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All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; e-mail: pubrights@worldbank.org. Photos: Shutterstock. THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE TABLE OF CONTENTS Table of Contents .....iv List of Tables .....v List of Figures .....v Boxes .....v ACRONYMS .....vi ACKNOWLEDGEMENTS .....viii EXECUTIVE SUMMARY .....ix Zambia .....x Zimbabwe .....xi PART 1. INTRODUCTION .....1 PART 2. FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA .....2 2.1 Overview of food security situation in Zambia .....3 2.2 SGR Management .....7 2.3 Fiscal cost of SGR Management .....8 2.4 Strategic Reserves Facilities and Location .....9 2.5 Grain Buying Modalities .....11 2.6 Selling and Distribution Practices .....13 2.7 Food Needs and Implications on the size of SGR .....14 2.8 Food Emergency Responses and Country-Level Coordination .....15 2.9 Grain Reserves and Synergies with Early Warning Systems .....16 2.10 Reserve Targets Under Different Scenario of Emergency Needs .....18 2.11 Recommendations to Enhance Management of SGR in Zambia .....19 PART 3. FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZIMBABWE .....24 3.1 Overview of Food Security Situation in Zimbabwe .....25 3.2 Management of the SGR .....28 3.3 The fiscal cost of SGR Management .....29 3.4 Strategic Reserves Facilities and Location .....31 3.5 Grain Buying Modalities .....32 3.6 Reserve Selling and Distribution Mechanisms .....35 3.7 Emergency Food Needs and Implications on the Size of SGR .....36 3.8 Size of the SGR under Different Scenarios of Emergency Needs .....39 3.9 The GMB’s social functions and commercial function .....40 3.10 Synergies of SGR management with Early Warning Systems .....41 3.11 Recommendations to Enhance Management of the SGR in Zimbabwe .....42 CONCLUSION .....45 iv TABLE OF CONTENTS REFERENCES .....48 ANNEX .....52 Annex 1A .....52 Annex 1B .....53 Annex 2A .....54 Annex 2B .....55 Annex 2C .....56 Scenario 1: Low levels of poverty and mild emergency disaster .....56 Scenario 2: Low levels of poverty and severe emergency disaster .....56 Scenario 3 (high levels of poverty and mild emergency disaster) .....56 Scenario 4-high levels of poverty and severe emergency disaster .....57 LIST OF TABLES Table 2.1: Historical Food Needs for emergency purposes in Zambia (2009-2019) .....4 Table 2.2: FRA Budget Allocation, Maize Production, Expected Maize Sales, and SGR Purchases, 2014 to 2020 .....8 Table 2.3: Zambia’s Storage Capacity by Operator .....9 Table 2.4: Types of Storage Facilities and their Capacity .....11 Table 2.5: Zambia’s Relief Food Requirements (Worst Case Scenario) .....19 Table 2.6 Summary of Key Issues and Recommendations to Enhance the Effectiveness of SGR Managemnet and Emergency Food Responses in Zambia .....20 Table 3.1: Food relief responses during years declared national disaster .....27 Table 3.2: Maize producer prices - RTGS converted to US$ at Interbank rates .....30 Table 3.3: National Production, GMB stocks, imports, disbursements to social welfare, millers and local sales and food needs, 2009-2020 .....34 Table 3.4: SGR requirements under 4 different Scenarios of Emergency Needs .....37 LIST OF FIGURES Figure 2.1: Zambia Trends in Maize Surplus/Deficit (1990/91-2018/19 Agricultural Years) .....3 Figure 2.2: FRA storage distribution in the disaster hotspots .....10 Figure 2.3: Vulnerable Districts with no FRA Storage as per ZVAC 2019 .....10 Figure 2.4: Maize Sales and FRA Purchases in Zambia .....13 Figure 2.5: Trends in the Size of Zambia’s SGR .....14 Figure 3.1: Zimbabwe: Trends in Maize Surplus/Deficit (1986/87-2019/20) .....25 Figure 3.2: Maize production and proportion of households requiring food assistance, 2009-2020 .....26 Figure 3.3: Proportion of Households Requiring Food Distribution By Quarter: 2015 - 2020 .....26 Figure 3.4: GMB Depot Network in Zimbabwe .....29 Figure 3.5: Cereal (maize and small grains) sufficiency .....31 Figure 3.6: Scenario of Emergency Needs .....31 BOXES Box 2.1: Zambia’s SGR Early Warning System .....17 Box 3.1: