Throughout the 1970s and early 1980s the production and marketing of agricultural produce in Zambia was heavily controlled by the state through parastatal organisations. Government adopted a policy of promoting maize production in the pursuit of food self-sufficiency through official price controls, centralised credit, input supply, extension and marketing support services and subsidies. This public sector dominated support system was very expensive and by the mid-1980s, maize related subsidies accounted for around 20% of the national budget. The effects of the maize policies were far reaching. They discouraged farmers from exploiting the country’s comparative advantage in agricultural production and discouraged private sector trading. They also resulted in farmers becoming ever more dependent upon the state, irresponsible attitudes to credit and credit repayment, a lack of understanding of the operation of agricultural markets, environmental degradation due to monocropping, a loss of farmer skills related to crop rotation and post-production handling and storage, a heavy dependency on subsidised maize meal in both urban and rural areas, and a loss of local commercial networks.
A number of attempts to implement a Structural Adjustment Programme (SAP) were made by GRZ between in the early 1980s but it was not until 1991 that a fully liberalised macro-economic policy was adopted. However, the process of grain market liberalisation began in 1989 with the disbanding of the parastatal, National Agricultural Marketing Board (NAMBOARD) and the transfer of responsibility for the primary purchase of maize to the Co-operatives, under the Zambia Co-operative Federation (ZCF). The cost of financing high purchases and stock levels (following the bumper harvest of 1989), and the system of fixed prices in a period of high inflation, resulted in GRZ announcing that the maize market was to be liberalised. Private traders were given the right to market maize in 1991 but with floor prices still fixed there was little incentive for them to do so.
Failure of rains and the ensuing drought in 1992 led to a drastic reduction in maize production and the development of the liberalised market was overshadowed by the import of approximately one million tonnes of food aid maize. However, it did strengthen the resolve to improve food security at the rural level. In 1993, maize production recovered and there was a national surplus of 0.7 million tonnes. The marketing system was under pressure through lack of liquidity and GRZ was forced to intervene with indirect subsidies to take the surplus from producers. Many producers were still unable to find markets and, because of inadequate storage, high losses occurred.
In 1994 GRZ announced sweeping changes in arrangements for maize marketing. The more significant measures included the following:
In 1995 the GRZ launched the Agricultural Sector Investment Programme (ASIP), the aim of which is to achieve a significantly greater sense of involvement and ownership by the government and beneficiaries in agricultural development. The specific objective of ASIP is to achieve five goals for the agricultural sector:
The implementation of ASIP began in January 1996. The programme is intended to co-ordinate agricultural investment and to improve both the institutional and policy framework. At the same time ASIP is expected to contribute towards creating a liberalised, market-oriented economy and to improving the delivery of services to farmers. Private initiative and investment, which were restricted and even discouraged in the past are now being promoted and government control and regulation strategies have been abandoned.
ASIP has four main components, namely: