a positive
growth in yield between 1975 and 1986. Except for wheat, the yield of
food crops grew slowly or declined.
The output of nonfood crops grew faster than that of food crops,
with the exception of beans and rice, which occupy a small proportion
^of the total cultivated area in all regions. Moreover, the yield of major
import substitutes, such as sunflower, groundnuts, and soybeans,
declined. This complicates efforts to determine an optimal or even an
acceptable trade-off between allocating land to domestic food crops and
to import-substitute and export crops. For both types of crops,
however, output grew because the amount of area cultivated expanded,
not because yield increased.
The pattern of agricultural growth shifted significantly over the
years (see Table 3.3). As the amount of land allocated to maize
decreased, the area allocated to groundnuts increased. The same
relationship exists between maize and sunflower, particularly in
Central, Southern, and Luapula provinces. In Southern Province, the
amount of land allocated to sunflower and groundnuts increased
dramatically, from about 4 percent each in 1979 to 11 and 13 percent,
respectively, in 1980. This increase led to a substantial decline in the
amount of land allocated to major food crops. Land allocated to maize
declined from 75 to 69 percent, while land allocated to sorghum
declined from 12 to 2 percent. In Eastern Province, land allocated to
groundnuts also increased dramatically (from 9 to 23 percent), while










Table 3.2-Annual rates of growth of physical output, area, and
yield in Zambia, selected periods, 1975-86


Indicator 1975-80 1981-86 1975-86

(standard units)
Physical output
Food crops
Beans 0.900 -0.220 0.340
Wheat 0.280 -0.370 0.010
Sorghum 0.240 0.003 0.190
Rice 0.220 0.120 0.180
Maize 0.110 -0.050 0.040
Groundnuts 0.440 -0.190 0.060
Nonfood crops
Cotton 0.370 0.200 0.210
Sunflower 0.140 -0.090 0.100
Soybeans 0.090 0.080 0.190
Virginia tobacco 0.040a 0.040 ...


(hectares)
Area
Food crops
Beans 1.260 -0.490 0.780
Wheat 0.280 -0.480 -0.070
Sorghum 0.340 -0.003 0.170
Rice 0.220 0.100 0.170
Maize 0.160 ... 0.090
Groundnuts 0.420 -0.230 0.090
Nonfood crops
Cotton 0.170 0.080 0.130
Sunflower 0.220 -0.090 0.110
Soybeans 0.120 0.140 0.220
Virginia tobacco 0.070' -0.100 -0.020


(continued)










Table 3.2-Continued


Indicator 1975-80 1981-86 1975-86

(standard units per hectare)
Physical yield
Food crops
Beans -0.360 0.780 -0.050
Wheat ... 0.110 0.080
Sorghum -0.100 0.010 0.020
Rice ... 0.020 0.010
Maize -0.0500 -0.050 -0.050
Groundnuts 0.0200 0.040 -0.030
Nonfood crops
Cotton 0.190 0.120 0.080
Sunflower -0.080 0.003 -0.010
Soybeans -0.030 -0.060 -0.030
Virginia tobacco -0.040" 0.140 0.020

Source: Computed from various statistical bulletins of Zambia's
Central Statistical Office, Lusaka, Zambia.
Note: The growth rates were calculated as follows:


where Q, is physical output in the current year; Qo is physical
output in a past year; e is a constant; r is the growth rate; and
t is the number of years that have elapsed.

Taking logarithms of both sides of equation (1) produces
LnQ, = LnQ, + rt. (2)
Rearranging equation (2), one obtains
rt = LnQ, LNQ,. (3)
Dividing both sides by t, one obtains
r = (LNQ, LNQ)/t. (4)
S1977-80.


Qt = Qoe",










land allocated to maize declined from 76 to 67 percent and land
allocated to sorghum declined from 5 to less than 1 percent. The
cultivation of cottonseed also increased markedly over the years,
particularly in Central, Southern, and Copperbelt provinces.
Despite a uniform pricing regime, Zambia does not have a uniform
pattern of production. This reflects regional differences in the soil,
climate, and level and availability of support services and
infrastructure. Furthermore, traditional food crops are produced in
provinces with relatively poor agricultural infrastructure and services.
In these so-called disadvantaged provinces, the supply of basic
foodstuffs, although adequate at the national level, is often unreliable.
Although Eastern Province was the only area to increase the allocation
of land to maize during the period under review (from 79 percent in
1975 to 84 percent in 1985), the disadvantaged provinces devoted a
significant proportion of their total land to food crops. The national
average was just over 79 percent, while Western Province devoted 95
percent, Northwestern Province, 91 percent, and Luapula Province, 89
percent of their land to food crops. Although these provinces apparently
increased the amount of land allocated to traditional crops, the increase
probably reflected improvements in the methods of collecting and
reporting data rather than substantial increases in the production of the
crops themselves.
Finally, despite the government incentives and technological
advances in production, Zambia's pricing policies do not recognize
comparative advantage nor support equitable regional growth and
income distribution. Agricultural policies should, for example,
complement industrial policies in order to enhance the market
opportunities of comparatively advantageous traditional crops.
Agricultural policies operate through the pricing system, have an
impact on the decisionmaking environment of producers and
consumers, and are designed for, and intended to have an impact on,
the institutions that implement them.
Zambia's policies and policy instruments have the following
objectives: (a) achieve self-sufficiency in the production of staple food
crops; (b) increase the production of traditional and nontraditional
agricultural exports and therefore diversify the economic base and
eliminate the nation's dependence on copper; (c) produce more import
substitutes of agricultural products and inputs; (d) improve employment
and provide equitable, higher incomes for rural households, improve
nutritional levels, and minimize migration from rural to urban areas;
and (e) increase the contribution of the agricultural sector to the total
gross domestic product.










Table 3.3-Proportion of total crop area devoted to selected crops in Zambia, by province, 1975-85


Province and Crop* 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985
(percent)


Central
Maize
Sunflower
Cottonseed
Groundnuts
Wheat
Soybeans
Sorghum
Virginia tobacco
Beans
Rice
Millet

Lusaka
Maize
Wheat
Sunflower
Virginia tobacco
Soybeans
Beans
Groundnuts
Sorghum


84.20 72.40 50.60 69.10 69.90 77.10
7.90 10.80 18.50 11.10 12.40 8.90
1.20 2.70 14.70 9.50 7.30 7.30
5.70 2.70 6.10 6.30 5.50 2.00
0.50 0.30 0.10 0.10 0.10 0.60
0.20 6.50 6.10 1.00 1.70 2.20


... 1.10 1.80 2.70 1.30 1.00 0.40 0.40
... ... 0.20 2.20 0.50 1.40 1.80 0.60
... .. ... ... 0.02 0.03 ...
...... ... ... 0.70


... ... ... 80.90 74.30 59.30 58.30 61.20
... ... ... 5.10 3.60 5.10 2.50 3.50
... ... ... 4.70 8.70 20.10 4.30 10.50
... 3.40 1.90 2.40 0.60 0.40
... 2.50 7.20 0.60 1.40 2.30
.. ... ... 2.30 2.20 2.10 0.40 1.10
0.60 1.10 3.00 4.40 0.81
).50 1.20 0.20 25.80 14.30 7.00 3.30 14.80


79.80 70.20 72.00
5.70 8.30 7.50
8.70 15.60 12.30
2.40 1.70 3.70

1.50 1.90 1.80

0.50 0.30
0.30 0.40 0.80
0.02 0.01 0.02
0.30 0.60


75.70 67.90 57.10

8.50 10.31 2.40

3.20 9.80 7.40
1.50 1.00 1.10
1.50 0.90 1.10


(continued)


76.20
11.40
9.80
1.70
0.40
0.40


85.50
6.60
1.60
3.90
0.70
0.10










Table 3.3-Continued
Province and Crop' 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985

Southern (percent)


Maize
Sorghum
Sunflower
Groundnuts
Cottonseed
Soybeans
Wheat
Virginia tobacco
Beans
Rice
Millet

Northern
Maize
Groundnuts
Rice
Sunflower
Cottonseed
Wheat
Beans
Sorghum
Virginia tobacco
Soybeans
Millet


88.60 82.50 78.50 75.40 75.20 68.70 71.50 74.40 69.60 61.20 66.60
4.70 2.20 1.80 6.40 12.30 1.90 2.00 2.10 2.90 3.70 3.80
4.10 4.40 3.80 3.10 3.60 10.60 9.20 9.70 9.90 13.00 13.80
1.20 9.60 13.70 12.90 3.90 13.00 9.90 5.10 3.60 4.40 4.00
0.80 0.80 0.90 0.70 2.80 2.90 4.70 7.20 11.20 13.30 8.60
0.40 0.40 0.40 0.30 0.20 0.30 0.70 0.60 1.70 1.60 0.90
0.04 0.10 0.02 0.10 0.50 0.10 0.30 0.40 0.40
... ... 0.70 0.60 0.80 1.50 0.50 0.40 0.70 0.60 0.40
0.20 0.50 1.00 1.90 1.40 ... 0.30 0.20 0.02
..... ... 0.01 0.10 ... 0.02 0.01
.. ... 0.40 1.60 1.90


91.00 76.40 76.30 42.30 28.80 12.90 13.50 60.70 60.20 69.70 67.20
3.80 11.20 10.00 18.80 29.40 5.80 5.10 3.50 3.40 6.20 3.80
3.50 4.70 5.90 4.60 2.30 0.70 0.80 6.20 5.20 5.80 7.10
1.50 1.20 1.80 ... 0.10 0.40 0.10 1.00 0.70 1.40 0.60
0.20 0.10 0.10 ... ... 0.02 0.03 0.20 0.10 0.30 0.30
0.02 ... ... 0.10 0.02 0.30 0.30 1.30
6.50 5.90 15.00 24.80 80.00 80.00 25.80 18.90 5.90 7.10
0.10 19.10 14.60 0.02 0.10 0.20 0.10 0.40 0.10
... ... ... 0.10 ... 0.02 0.01 0.02 0.02 0.03 0.01
... ... ... 0.01 ... 1.1 0.10 0.20 0.90
... ... ... ... 11.30 10.20 12.90










Eastern
Maize
Groundnuts
Sorghum
Sunflower
Cotton
Rice
Soybeans
Beans
Virginia tobacco
Millet
Copperbelt
Maize
Sunflower
Groundnuts
Beans
Soybeans
Sorghum
Cottonseed
Wheat
Virginia tobacco
Rice
Millet


78.90 59.10 73.70 73.70 76.40 66.60 65.10 85.50 81.50 81.00
12.20 31.00 23.80 22.30 9.30 23.10 19.90 4.60 6.90 5.60
5.60 5.50 ... 1.10 5.40 0.60 1.60 0.10 0.50 0.70
1.50 0.90 0.40 0.10 0.80 4.80 7.70 5.90 8.20 7.80
1.40 1.70 1.50 1.40 4.90 3.10 2.10 1.60 1.10 2.60
0.50 0.30 0.20 0.30 0.60 0.50 0.50 0.50 0.60 0.60
0.1 0.02 0.01 0.01 0.10 0.20 0.20 0.20 0.20 0.20
... 0.60 0.40 0.80 2.20 1.50 2.50 0.60 0.50 0.50
... 0.40 0.40 0.30 0.50 0.40 0.20 0.20
... 0.20 0.70


83.80
4.80
0.50
7.10
2.40
0.60
0.30
0.30
0.10


82.70 56.10 56.50 36.90 68.70 25.70 37.20 29.90 57.2 58.3 63.3
12.20 6.40 3.10 1.40 0.50 ... 37.20 29.90 2.8 3.9 2.4
3.30 25.20 19.50 2.50 1.40 0.09 3.60 3.00 3.9 2.5 4.3
1.20 0.70 ... 1.10 ... 0.40 3.20 4.40 1.6 0.5 1.0
0.70 0.10 0.50 0.10 ... 0.70 1.00 6.90 9.5 8.1 9.1
... 11.40 18.50 56.60 28.20 70.90 17.50 24.20 23.0 24.1 18.9
.. ... 1.50 0.70 1.00 0.20 0.07 0.40 1.5 1.2 0.6
... 0.30 ... ... ... 0.30 1.00 ... 0.9
... ... 0.90 0.30 0.10 0.10 0.20 0.5 0.1 0.1
... ... 0.10 ... ... 0.10 0.1 0.4 0.2
...... ........ 0.1 0.4
(continued)











Table 3.3-Continued


Province and Crop* 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985
(percent)


66.80 71.20 57.80 22.70 61.30 23.60 30.60 74.60 70.70 62.50 66.20
18.70 13.30 15.60 0.40 5.10 1.40 0.60 7.20 6.40 8.10 6.60
8.60 12.70 22.20 67.00 2.90 62.10 52.30 7.50 11.20 8.10 6.70
4.40 0.80 1.60 6.60 29.10 12.60 16.40 5.70 6.40 4.70 4.10
1.50 2.00 3.00 0.30 1.50 0.20 0.10 4.60 3.10 4.00 2.40
.. ... 1.70 10.30 11.50
.... ... 0.02 0.50 0.40 0.30 1.10
0.10 ... ... ... 0.10 0.30 1.10
1.80 0.40


Luapula
Maize
Rice
Groundnuts
Beans
Sunflower
Millet
Cottonseed
Soybeans
Sorghum

Northwestern
Maize
Rice
Groundnuts
Sunflower
Sorghum
Beans
Millet


53.20 53.50 58.40
3.60 4.80 4.30
3.30 4.30 3.50
1.30 2.80 1.20
20.50 25.50 13.80
6.50 7.00 5.30
11.40 1.80 11.60


6.30 72.40 41.70 30.20 43.00 45.00 58.30
6.00 4.10 1.70 0.90 0.40 0.30 2.80
3.30 18.10 19.00 18.90 15.80 12.20 2.40
2.80 3.60 0.30 1.10 0.20 0.60 3.20
... ... 37.30 21.50 36.20 41.00 25.10
1.70 1.80 ... 27.50 4.50 1.10 8.20


84.40 7
8.30
4.50 1
2.80










Western
Maize
Sorghum
Rice
Groundnuts
Sunflower
Wheat
Beans
Virginia tobacco
Cottonseed
Soybeans
Millet

Zambia as a whole
Maize
Sunflower
Groundnuts
Cottonseed
Millet
Rice
Soybeans
Virginia tobacco
Sorghum
Wheat


92.60 84.60 77.10 74.00 75.40 85.30 65.80 74.00 58.10 50.10 56.40
3.70 2.70 3.20 14.60 18.10 4.10 13.40 8.40 4.60 13.00 7.80
2.30 2.20 2.80 3.30 1.20 3.10 2.70 11.70 4.50 8.70 10.10
0.70 10.30 14.80 4.80 3.60 4.30 11.20 4.00 0.90 1.10 3.60
0.60 0.30 1.50 2.50 0.50 1.80 0.10 0.60 0.30 0.40 0.30
0.10 ...... ... ... 0.02 0.03 ...
.. 0.50 0.10 0.70 0.60 6.00 ... 4.70 0.80 0.10
... ... 0.70 0.60 0.60 0.50 0.70 0.30 0.10 0.20
... ... ... 0.10 0.20 0.20 0.60 0.20 0.60 0.60
... ...... .. ..... 0.20 ... 0.10 0.20
... ... ... ... 26.50 25.10 20.70


81.60 76.70 78.00 70.60 64
6.00 4.00 3.50 2.90 4
4.30 13.90 14.90 16.30 8
4.20 1.20 1.20 1.20 4
2.90 3.00 0.80 5.90 10
0.50 0.50 0.40 0.40 0
0.30 0.20 0.20 0.20 0
0.10 0.40 0.40 1.60 4
.. ... 0.50 0.70 0


.40 49.70 50.70 75.50 77.20 72.70 74.80
.90 5.20 7.90 8.10 6.80 8.30 8.10
.40 12.30 10.90 3.70 4.40 4.20 4.10
.70 2.80 2.60 4.00 4.70 7.50 5.90
1.60 5.40 4.90 3.60 2.30 3.10 3.20
.60 0.50 0.50 1.00 1.00 1.30 1.40
.40 0.10 0.40 0.90 0.70 1.40 1.30
.90 23.30 21.60 2.40 2.50 1.10 1.10
.90 0.40 0.40 0.40 0.30 0.30 0.20
.. ... ... ... ... 0.10 0.10

(continued)









Table 3.3-Continued


Source: Computed from various agricultural statistical bulletins of Zambia's Central Statistical Office, Lusaka, Zambia.
Note: The growth rates were calculated as follows:

Q, = Q.oe, (1)

where Q, is physical output in the current year; Q, is physical output in a past year, r is the growth rate; e is a constant; and t is the number
of years that have elapsed.

Taking logarithms of both sides of equation (1) produces

LnQ, = LnQ, + rt. (2)

Rearranging equation (2), one obtains

rt = LnQ, LNQ. (3)

Dividing both sides by t, one obtains

r = (LNQ, LNQ)/t. (4)
SCrops are listed in order of importance for 1975, except in Lusaka Province, where they are listed in the order for 1978.










The strategies for achieving these policy objectives are as follows:
(a) intensify the use of abundant resources, particularly land and labor,
by deemphasizing the use of imported machinery and other inputs that
require substantial capital and foreign exchange; (b) promote and
expand market-oriented production, particularly by supporting small-
scale commercial farmers; (c) streamline the provision of credit to
producers wishing to buy imported agricultural inputs; (d) develop and
disseminate appropriate technology and labor-intensive packages for
crop production as well as reduce substantially the incidence of
livestock and plant diseases, particularly in the subsistence subsectors;
and (e) reduce significantly the cost of production, especially of export
commodities in the commercial farming sector, and thus increase
international competitiveness.
The government plays an important role in efforts to achieve these
objectives and implement these strategies. It invests directly in the
agricultural sector, allocates portions of the central budget to
agriculture, is whole or part owner of parastatal companies that
promote a given crop or crops and market an agricultural product,
provides credit and other inputs to farmers, mobilizes foreign
investments, and sets policies and implements policy instruments. The
government influences the pace of agricultural growth and the
composition and volume of trade in Zambia.


SECTORAL PRICING POLICIES

The government uses a system of price controls to influence the
pattern and composition of production and the distribution and
consumption of most agricultural commodities. Prices are uniform,
determined by a set of criteria, and raised annually. These floor prices
do not take into account geographic differences nor seasonal
fluctuations in supply and demand. The government recently set floor
prices for all commodities except maize and wheat, whose price is both
a floor and a ceiling price. The producers of commodities other than
maize and wheat negotiate prices with buyers, and these prices may be
equal to or greater than floor prices. This partial liberalization of
commodity markets in effect raises the price of wheat and other
commodities above the price mandated by the government by allowing
producers to sell their product to nongovernmental and private
commodity traders.
Consumer prices, particularly for maize and wheat flour, are set
below producer prices. This creates huge subsidies that are a major










component of the government's budget for the agricultural sector. The
producer price of maize and wheat is based on 100 percent of the cost
of production plus allowances for management. The floor price of
soybeans, cotton, and sunflower is based on, among other factors, oil
content and supply cross-price elasticities (Fosu 1987). The floor price
of traditional export and import-substitute crops is based on the parity
price of imports and exports (see Table 3.4). That of other food crops,
such as millet and sorghum, is based on the cost of production and
nutrient value compared with those of maize, which is estimated to be
90 percent. Floor pricing seeks to ensure that producers receive an
"adequate" price. Therefore, the following factors determine the price
of agricultural commodities: (a) cost of production; (b) political
acceptability; (c) profitability; (d) fairness to producers and consumers;
(e) nutrient content; and (f) export and import parity. The government
significantly controls the structure of agricultural commodity prices that
producers receive and consumers pay. These prices profoundly
influence, in turn, the direction, pace, composition, and volume of
agricultural output and trade.
Some of these criteria may, in fact, have little or no bearing on
how the government determines producer prices. The dramatic shifts
in how land is allocated to food crops in general and to maize and oil
seed crops such as sunflower and groundnuts in particular, suggest that
relative prices, represented by high cross-price elasticities, were
sometimes ignored in the years between 1975 and 1986. Determining
producer prices for traditional food crops by comparing their nutrient
content with that of maize suggests that relative prices were perhaps
less important than other considerations.
Although parity pricing is supposed to be one factor determining
producer prices, this is not evident from the data analysis. To examine
the effect that pricing policies have on agricultural commodities, crops
were grouped as import substitutes and export crops, and nominal
protection coefficients were calculated. The border price from 1975 to
1985 was calculated and converted to domestic currency at the official
exchange rate (see Table 3.5). This approach excludes the effects of
trade and exchange rate policies and defines the border price as the
price that farmers could have received if border pricing had been the
main criteria for determining the producer price. A nominal protection
coefficient less than 100 percent means that producers were implicitly
taxed, while a nominal protection coefficient greater than 100 percent
means that producers were implicitly subsidized.
From 1975 to 1985, some crops were taxed; the degree of taxation
was -35 percent for groundnuts, -24 percent for soybeans, -21 percent










Table 3.4-Guaranteed producer price index for selected import-substitute and export crops, Zambia, 1975-86

Import Substitutes Exports
Paddy Shelled Cotton- Virginia
Year Maize" Sunflowerb Soybeans" Rice' Wheatd Groundnuts' Seed' Tobaccod Sorghum"
(1975= 100)
1975 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
1976 126.0 119.0 128.8 120.0 100.0 147.1 133.3 115.8 100.0
1977 126.0 119.0 128.8 120.0 100.0 147.1 133.3 130.4 100.0
1978 136.0 148.8 162.9 120.0 125.0 168.2 153.3 148.6 100.0
1979 180.0 163.1 189.4 133.3 125.0 188.2 153.3 174.5 100.0
1980 234.0 195.2 242.4 150.0 125.0 205.9 153.3 181.2 100.0
1981 270.0 209.5 275.0 155.0 162.5 251.2 153.3 189.4 150.0
1982 320.0 247.0 319.8 233.3 200.0 282.4 156.7 277.1 150.0
1983 366.0 256.0 343.2 333.3 223.4 323.5 173.3 306.1 266.7
1984 490.0 256.0 397.7 333.3 265.6 420.6 193.3 323.3 310.8
1985 566.0 331.9 461.4 333.3 282.5 539.2 223.3 398.5 448.3
1986 1,100.0 499.4 849.2 463.1 527.5 772.6 323.3 609.5 870.8
Source: Doris J. Jansen, "Zambia: A comparative study of the political economy of agricultural pricing policies," University of Zambia,
Lusaka, Zambia, September 1987, Mimeo.
" Kwacha per 90 kilograms.
b Kwacha per 50 kilograms.
' Kwacha per 80 kilograms.
d Kwacha per kilogram.









Table 3.5-Nominal protection coefficient of government producer prices and border prices in Zambia, by crop,
1975-85

Maize" Shelled Groundnutsb Sunflower" Soybeansa
Year P, P, NPC P, Pb NPC Pg Pb NPC P, Pb NPC


25.0 65.9
40.9 61.1
35.7 70.0
42.3 67.6
45.7 70.0
91.5 38.3
61.3 69.7
76.1 63.1
90.8 60.6
107.3 66.6
163.0 80.6


8.4
10.0
10.0
12.5
13.7
16.4
17.6
20.8
21.5
21.5
27.9


73.5
84.0
78.8
85.0
70.3
78.0
65.9
80.0
83.9
87.8
76.1


78.3
78.7
78.5


13.7' 61.3
8.9 112.4
13.1 76.3
14.2 88.0
13.6 100.7
12.0 136.7
11.7 150.4
11.1 187.4
15.5 140.6
26.6 80.8
34.7 80.4


95.9
127.9
103.1


13.2
17.0
17.0
21.5
25.0
32.0
36.3
42.2
45.3
52.5
60.9


23.3 56.7
22.6 75.2
29.5 57.6
32.9 65.3
31.2 80.1
33.4 95.8
34.1 106.5
32.2 101.0
43.4 104.6
57.8 90.8
68.2 89.3


71.8
98.4
75.8


(continued)


1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985


5.0
6.3
6.3
6.8
9.0
11.7
13.5
16.0
18.3
24.5
28.3


6.8
7.5
8.0
8.0
12.8
15.0
20.5
20.0
21.8
27.9
37.2


17.0
25.0
25.0
28.6
32.0
35.0
92.7
48.0
55.0
71.5
131.4


62.2
68.1
64.7


Averages
1975-80
1981-85
1975-85









Table 3.5-Continued
Paddy Riceb Wheat' Cottonseedd Virginia Tobaccod
Year P. P, NPC P, P, NPC P, Ph NPC P, P, NPC
1975 12.0 ... ... 16.0 13.1 122.1 0.3 0.4 75.0 0.8 0.8 100.0
1976 14.4 11.8 122.0 16.0 12.7 126.0 0.4 0.5 80.0 1.0 1.0 100.0
1977 14.4 13.4 107.5 16.0 17.8 87.9 0.4 0.6 66.7 1.0 1.1 90.9
1978 14.4 16.5 87.3 20.0 16.5 121.2 0.5 0.6 83.3 1.3 1.3 100.0
1979 16.0 15.4 103.9 20.0 18.4 108.7 0.5 0.6 83.3 1.5 1.5 100.0
1980 18.0 14.4 125.0 20.0 19.2 104.2 0.5 0.6 125.0 1.6 1.5 113.3
1981 18.6 17.1 108.8 26.0 25.4 102.4 0.5 0.4 100.0 1.7 1.6 106.3
1982 28.0 19.1 146.6 32.0 24.2 132.2 0.5 0.5 100.0 2.4 1.8 133.3
1983 40.0 14.2 281.7 35.8 36.9 97.0 0.5 0.6 83.3 2.6 1.9 136.8
1984 40.0 27.7 144.4 42.5 44.9 94.7 0.6 1.0 60.0 2.8 2.2 127.3
1985 40.0 36.1 110.8 45.2 44.9 100.7 0.7 1.2 58.3 3.5 3.0 116.7
Averages
1975-80 109.1 111.7 85.6 100.7
1981-85 158.5 105.4 80.3 124.1
1975-85 133.8 108.8 83.2 111.3


Source: Doris J. Jansen, "Zambia: A comparative study of the political economy of agricultural pricing policies," University
of Zambia, Lusaka, Zambia, September 1987, Mimeo.
Note: The nominal protection coefficient (NPC) is 1 + (P, r Pb)/rP,, where P, is the government producer price, Pb
is the border price, P, is the world price, and r is the nominal exchange rate.
" Kwacha per 90 kilograms. b Kwacha per 80 kilograms. c Kwacha per 50 kilograms. d Kwacha per kilogram.










for maize, and -17 percent for cottonseed. On the other hand, some
crops were protected: the degree of subsidization was 34 percent for
rice, 11 percent for Virginia tobacco, 9 percent for wheat, and 3
percent for sunflower. Adjusting for overvaluation of currency, the
level of taxation averaged -68 percent for groundnuts, -60 percent for
maize, -58 percent for soybeans, -45 percent for sunflower, -42
percent for wheat and Virginia tobacco, and -35 percent for rice
(Jansen 1987).
The government provides additional incentives to farmers and
potential investors in the agricultural sector. Farmers receive (a) a
bonus in foreign exchange of US$0.50 for each bag they produce above
5,000 bags of maize, 1,000 bags of soybeans, and 2,000 bags of wheat
sold to official marketing organizations; (b) a development allowance
of 10 percent of the total expenditure in any given year for planting tea,
coffee, bananas, and citrus fruits; (c) a reduced tax rate of 15 percent
on income earned from agriculture; (d) a two-year period in which to
write off farm machinery and equipment; (e) a five-year tax holiday on
dividends derived from farm income; (f) an exemption from paying
duties on imported machinery and equipment for agriculture; (g) a
withdrawal of the selective employment tax; and (h) a retention of 50
percent of the foreign exchange earned on agricultural exports.
These incentives benefit commercial farmers, who contribute
relatively little to the agricultural gross domestic product. Small-scale
farmers would benefit more if they were encouraged to develop more
productive cooperatives that could then be grouped into informal
farmers associations and if the US$0.50 foreign exchange bonus could
be applied to marketing groups. Applying the bonus to these groups
might, however, benefit commercial farmers who form joint marketing
ventures more easily than small-scale farmers can. Exporting agencies
could also pay a premium to small-scale farmers who do not directly
export their own product. Originating from the 50 percent retention of
foreign exchange, such a premium would stimulate production.


MARKETING AND SUBSIDY POLICIES

Until recently, when the government partially liberalized the
marketing system, the National Agricultural Marketing Board enjoyed
a statutory monopoly over the marketing of all agricultural
commodities. The Board now purchases maize from provincial
cooperative unions in provinces with a surplus, imports and sells maize
to cooperative unions in provinces with a deficit, maintains national










strategic reserves, and imports fertilizers. The provincial cooperative
unions purchase produce directly from farmers, market it to other
provinces, and supply maize directly to provincial milling companies.
Although designed to serve their members, provincial cooperative
unions now purchase crops from nonmembers as well.
The partial liberalization of the marketing system also allows
private commodity merchants to purchase agricultural commodities
directly from producers at prices at or above the government-
determined floor price. Provincial cooperative unions are thus the
buyers of last resort. The marketing policy adjustments also seek to
make the marketing organization more efficient and provide incentives
to producers.
Subsidies, both to consumers and to producers, rose as a
percentage of the Ministry of Agriculture's budget from 6 percent in
1981 to 70 percent in 1986 (see Tables 3.6 and 3.7). The government
recognizes that this share is too high and is committed to reducing its
subsidies to the agricultural sector. Subsidies comprised 66 percent of
the agricultural budget in 1981 and 58 percent in 1986, an annual
decline of 2 percent. Moreover, agricultural subsidies dropped from 20
percent of the agricultural gross domestic product in 1981 to 16 percent
in 1985, an annual decline of 1 percent.
The rate at which government subsidies to particular sectors rises
or declines is sensitive to a number of factors, including the policy of
maintaining uniform prices. Uniform prices, particularly of maize,
encourages production in areas located far from consumption centers
and increases the cost of transportation and handling (Jansen 1987).
The level of government subsidy should perhaps also include implicit
subsidies on credit, such as nominal interest rates that are lower than
the rate of inflation and investments in research and extension. The
source of the subsidized commodity is also a factor, that is, whether a
commodity is produced domestically or is imported, how the price of
the import compares with that of the domestic product, and how far the
production center lies from the consumption center. The level at which
agricultural products and inputs are subsidized depends on the
commodity produced, while the extent of subsidy support depends on
the type of inputs and level of management used by each type of
producer.
Although subsidies transfer resources from lenders and taxpayers
to borrowers and consumers, they also work against the objective of
equity. In 1982, the average rate of subsidy per bag of fertilizer
equaled 60 percent of the cost of production, storage, and handling.









Table 3.6-Budgetary expenses in nominal terms, Zambia, 1979-86

MAWD as a
Percent of Subsidies as
MAWD Government Government a Percent of
Year Recurrent Capital Subsidies Budget Budget Budget MAWD Budget
(KI,000)
1979 119,211.3 15,317.6 17,939.4 152,468.3 956,410.7 16 12
1980 225,001.5 20,767.0 14,854.2 260,632.7 1,657,566.6 16 6
1981 131,115.5 18,085.9 10,037.1 159,238.5 1,388,007.6 11 6
1982 190,225.4 25,438.9 21,226.6 236,920.9 1,643,237.2 14 9
1983 84,697.8 31,862.8 16,912.0 133,472.6 1,476,361.4 9 13
1984 73,110.7 28,538.4 21,113.1 122,762.2 1,484,625.7 8 17
1985 47,140.1 46,551.0 171,670.6 265,361.7 2,184,332.8 12 65
1986 74,122.6 159,332.0 548,145.4 781,600.0 5,260,997.1 15 70
Annual
growth rate
(percent) 6 29 43 20 21 ...
Source: Compiled from various financial reports of the government of the Republic of Zambia, 1979-86.
Note: MAWD is the Ministry of Agriculture and Water Development. These figures do not include resource flows to the
Ministry of Co-operatives and Ministry of Lands and Natural Resources or from other sectors, including the private
sector.









Table 3.7-Budgetary expenses in real terms, Zambia, 1979-86

MAWD as a
Percent of Subsidies as
MAWD Government Government a Percent of
Year Recurrent Capital Subsidies Budget Budget Budget MAWD Budget


1979
1980
1981
1982
1983
1984
1985
1986


131,001.4
225,001.5
111,398.0
160,663.4
64,262.4
48,481.9
25,087.9
25,143.4


Annual
growth rate
(percent)


16,832.5
20,767.0
15,366.1
21,485.5
24,175.1
18,924.6
24,774.3
54,047.5



15


19,713.6
14,854.2
8,527.7
17,927.9
12,831.5
14,000.7
91,362.8
185,938.1


(K1,000)
167,547.6
1,657,566.6
1,179,785.5
1,387,869.3
1,120,152.8
984,499.8
1,162,497.5
1,784,598.8


1,051,000.8
1,657,566.6
1,179,785.5
1,387,869.3
1,120,152.8
984,499.8
1,162,497.5
1,784,598.8


Source: Compiled from various financial reports of the government of the Republic of Zambia, 1979-86.
Note: MAWD is the Ministry of Agriculture and Water Development. These figures do not include resource flows to the
Ministry of Co-operatives and Ministry of Lands and Natural Resources or from other sectors, including the private
sector.










During that same year, 90 percent of all fertilizer was distributed to the
so-called traditional line-of-rail provinces, including Eastern Province.
This left the rest of the provinces only 10 percent of all fertilizer
(World Bank 1984).
Market performance is influenced by the existing pricing policy,
which does not change during the year. The lack of a premium to cover
the cost of storing and managing inventory discourages producers and
private millers or processors from storing the product. It also
encourages producers to sell their produce immediately after the
harvest, which means that the government must finance large crop
purchases over a short period and mobilize reliable and adequate
transportation and storage facilities to handle the product. Even after
1985, transportation rates still accounted for the distances to be covered
and the quantity to be transported, but not the quality of the road
surfaces. The absence of premiums to store and manage inventory
continues to discourage the participation of private traders.
After liberalization, private commodity merchants did begin to
market products whose processing facilities lay outside the domain of
parastatals, such as wheat, soybeans, and groundnuts, and commodities
whose consumer price was not controlled by the government. It is not
clear how many producers receive the US$0.50 bonus or how much the
government pays in lieu of this incentive. It is clear, however, that the
bonus does not encourage producers to sell their produce to private
merchants because it only covers products delivered to official
marketing entities. The government does not have the staff or the
financial resources to authenticate deliveries to private merchants.
To improve equity and increase output, producer subsidies must
take into account differences in the level of demand for production
inputs among various categories of farmers and products. Given
shortfalls in the supply of inputs, the government will have to balance
the demands of different categories of producers and their expected
contribution to the overall growth of the agricultural sector. This
balance should reflect the government's national objectives for the
agricultural sector.


CREDIT POLICIES

The relatively poor performance of the agricultural sector has been
attributed partly to its inadequate financial base. The overall financial
requirements of the agricultural sector are, however, unknown.
The government is involved in financial credit markets to a great










degree. This involvement includes the whole or partial ownership of
commercial banks, pension funds, and insurance concerns, all of which
exercise significant direct and indirect control over allocating resources
to the agricultural sector. The government also maintains a policy of
differentiated interest rates, which places the interest on loans to the
agricultural sector at 1 percentage point above the prime lending rate
compared with 3 percentage points on loans to other sectors.
Since interest rates on loans to the agricultural sector are low, the
rates of return on investments are probably lower in agriculture than in
other sectors. It appears, however, that if the policies and practices
governing land tenure were changed and capital gains were included in
the rate of return, investments in the agricultural sector would realize
rates of return comparable to those realized in other sectors.
The government also imposes a ceiling on interest rates, which
reduces the amount of credit that financial institutions can effectively
and profitably lend to the agricultural sector. Financial institutions
cannot charge a premium to cover the additional costs and risks
associated with loans to nontraditional borrowers. Consequently,
financial institutions in effect raise interest rates by charging
commitment fees, registration fees, and other types of fees.
Although the government allows loans to be secured with different
rates of maturity, the ceilings placed on interest rates are binding on all
loan portfolios. The result is that a stable, but small amount of loans
is delivered to the agricultural sector; between 1980 and 1984,
approximately 50 percent of the revealed demand was satisfied
(Zambia, Ministry of Agriculture and Water 1986b) The excess demand
for credit was stimulated in part by the low interest rate. Furthermore,
the total disbursement of loans from 1980 to 1984 shifted progressively
from loans for long-term development to loans for short-term, seasonal
production (see Table 3.8); this distribution improved marginally in
1985.
Commercial farmers and politicians create the demand for low
interest rates. Commercial farmers are concerned that the cost of
borrowing is high, while the price they receive for their product is low.
Politicians are concerned that high interest rates keep small-scale
farmers (who form the bulk of the rural population; see Table 3.9)
from participating in the credit market. If interest rates were high,
agricultural output would suffer because small farmers would not be
able to acquire and apply improved inputs, and income distribution in
rural areas would become even more skewed.
Only 4 percent of the estimated 600,000 rural households had
access to formal credit in 1984 (Zambia, Ministry of Agriculture and







44


Table 3.8-Loans disbursed for short-term production and long-
term development in Zambia, by end use, 1980-85


End Use 1980 1981 1982 1983 1984 1985

(percent)
Crop inputs
Production 88 95 98 98 98 91
Development 12 5 2 2 2 9
Livestock
Production 56 73 58 50 52 44
Development 44 27 42 50 48 56
Machinery
Production 31 28 89 79 60 50
Development 69 72 11 21 40 50
Land
Production 18 42 28 23 66 58
Development 82 58 72 77 34 42
Construction and
improvements
Production 23 28 87 67 97 56
Development 77 72 13 33 3 44
Other
Production 85 98 98 98 90 99
Development 15 2 2 2 10 1
Total
Production 73 80 87 86 93 85
Development 27 20 13 14 7 15

Source: Zambia, Ministry of Agriculture and Water Development,
Planning Division, Survey of agricultural loans issued by
commercial banks and other financial institutions during
1979/80-1983/84 financial years, Lusaka, Zambia, July 1986.



Water 1986b). Moreover, credit was highly concentrated in a few
provinces (see Table 3.10). More than 90 percent of all loans went to
Central, Lusaka, Southern, and Eastern provinces, which have the
highest concentration of commercial farmers. The loans disbursed to
small-scale farmers tend to be small, and the cost of procuring a loan










Table 3.9-Number of farm units in Zambia, by type of farm and
province, 1980

Commercial
Large- Medium- Small-
Province scale scale scale Subsistence Total

Southern 320 8,000 49,000 7,500 62,720
Central 300 7,630 21,400 18,400 47,730
Lusaka 90 1,910 4,300 13,400 19,700
Copperbelt ... 490 2,000 17,900 20,399
Eastern 20 3,100 27,000 80,900 111,920
Western ... ... 5,450 85,400 90,350
Northwestern ... 80 2,900 53,600 56,580
Luapula ... 50 2,050 73,600 75,700
Northern ... 90 7,400 111,900 119,390
Total 730 21,350 122,400 462,600 607,080

Source: Zambia, Ministry of Agriculture and Water Development,
Food strategy study. Main report. Annex on socio-regional
framework (Lusaka, Zambia: MAWD, 1981).
Note: Small-scale commercial units are less than 10 hectares,
medium-scale units are between 10 and 40 hectares, and
large-scale units are more than 40 hectares.


generally depends on its size and maturity. Thus the small loans typical
of small-scale farmers tend to be eliminated because the overhead cost
of administering them is high. The distribution of loans both within and
among provinces is as skewed as the access to credit.
The credit that commercial banks extend to agriculture and to the
economy in general declined in real terms, but increased in nominal
terms between 1980 and 1985 (see Table 3.11). Subsidies form an
increasingly large share of total credit and are becoming increasingly
important to the agricultural sector. The subsidized dimension of
agricultural credit continues to grow as the spread between the nominal
interest rate and the ever-rising inflation rate continues to widen.
Between 1980 and 1985 policies governing how credit is allocated
among sectors remained unchanged.
Internal financing in Zambia ranges from 42 to 70 percent
(Zambia, Ministry of Agriculture and Water Development 1983b). To










Table 3.10-Disbursement of loans to farmers in Zambia, by
province, 1979-84


Province 1979/80 1980/81 1981/82 1982/83 1983/84

(percent)

Central 30.73 22.02 9.02 15.27 10.85
Copperbelt 4.40 3.22 5.16 4.01 3.78
Eastern 7.34 8.60 4.38 4.83 14.34
Luapula 0.62 0.72 0.85 0.77 0.63
Lusaka 22.92 28.87 46.90 45.93 41.46
Northern 2.53 2.16 2.73 3.09 1.41
Northwestern 0.79 0.77 0.93 0.46 0.45
Southern 30.13 33.10 29.29 23.56 25.99
Western 0.51 0.56 0.75 2.07 1.10

Total 100.00 100.00 100.00 100.00 100.00

Source: Zambia, Ministry of Agriculture and Water Development,
Planning Division, Survey of agricultural loans issued by
commercial banks and other financial institutions during
1979/80-1983/84 financial years, Lusaka, Zambia, July 1986.


be adequate, institutional credit to agriculture should constitute 40
percent of the total cost of production, giving an internal financing ratio
of 60 percent. The government's policy of keeping interest rates
substantially below the rate of inflation discourages additional financing
from being reinvested in agriculture. That is, the rate of reinvestment
in agriculture is low because the financial recoveries from agricultural
lending and additions to the portfolio of agricultural lending are low.
Producers have no incentive to use their own resources to finance
production.
High internal financing ratios of approximately 70 percent reflect,
perhaps, the lack of available funds to satisfy the demand for loans and
the tendency of institutions that supply inputs to favor clients who pay
with cash over those who pay with local purchase orders. Also, since
only 4 percent of the rural population has access to credit, the
agricultural sector is undercredited. Low interest rates and concentrated











Table 3.11-Commercial bank advances and implicit credit subsidies transferred to the agricultural sector of Zambia,
1980-85
Annual

Economic Indicator 1980 1981 1982 1983 1984 1985 Growth Rate
(thousands of 1980 kwacha)

Average annual balance 119,858.0 77,186.0 109,684.0 116,146.0 105,435.0 71,055.0 -8.0
Commercial bank advances
To the agricultural sector 23,924.0 61,543.9 55,712.7 43,807.4 48,115.6 47,722.5 11.0
Total 354,296.0 455,838.2 406,673.6 371,744.5 408,903.9 347,875.7 -0.3
Gross domestic product
Total 3,063,600.0 3,185,923.2 3,115,511.2 3,113,328.3 3,187,459.5 3,369,930.8 2.0
Agricultural 435,300.0 470,518.0 425,710.0 450,455.0 475,597.0 492,390.0 2.0
Credit subsidies transferred
to the agricultural sector 1,989.0 1,678.0 3,585.0 4,733.0 2,795.0 6,211.0 19.0
Ratios (percent)
Total average balance to the agricultural
gross domestic product 0.005 0.004 0.010 0.010 0.010 0.010 n.a.
Total bank advances to the the agricultural sector 0.250 0.160 0.260 0.260 0.220 0.140 n.a.
Credit subsidies to the agricultural
gross domestic product 0.010 0.020 0.020 0.010 0.020 0.010 n.a.
Bank advances to the total gross domestic product 0.120 0.140 0.130 0.120 0.130 0.100 n.a.
Source: Basic data were collected from various statistical bulletins of Zambia's Central Statistical Office and financial reports of the government of the
Republic of Zambia by the Bank of Zambia, 1981-86.
Note: The figures have been deflated by a gross domestic product deflator. The average annual balance includes credit and grants to parastatal
companies and loans from commercial banks and other financial institutions. The credit subsidies transferred to agriculture were estimated by
multiplying the annual balance by -i, where i is (is r)/l + r, where r is the annual rate of inflation and is is the average nominal rate of interest
for agricultural credit.










credit appear to have benefited mainly commercial farmers. Equally
important, the prevailing interest rates do not make annual crop credit
more available to successful farmers. The growth of output for selected
crops was apparently due to an expansion of the area sown rather than
an increase in productivity.
On the whole, credit plays a minimal role in helping farmers adopt
higher-yielding techniques in production. It does, however, play a role
in sustaining commercial farmers at their existing level of production.
Nonetheless, within a given group of farmers producing a given crop,
individuals seem to increase their productivity in proportion to the
credit they receive. The significance of credit as a means of stimulating
technical change remains to be established empirically.


EXCHANGE RATE AND TRADE POLICIES

Trade and exchange rate policies have a profound impact on
agriculture and rural development in Zambia. In fact, they seem to
have more influence, especially on the movement of capital within and
between sectors, than policies directed at specific sectors.
From October 1985 to May 1987, the exchange rate was
determined through a weekly auction system. During that time, 5
percent of the total amount of foreign exchange available for auctioning
went to the agricultural sector. This share was low because liquidity
within the agricultural sector was low and the financial resources of
small-scale farmers were severely constrained. The bulk of the foreign
exchange available to the agricultural sector was used to acquire spare
parts and rehabilitate existing machinery and equipment. The exchange
rates that emerged may not have reflected a scarcity of foreign
exchange, but they did have a profound impact on the agricultural
sector.
When the kwacha was devalued in 1982, the cost of production
rose 116 percent, the direct costs of agricultural inputs in kwacha grew,
the agricultural sector was highly dependent on inputs from import-
intensive sectors within the economy, and prices rose in general. The
impact that devaluation had on the price and comparative advantage of
various commodities depended on the producer's level of technology
and management. The ratio of the border price to the domestic cost of
production for 1986 without auction was as follows: for rice,
1.28:2.69; for maize, 1.54:2.28; for soybeans, 1.02:1.51; for cotton,
3.98:5.78; and for wheat, 1.03:1.39. Since all the ratios were greater
than 1.0, Zambia had a comparative advantage in producing rather than










importing these crops (Zambia, Ministry of Agriculture and Water
Development 1986a). Commodities, such as maize and cotton, that are
produced primarily by small-scale farmers have the highest ratios and
offer the greatest opportunities for increasing production for domestic
use and for export.
Since May 1987, when the auction system was discontinued, the
kwacha has been pegged at K 8.00 to US$1.00. The business
community and scholars argue that the kwacha is overvalued, although
the amount of overvaluation is not certain. Exchange rates higher than
K 20.00 to US$1.00 are not uncommon on the unofficial foreign
exchange market.
A system of import quotas and foreign exchange allocations made
through the Foreign Exchange Management Committee replaced the
auction system. Through this arrangement, the government exercises
quantitative restrictions that limit aggregate imports and regulate the
structure of imports and exports. Although this system influences the
flow of foreign exchange to various sectors, it has not influenced the
end use of foreign exchange. Administrative constraints keep it from
closely monitoring the nature and composition of imports. The
government's criteria for budgeting and allocating foreign exchange
reflect, however, what is socially desirable and beneficial.
Import substitutes and export commodities are important to
examining the impact of trade and exchange rate policies (see Table
3.12 for the methodology of this examination and the classification of
commodities). The level of direct export subsidies grew from 3 percent
in 1977 to 75 percent in 1985. Over the 10-year period, exports
received an average direct export subsidy of approximately 9 percent
in nominal terms. If a real "equilibrium" exchange rate were used, the
rate of export subsidies would be lower.
The government continues to restrict imports, and the tariff rates
reported here do not account for scarcity premiums that occur when the
supply of foreign exchange falls short of the demand, which is the main
reason for quantitative restrictions. Between 1975 and 1985, the
domestic price of import substitutes was higher than the foreign price
by an average of 85 percent. This changed between 1983 and 1985,
when the domestic price of import substitutes was lower than the
foreign price by about 41 percent. Based on the figures for overall
trade bias presented in Table 3.12, trade policies in Zambia from 1976
to 1985 favored producers of import substitutes over producers of
exports; this trend remains fairly stable (for the methodology used, see
Bautista 1987). The picture improved marginally in 1982/83, when the
kwacha was devalued 20 percent.










Table 3.12-Nominal and effective exchange rates, implicit export
tax and tariff rates, and overall trade bias in Zambia,
1975-85


Implicit Implicit Overall
Nominal Effective Export Tariff Trade
Exchange Exchange Rate Tax Rate Rate Bias
Year Rate EERx EERm (Tx) (Tm) (OTB)


1975 0.643 0.788 0.785 0.226 0.220 1.004
1976 0.713 0.813 1.038 0.140 0.456 0.783
1977 0.790 0.765 0.818 -0.032 0.035 0.935
1978 0.800 0.840 0.892 0.050 0.115 0.942
1979 0.793 0.808 0.926 0.110 0.168 0.873
1980 0.789 0.885 1.084 0.122 0.374 0.816
1981 0.860 0.855 1.066 -0.006 0.240 0.802
1982 0.928 0.940 1.354 0.013 0.460 0.694
1983 1.251 0.913 1.228 -0.270 -0.018 0.743
1984 1.940 0.855 0.996 -0.559 -0.487 0.858
1985 3.139 0.780 0.912 -0.752 -0.710 0.855

Source: Calculated by the author.
Note: The overall trade bias (OTB) is calculated as: OTB = [P, /
P,] / [P*x / P*J, where P, = (1 tr; P, = (1 t)r; P*,
= EERX, P*,; and P*m = EER_ P*m. Hence OTB = [(1
t / (1 t)] = [EER, / EERJ, where tx and tm are
implicit export tax and import tariff rates, r is the average
nominal exchange rate, EERx and EERm are the effective
exchange rates for exports and imports, respectively. If OTB
is less than 1, there is evidence of an antitrade bias where the
policies favor the production of import substitutes over that of
export commodities. If OTB is greater than 1, there is
evidence of a trade bias where the policies favor exports over
imports. Finally, if OTB equals 1, neither is being
encouraged. EERx includes maize, groundnuts, cotton, and
Virginia tobacco, while EERm includes maize, sunflower,
soybeans, rice, and wheat. Maize appears both as an import
substitute and as an export because it switched positions over
the years. These calculations assume the absence of import
restrictions.










By revising producer prices upward each year, the government
may have compensated for the currency overvaluation. However, even
though the revised producer prices may approximate border prices in
nominal terms, the annual revisions may leave farmers worse-off in
real terms (World Bank 1986). Based on the official exchange rate, the
incentives given to cereal producers in Zambia increased 46 percent
between 1971 and 1983, which means that domestic prices increased
significantly more than border prices. When border prices are
calculated taking into account real appreciation, incentives only
increased 25 percent. The incentives given to export crops over the
same period decreased 7 percent in nominal terms, but 20 percent in
real terms (World Bank 1986). Thus exchange rate policies have
different effects on different commodity groups.


LAND TENURE POLICIES

A dual land tenure system exists in Zambia. Under one system, the
president holds the title to state land and delegates authority over it to
the commissioner of lands. Rental of state land is set at a nominal
average of K 0.80 per hectare per annum. The lease is for a maximum
period of 99 years. Land in Zambia has no market value, and the
compensation of holding a lease is limited to the value of improvements
not exhausted. Therefore, the value of land consists of the cost of
investments in infrastructure and improvements. Land has an informal
market value, however, and changes hands at a rate much higher than
the rate mandated by the government. Under the system of customary
land tenure, traditional chiefs govern the use of land under their
jurisdiction.
Several studies on land tenure in Zambia have suggested that the
traditional land tenure system should be gradually converted into
statutory leaseholds. This could be done by establishing differential
rents that reflect comparative values based on the potential use of the
land, which would make long-term credit more accessible to
leaseholders (World Bank 1984). Although the absence of tenure under
the traditional system does not give producers secure opportunities to
obtain credit and invest in development, the investments in
infrastructure, services, and markets that the government and private
individuals undertake are more important than the provision of secure
credit if they increase the value of undeveloped land (Fosu 1987).










RESEARCH AND EXTENSION SERVICES

In the past, research and extension activities concentrated
principally on the needs of commercial farmers, and a committee of
experts determined the policies and priorities of national plans to
develop the agricultural sector. Recently, however, adaptive research
planning teams shifted the emphasis to addressing the constraints of
small-scale farmers. These teams were created to ensure that research
and extension would complement each other. Moreover, research
activities were reorganized into agroecological zones. The country is
now divided into three zones served by three main research stations,
which are, in turn, supported by a network of provincial and district-
based extension stations. Accompanying this reorganization, research
was reoriented to managing acid soil, increasing soil productivity,
integrating agroforestry and livestock activities into farming systems,
and integrating biological control of crop diseases. The approach now
focuses on conserving soil moisture; developing early maturing,
drought tolerant, and prolific crops; and relating soil, plants, and water
to one another with the aim of achieving optimal results by applying
water in a timely fashion.
The research program continues to improve varieties suited to the
conditions of each region and farming system and to examine issues
related to problems after the harvest. Under the new institutional
arrangement, joint research priorities are planned between the adaptive
research planning teams and the research and extension staff, and a
certain amount of decentralization is allowed at the level of the
agroecological zone. The government recognizes that policies and
targets will only succeed if they are rooted firmly in the local
environment. In the long run, this reform seeks to promote research
and extension that takes into account and addresses effectively the
constraints on farmers. In the short run, improved adaptive trials
address the most relevant needs of farmers.
The training and visit system of extension is designed to improve
the performance of extension services. Although this system has more
contact with small-scale farmers than previous ones, it still
communicates a message based on the conditions and experiences of
commercial farmers. In the past, research focused on adapting the
standard recommended practices to suit the local conditions of the
commercial farming community. Because the training and visit system
uses extension workers more effectively than previous systems, it is
adopted by many countries such as Zambia where the ratio of extension
worker to farmer is greater than 1:600. On the other hand, the training










and visit system addresses standard problems and consequently
proposes standard solutions, which may not be equally appropriate for
commercial and small-scale subsistence farmers or for diverse
agroecological regions. Perhaps most important, the extension system
requires increased and consistent funding to be effective.


RESOURCE ALLOCATION TO SECTORS

For the most part, analysis of how resources are allocated seeks to
reform the system of public expenditures and make resource allocation
to the agricultural sector more efficient. How revenue is collected
generally receives little attention, even though Zambia's agricultural
sector is taxed less than other sectors. To review the priorities that
govern how public monies are spent on agriculture and to examine
changes in the pattern over the years would require a functional
classification of public expenditures in the sector. Unfortunately, the
data needed to accomplish this are not available.
The data that are available indicate that the recurrent and capital
expenditures of the Ministry of Agriculture and Water Development
grew 21 percent in nominal terms and only 7 percent in real terms
between 1979 and 1986 (Tables 3.6 and 3.7). The share of the
agricultural sector, including subsidies, in the total national budget
averaged 13 percent per year during the same period (see Table 3.13).
When subsidies are excluded, the average share of agriculture was less
than 6 percent, meaning that more than 50 percent of the budget
represented subsidies. The subsidy component of the Ministry of
Agriculture and Water Development's budget increased from 6 percent
in 1981 to 70 percent in 1986. At the national level, subsidies increased
their share of the public budget from 26 percent in 1980 to 58 percent
in 1987 (see Table 3.14). Within the agricultural sector, the share of
subsidies declined from 66 percent in 1981 to 58 percent in 1986. This
reflects both a deliberate government policy to reduce subsidies and a
general economic crisis in the country.
Despite its growth at an annual rate of 20 percent in nominal terms
and 6 percent in real terms, the ministry's budget has significant
internal imbalances. First, an imbalance exists between personnel
emoluments--that is, salaries, wages, and bonuses--and recurrent
departmental charges--that is, operating costs for materials and
services. The ratio of recurrent departmental charges to personnel
emoluments declined from 1.00:1.05 in 1979 to 1.00:0.34 in 1986 (see
Tables 3.15 and 3.16). This significantly affects the ministry's ability









Table 3.13-Budget allocations to programs in the agricultural sector, Zambia, 1981-86


Program 1981 1982 1983 1984 1985 19862

(K1,000)


Administration
Area development
Crop and livestock
production
Agricultural extension,
land use, and
information services
Agricultural research
Veterinary services
Agricultural education
Input supply and
marketing
Agricultural credit
Forestry development
Fisheries development


1,578.5
3,929.2

5,336.3


10,556.8
2,590.5
5,516.5
3,208.0

5,284.1
9,100.0
8,078.7
1,537.7


2,039.9
7,556.8

8,398.7


16,303.5
5,117.4
8,122.2
4,678.6

10,014.1
9,200.0
20,558.9
1,841.1


3,193.0
6,337.4

15,278.1


23,207.8
4,079.7
9,721.4
2,922.4

17,649.7
696.0
7,274.9
2,879.6


3,033.5
21,852.2

4,980.0


24,349.1
4,613.8
8,263.4
4,630.3

21,049.2
250.0
4,492.2
2,865.7


4,067.3
19,225.0


5,985.6
59,273.8


9,478.0 28,097.0


25,257.9
5,393.5
14,529.0
7,551.7

18,769.8
3,500.0
7,692.5
3,394.0


44,077.3
9,607.3
20,192.6
13,543.3

37,968.2
6,500.0
12,539.3
4,169.6









Total
Agricultural subsidies
Agricultural programs
and subsidies
National budget

Agriculture as a percent of
the national budget
With subsidies
Without subsidies
Agriculture as a percent of
the agricultural
Budget
Gross domestic product


56,716.3 93,831.2 93,239.8 100,379.8 118,858.7 241,954.0
108,786.7 153,429.1 81,116.4 90,143.3 150,077.0 332,077.0


165,503.0 247,260.3 174,356.2
1,388,607.6 1,643,237.2 1,476,361.4


190,523.1
1,484,625.7


268,935.7
2,181,650.2


574,031.0
5,260,997.1


(percent)


11.9
4.1


65.7
19.6


15.1
5.7


62.1
31.2


11.8
6.3


46.5
13.7


12.3
5.5


55.8
16.4


10.9
4.6


57.9
...


Source: Compiled from various financial reports of the government of the Republic of Zambia, 1981-86.
Note: The agricultural sector comprises agriculture, forestry, and fisheries.
" Preliminary figures.











Table 3.14-Financial operations of the central government of Zambia, 1980-87
Financial Operation 1980 1981 1982 1983 1984 1985 1986 1987
(K million)


Total revenues and grants
Tax revenue
Minerals
Imports
Domestic goods
Income
Nontax revenue
External grants
Total expenditures and net lending
Current expenditures
Personnel emoluments
Recurrent departmental charges
Subsidies
Construction and statutory expenses
Interest payments
Domestic
External
Other payments
Transfers and pensions
Capital expenditures and net lending
Capital outlays
Net lending


791.4 834.1
684.5 727.8
41.7 1.0
98.1 108.3
273.4 310.7
271.3 307.8
83.2 83.8
23.7 22.5

1,581.1 1,292.4
1,022.6 1,152.3
250.9 354.6
147.7 153.2
206.4 109.1
337.1 444.2
126.8 117.6
64.2 70.5
62.6 47.1
210.3 326.6
80.5 91.2
558.5 140.1
121.3 130.4
437.2 9.7


869.1 1,069.1 1,114.8 1,579.5 3,206.4 4,371.1
744.4 940.9 975.1 2,651.6 3,725.7
0.0 53.4 94.5 129.5 405.4 475.2
111.0 83.3 122.3 288.1 820.9 1,334.6
337.0 425.5 420.8 447.0 580.4 781.3
296.4 378.7 337.5 474.1 844.9 1,134.6
96.1 75.2 117.1 207.9 383.9 554.1
28.6 53.0 22.6 32.9 170.9 91.3
1,544.2 1,379.4 1,439.4 2,084.4 5,108.9 5,537.4
1,233.7 1,184.1 1,262.3 1,829.4 4,135.5 4,884.5
378.9 403.0 451.0 536.3 661.1 1,014.7
240.4 202.6 219.5 310.7 567.9 1,086.8
154.1 82.2 90.5 188.4 569.9 677.4
317.5 358.5 364.7 615.2 1,996.8 1,684.1
149.6 184.3 164.1 336.1 1,125.1 738.4
74.4 147.5 120.0 266.0 671.0 617.8
75.2 36.8 44.1 70.1 454.1 120.6
167.9 174.2 200.6 279.1 871.7 945.7
142.8 137.8 136.6 178.8 339.8 421.5
310.5 195.3 176.9 255.0 973.4 652.9
198.5 153.9 150.4 180.6 511.4 560.5
112.0 41.4 26.5 74.4 462.0 92.4










Overall deficit (financing requirements)
External (net)
Domestic nonbank (net)
Bank borrowing
Ratios
Total revenue and grants
to total expenditures
Domestic revenue to total expenditures
Domestic revenue to


gross domestic product 25
Capital expenditures to total expenditures 35
Capital expenditures to
gross domestic product 18
Overall deficit to gross domestic product -26
Bank borrowing to gross domestic product 16
Bank borrowing to overall deficit 61
External financing to total financing 33
Subsidies to total financing
(overall deficit) 26
Subsidies to current expenditures 20
Subsidies to bank borrowing 43


789.7 458.3 675.1 310.3 324.4 504.9 1,902.5 1,166.3
264.0 247.4 111.6 100.8 40.6 62.5 282.7 (56.6)
41.7 42.0 38.9 81.0 21.5 37.6 49.4 40.9
484.0 168.9 524.6 128.5 262.3 404.8 1,570.4 1,182.0

(percent)

50 65 56 78 77 76 63 79
49 63 54 74 76 74 59 77


23 23 24 22 22 23 24
11 20 14 12 12 19 12


24
9
65


Source: Compiled from national accounts statements of the government of the Republic of Zambia, 1979-86.









Table 3.15-Expenditures in nominal terms and ratio of personnel emoluments to recurrent departmental charges and
of recurrent to capital expenditures, Zambia, 1979-86


Recurrent Ratio of Recurrent Ratio of Capital
Personnel Departmental Departmental Charges to to Recurrent
Year Emoluments Charges Personnel Emoluments Expenditures

(K1,000)

1979 8,405.3 8,819.0 1.05 0.13
1980 8,899.2 10,897.9 1.23 0.09
1981 10,313.0 11,874.0 1.15 0.14
1982 15,466.3 20,830.3 1.35 0.13
1983 15,733.9 23,472.3 1.49 0.38
1984 33,335.8 7,439.1 0.22 0.39
1985 35,975.2 10,343.1 0.03 0.99
1986 56,342.3 18,896.1 0.34 2.15

Source: Compiled from various financial reports of the government of the Republic of Zambia, 1979-86.








Table 3.16-Expenditures in real terms and ratio of personnel emoluments to recurrent departmental charges and of
recurrent to capital expenditures, Zambia, 1979-86


Recurrent Ratio of Recurrent Ratio of Capital
Personnel Departmental Departmental Charges to to Recurrent
Year Emoluments Charges Personnel Emoluments Expenditures

(K1,000)

1979 9,236.6 9,691.2 1.05 0.13
1980 8,899.2 10,897.9 1.23 0.09
1981 8,762.1 10,088.3 1.15 0.14
1982 13,062.7 17,593.2 1.35 0.13
1983 11,937.7 17,809.0 1.49 0.38
1984 22,105.0 4,933.1 0.22 0.39
1985 19,145.9 5,504.6 0.03 0.99
1986 19,112.0 6,409.8 0.34 2.15

Source: Compiled from financial reports of the government of the Republic of Zambia, 1979-86.










to deliver essential services to farmers. Second, an imbalance exists
between current and capital outlays. Although current expenditures
declined in both nominal and real terms, as shown in Tables 3.7 and
13, capital expenditures continued to grow. The ratio of capital to
current expenditures thus increased from 1.00:0.13 in 1979 to
1.00:2.15 in 1986. Since the incremental recurrent cost required by 1
kwacha of capital expenditure is approximately 11 percent (and the real
annual growth rate in capital expenditure was about 15 percent between
1979 and 1986), a real growth rate in recurrent expenditures of about
4 percent was needed over the same period (Jansen 1986).
Other issues are important to understanding the implications of the
level and pattern of investment in greater depth. First, the current and
capital expenditures on human capital formation, livestock programs,
forestry programs, and agricultural research in capital formation should
be disaggregated and compared with investment expenditures on
noncapital formation, such as administration and planning. Second, the
tax policies that affect agriculture should be analyzed to see (a) whether
the current method of collecting revenue distorts incentives and
supports inefficient patterns of agriculture; (b) whether alternative
methods of collecting revenue could collect the same amount of revenue
while distorting relative prices less; and (c) whether additional revenue
could be collected without having a negative impact on poor farming
households (Norton 1988).



REFERENCES

Bautista, Romeo M. 1987. Production incentives in Philippine
agriculture: Effects of trade and exchange rate policies. Research
Report 59. Washington, D.C.: International Food Policy Research
Institute.

Cooperative Savings Scheme. 1976. Projections of labor force, 1969-
84. Lusaka, Zambia.

Fosu, Joseph. 1987. Impacts of government pricing policies on
agricultural production and the achievement of government policy
objectives in Zambia. Ph.D. diss., Iowa State University, Ames,
Iowa, U.S.A.










Jansen, Doris J. 1986. Zambia: A comparative study of the political
economy of agricultural pricing policies. University of Zambia,
Lusaka, Zambia. Mimeo, January.

1987. Zambia: A comparative study of the political economy
of agricultural pricing policies. University of Zambia, Lusaka,
Zambia. Mimeo, September.

Norton, Roger D. 1988. Policy analysis for food and agricultural
development: Basic data series and their uses. Mimeo.

World Bank. 1984. Zambia: Policy options and strategies for
agricultural growth. Washington, D.C.: World Bank.

1986. World development report, 1985. Washington, D.C.:
World Bank.

1987. World development report, 1986. Washington, D.C.:
World Bank.

Zambia, Central Statistical Office. 1982. Monthly digest of statistics,
October/December. Lusaka, Zambia: Government Printer.

Zambia, Ministry of Agriculture and Water Development, Planning
Division. 1983a. Food strategy study. Main report. Lusaka,
Zambia: MAWD.

1983b. Zambia agricultural finance markets: Appraisal of
recent performance and prospects. Lusaka, Zambia, June.

1986a. The impact of the foreign exchange auction system on
the economy. Lusaka, Zambia.

1986b. Survey of agricultural loans issued by commercial
banks and other financial institutions during 1979/80-1983/84
financial years. Lusaka, Zambia.








Policy Constraints on the Development of
Agriculture and Small-Scale Enterprises in
Rural Zambia


Lundondo Mumeka


This paper assesses Zambia's macroeconomic policies during the
16 years from 1970 to 1986. First, it discusses comprehensive and
aggressive policies to develop agriculture. Such policies are the only
viable means for diversifying the country's copper-dependent economy
and promoting balanced growth and equity. Second, it examines the
government's policies to industrialize and promote the development of
small-scale enterprises (particularly privately owned enterprises) in
rural areas. Third, it analyzes the new paradigms for allocating
resources that were developed by the post-Mulungushi industrialization
policies. Fourth, it stresses the importance of rural, small-scale
enterprises in supporting agriculture and thus promoting economic
growth.


THE STRUCTURAL ORIGIN OF POLICY DEFICIENCIES

Policy deficiencies in Zambia can be traced to endogenous and
exogenous factors. Both factors are essential to analyzing the policy
options chosen by the government.

Endogenous Factors

The copper industry occupies a pivotal position in Zambia's
economy and influences the direction of Zambia's general economic
policy. The overall growth of the Zambian economy depends on the
buoyancy of the revenue generated by the copper industry. Except for
two periods, from 1975 to 1980 and from 1984 to 1985, the copper
industry contributed between 24 and 46 percent of Zambia's gross
domestic product in the 22 years between 1964 and 1986. The copper
industry thus exerts a great deal of influence on the government's fiscal
policy, and the government budget is highly sensitive to changes in
both the production and price of copper.
The copper industry also provides the framework within which
domestic savings and capital formation take place. It is the country's










major source of foreign exchange earnings and generates over 90
percent of Zambia's earnings from exports of merchandise. The mining
industry continues to be the largest employer of wage labor, despite the
decline in its share of employment from 18 percent in 1976 to 16
percent in 1986.'

Exogenous Factors

From 1964 to 1974, Zambia experienced relatively high economic
growth and stability followed by serious convulsions in the world
economy. Most of these were triggered by fluctuations in the real price
of oil, which quadrupled in 1973-74, fell one-sixth between 1974 and
1978, and then increased 80 percent during 1979-80.2 The high cost
of oil imports meant that the imported capital and intermediate goods
required to produce domestic goods and services had to be forgone.




SThe following statistics describe the share that mining and quarrying held
in Zambia's total employment in the formal sector between 1976 and 1986.

1976 1978 1979 1980 1981 1982 1983 1984 1985 1986

(percent)
17.5 17.0 16.3 16.5 16.2 16.2 15.9 16.0 15.9 15.8

Source: Zambia, Central Statistical Office, Monthly digest of statistics
(Lusaka, Zambia, 1987).

2 Other factors also caused convulsions in the world economy (commonly
referred to as external shocks). First, inflation hit double digits in 1973,
receded slightly, and once again soared into double digits late in the decade.
Although Zambia's exports initially profited from the upsurge in global
inflation, the benefits were short-lived. By 1974, the profits earned from the
high price of raw materials were consumed by the skyrocketing price of oil and
oil products. Second, global economic growth took a downswing accentuated
by the steep recessions of 1974-75 and 1980-82. At the same time, the problem
of stagflation in industrialized countries caused import prices to rise
precipitously and export markets and prices to decline by the same magnitude.
Third, interest rates soared to an unprecedented height, which caused the cost
of borrowing money (especially from private banks) and of servicing foreign
debts to rise substantially. The combination of these shocks gave Zambia a
Hobson's choice of going deeply into debt or suffering economic collapse.











As the price of oil rose, so did the dollar value of imported
merchandise (manufactured goods). As Figure 4.1 illustrates, the year-
to-year movements of the unit value index of manufactured goods
began to rise steeply in 1970 and reached a peak of 100 percent in
1980.


Figure 4.1-Price indices, Zambia, 1970-82

Manufacturing unit
value index
100 -



90 -


80 -



70 -



60 -



50 -



40 -


30 -



1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982

1980 = 100

Source: World Bank, Commodity trade and price trends, 1985
(Washington, D.C.: World Bank, 1985).











While the price of oil and imported merchandise increased, so did
the value of the dollar. This strongly depressed the dollar price of
exports, especially of primary products such as metals and minerals,
which are Zambia's main source of international liquidity (see Figure
4.2). The purchasing power of these products averaged 60 percent in
1970, plummeted to 15 percent in 1975, and declined to average a
negative 5 percent in 1982 (1977-79 = 100; see World Bank 1985).
The situation was aggravated by sporadic, sharp recessions between
the second quarter of 1974 and the fourth quarter of 1982. These
recessions hit industrialized countries, producing a general slowdown
in economic growth and high rates of unemployment. Beginning in
1979, these factors caused a large and rapid growth in Zambia's trade
deficit and a sharp deterioration in its terms of trade (see Figure 4.3).


Figure 4.2-Purchasing power of primary commodity exports
compared with manufactured imports, developing
countries, 1970-82
Average in constant
U.S. dollars
160 -


140 -


120 -


100


80 -


I I I I I I I I I I I I
1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982
1977-79 100
Source: Calculated from World Bank, Commodity trade and price
trends, 1985 (Washington, D.C.: World Bank, 1985).
Note: The primary commodities are metals and minerals.











Figure 4.3-Balance of trade, Zambia, 1970-82

US$Million
2,000 -

1,900 -

1,800 -

1,700 -

1,600 -

1,soo /\
1,400 \ /
1,300 -


1,200 -

1,100 -

1,000 -

900 /

800 /

700 /

600 portg
Imports
0 -


I
I
I
I
j


1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982
Source: Calculated from International Monetary Fund, Direction of
trade statistics yearbook, 1970-1983 (Washington, D.C.: IMF,
1970-83).



The world price of copper slumped, and so did the Zambian
economy. The average price of copper dropped 40 percent in one year,
from an average of US$0.93 per pound in 1974 to US$0.56 in 1975.
It recovered temporarily in 1979 and 1980, reaching almost US$1.00
per pound as world stocks fell drastically. Since then, the trend has










remained downward, averaging less than the 1974 peak even in current
terms. The collapse of copper prices had an adverse multiplier effect.
Drastically reduced export earnings generated a foreign exchange crisis,
particularly after 1980, and had a severe, adverse impact on the
manufacturing sector. Foreign exchange shortages now constitute the
most critical constraint to industrial growth and diversification. By 1984
many firms were operating at a low 30 percent of capacity.
The government budget was under severe pressure between 1975
and 1982. The mining industry's contribution to government revenue
dropped from 53 percent in 1974 to 0 percent in 1977, 1978, and 1979,
only 6 percent in 1980, and then 0 percent again in 1981 and 1982. As
a result of decreased output and greatly reduced profitability in almost
all industries, few taxes were collected from mining companies. The
inflow of both customs and excise duties was similarly affected.
The continued erosion of Zambia's terms of trade led to a huge
reduction in national income (exports account for 50 percent of
Zambia's gross national product; see Zambia, Central Statistical Office
1984). The economic growth of the 1960s and most of the 1970s came
to an abrupt halt, and per capital growth was reversed (World Bank
1981, 154). By 1985 per capital income stood at $390, prompting the
World Bank to reclassify Zambia from a low-middle-income to a low-
income country.
The overall macroeconomic environment ultimately forced the
government to use external financing to sustain the necessary level of
recurrent expenditures and imports. This drained export earnings.3
The extent to which the country's real resources were diverted to



3 The following data show the extent and effect of Zambia's external
indebtedness for the period 1980-86.

Ratio 1980 1981 1982 1983 1984 1985 1986
(percent)
Debt to exports 199.8 307.3 337.8 369.0 396.9 527.1 326.1
Debt to gross
national product 90.3 92.1 100.2 120.2 152.0 185.9 356.5
Debt service to
exports 17.8 25.1 16.3 12.2 11.9 11.2 7.6
International reserves (months)
to imports 1.2 0.9 1.2 1.3 0.6 2.2 0.4
Source: Mumeka (1987).










servicing the external debt between 1973 and 1980 is shown in Figure
4.4. Scaled in relation to exported goods and services, the outstanding
external debt (including undisbursed debt) rose from 87 percent at the
end of 1970 to over 303 percent at the end of 1982 (see Figure 4.5).
Also, as illustrated in Figure 4.6, the cost of paying interest and
amortization, plus weak export earnings, forced Zambia to use foreign
reserves to service the external debt. The country's international
reserves as a percentage of disbursed external debt plummeted from
nearly 97 percent in 1970 to about 7 percent in 1982. This reduced the
country's safety margin of international reserves (that is, its capacity to
import goods and services) to critically low levels of less than three
months during the period from 1975 to 1986. As of March 31, 1986,
Zambia's external debt totaled US$4.6 billion, including US$430
million in short-term commercial arrears.
This scenario depicts how dependence on the copper industry
makes the Zambian economy highly vulnerable to the vagaries of
external factors. It also underlines the necessity of diversifying the
country's economy away from the copper industry and toward
agriculture.


MACROECONOMIC POLICIES AND AGRICULTURAL
DEVELOPMENT

There is a general consensus in Zambia that agriculture could play
an overwhelming role in development. This consensus is reflected in
Zambia's postindependence economic policies, which purportedly
discourage discrimination against the agricultural sector. The reasons
for this approach are easy to find. First, the largest segment of
Zambia's population and the majority of the poor depend on agriculture
for their livelihood. Second, increased agricultural production is
critically important because the population is growing rapidly,
especially in urban areas. Third, agriculture is a viable policy
instrument for attacking poverty and hunger on a broad front. Thus
Zambia could use agricultural development to redress the urban-rural
bias in income distribution, given the right policy mix (see, for
example, Kaunda 1967, 1982; and International Labour Organisation
1969). Growth in the agricultural sector would encourage production
to be more labor-intensive. This policy has merit, since the goods
demanded by the majority of Zambians (food, clothing, and housing)
are produced in relatively labor-intensive industries.










Figure 4.4-External debt as a percentage of the gross domestic
product, Zambia, 1973-80


Percent

80 r-


1973 1974 1975 1976 1977 1978


1979 1980


1980 = 100

Source: World Bank, World tables, various issues (Washington, D.C.:
World Bank, various years); and World Bank, World debt
tables: External debt of developing countries, various issues
(Washington, D.C.:World Bank, various years).











Figure 4.5-Outstanding external debt as a percentage of the total
value of exports, Zambia, 1970-82

Percent

320 -

300 -

280 -

260 -

240 -

220 -

200 -

180 -

160 -

140 -

120 -

100

80

60 -

40 -

20 -


1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982


Source: Calculated from World Bank, World debt tables: External
debt of developing countries, 1970-83 (Washington, D.C.:
World Bank, various issues).
Note: Includes undisbursed debt.









Figure 4.6-Ratio of international reserves to disbursed debt,
Zambia, 1970-82

Ratio
95
90


1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982

Source: Calculated from World Bank, World debt tables: External
debt of developing countries, 1970-83 (Washington, D.C.:
World Bank, 1970-83).










Further, agriculture has a long-term future because Zambia has
vast tracts of land that is excellent for agricultural development. The
agricultural sector could expand its production not only of food, but
also of raw materials. This is especially important because Zambia
imports most of the raw materials it uses for industrial production.
From 1970 to 1985 government policies to develop agriculture and
food production revealed constant and sustained biases against
agriculture and for nonagricultural and urban-based industries. The
government allocated more resources to develop nonagricultural sectors
than to develop the agricultural sector, which was neglected throughout
the second and third national development plans (1972-83).
Between 1974 and 1985 the central government allocated only 7
percent of its financial resources and 5 percent of the total value of
imported capital goods to productive activities in the agricultural sector.
From 1973 to 1981 agriculture received only 10 percent of the total
value of imported inputs (see Zambia, Central Statistical Office 1974-
82a).
Consequently, the government did not achieve self-sufficiency in
the production of food. From 1970 to 1981 the total value of food
imports amounted to K 445.7 million. Between 1979 and 1984 Zambia
imported under commercial and concessional terms 132,602 tons and
4,663,153 bags of foodgrains (each bag weighs 90 kilograms; see
Mumeka 1987; Zambia, National Agricultural Marketing Board 1979-
84).
The high cost of food imports, together with widespread food
shortages, increased the cost of living, wages, and the cost of
production. It also exacerbated the acute shortage of foreign exchange
and limited the country's ability to import much-needed capital goods
and spare parts.4
Zambia has considerable potential for agricultural development. It
has an estimated 45 million hectares of arable land, but only 4.5
million hectares, or 10 percent, were cultivated during the 1984/85
season. Zambia's climate and topography vary widely, which allows a




4 Food imports were valued at K 24.9 million in 1973, or 7 percent of total
commodity imports, and prices continued to rise. Between 1974 and 1981 the
value of imported food averaged 9 percent of the value of all imported goods.
In 1982 it stood at K 49.4 million, or 5 percent of total commodity imports,
which were valued at K 930.0 million. See Zambia, Central Statistical Office
(1974-86b).










wide range of crops to be grown.' Despite its potential, agricultural
growth is retarded by inappropriate policies. The vast majority of
utilized land is cultivated with rainfed maize, which contributes over 70
percent of the total value of agricultural products marketed. Zambia
also has the potential to irrigate 12 million hectares, but in 1982 only
16,000 hectares, or about 0.13 percent of the country's irrigation
potential, were developed (for details on irrigation potential in Sub-
Saharan Africa, see Food and Agriculture Organization of the United
Nations 1985).
Policies intended to develop the agricultural sector are inconsistent
and tend to favor recurrent over capital expenditures. From 1970 to
1982, for example, 65 percent of total expenditures were allocated to
subsidies. The same was true with recurrent and capital expenditures
on agricultural research from 1980 to 1985. In 1980 recurrent
expenditures received K 1.9 million, or 58 percent of the K 3.3 million
allocated. This increased to K 3.1 million, or 76 percent of the K 4.1
million allocated, in 1983. The amount allocated to capital expenditures
was K 1.4 million (42 percent) and K 1.0 million (24 percent) of total
allocations in 1980 and 1983, respectively.
Although government development policies and programs
constantly stress that agricultural growth is a first priority, the results
for the period from 1972 to 1986 were extremely disappointing.
Agriculture's overall contribution to the gross domestic product never
exceeded 16 percent, and between 1974 and 1986 its share of the
country's employment never exceeded 10 percent (see Tables 4.1 and
4.2). The agricultural sector will have to account for at least 30 percent
of the gross domestic product by the year 2000 if agriculture is to
replace copper as the driving force in the economy.6







5 Zambia has three main seasons: a cool and dry period from April to
August, a hot and dry season from August to November, and a warm and wet
season from November to April, which is the main planting and growing
season.

6 Some progress was made during 1983-85. The agricultural value added
grew an average of 8 percent a year, and enough maize was produced to make
the country self-sufficient in 1985 and enough to record a surplus in 1986.




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