Integrating Nutritionally –Enhanced Maize in National Procurement: Zimbabwe .....37 v THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE ACRONYMS ADMARC Agricultural Development and Marketing Corporation AMC Agricultural Marketing Council ARMS African Rural Marketing Scheme ASEAN Association of Southeast Asian nations ASPEF Agriculture Sector Productivity Enhancement Facility CCEDPM Cabinet Committee on Environment, Disaster Preparedness and Management CFS Crop Forecast Surveys CPD Civil Protection Department. DDMCs District Disaster Management Committee DMMU Disaster Management and Mitigation Unit DRC Democratic Republic of Congo DTA Debt Takeover Agreement EC European Commission ECOWAS Economic Community of West African States EPDMA Emergency Preparedness and Disaster Management Authority FAO Food and Agriculture Organization FNC Food and Nutrition Council FRA Food Reserve Agency FSNC Food Security and Nutrition Council FEWSNET Famine Early Warning Systems Network FSWR Food Security Wheat Reserve GMB Grain Marketing Board GMP Guaranteed Minimum Price IAPRI Indaba Agricultural Policy Research Institute LBA Licensed Buying Agents LBC Licensed Buying Companies LINCTO Lint Company of Zambia MVAC Malawi Vulnerability Assessment Committee MFED Ministry of Finance and Economic Development MECHI Ministry of Environment, Climate and Hospitality Industries MHCC Ministry of Health and Child Care MIC Ministry of Industry and Commerce MLAFWRR Ministry of Lands, Agriculture, Fisheries, Water and Rural Resettlement MLGPW Ministry of Local Government and Public Works MFAIT Minister of Foreign Affairs and International Trade vi ACRONYMS MPSLSW Ministry of Public Service Labour and Social Welfare MECHI Ministry Environment, Climate and Hospitality industries MFAIT Minister of Foreign Affairs and International Trade MT Metric Tons NAFCO National Food Buffer Stock Company NAMBOARD National Agricultural Marketing Board NCPB National Cereals and Produce Board NEWU National Early Warning Unit NFR National Food Reserves NFRAM National Food Reserve Agency Malawi NFBS National Food Balance Sheet Non-GMO Non Genetically Modified Organisms OVP Office of the Vice President PHS Post-Harvest Survey REWU Regional Early Warning Unit SARCOF Southern African Regional Climate Outlook Forum SGR Strategic Grain Reserve SADC Southern Africa Development Community SFRTF Strategic Food Reserve Trust Fund SI Statutory Instrument SGRD Strategic Food Reserve Division UN United Nations US$ United States Dollar USA United States of America WARMA Water Resources Management Authority WB World Bank WFP World Food Programme WRS Warehouse Receipt System ZAIS Zimbabwe Agricultural Information Service ZCF Zambia Cooperative Federation ZIMACE Zimbabwe Agricultural Commodity Exchange ZIMSTAT Zimbabwe Statistics Agency ZIMVAC Zimbabwe Vulnerability Assessment Committee ZMD Zambia Meteorological Department ZMW Zambian Kwacha ZRA Zambezi River Authority ZWL Zimbabwean Dollar vii THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE ACKNOWLEDGEMENTS This report was prepared by the World Bank Agriculture and Food Practice for East and Southern Africa under the guidance of Holger Kray, Practice Manager. The preparation of the report was led by Hazem Hanbal and Azeb Fissha Mekonnen with inputs from Easther Chigumira. Indaba Agricultural Policy Research Institute under the leadership of Antony Chapoto conducted the technical analysis and field work. The report benefited from substantive feedback from Clemence T Bwenje, Chief Director for Policy Planning and Business Development, Zimbabwe Ministry of Lands, Agriculture, Fisheries, Water and Rural Resettlement (MLAFWRR), Grace Nicholas (MLAFWRR), Niels Belzer (WFP), Prince Kuipa (Zimbabwe Farmers Union), Chipo Nheta (Zimbabwe Grain Millers Association/National Foods), the Zimbabwe Grain Marketing Board, the Food Reserve Agency in Zambia, Disaster Management and Mitigation Unit in Zambia, Yotam Mkandawire from the Grain Traders Association of Zambia, Jacob Mwale (Zambia Commodity Exchange) and stakeholders who participated in the validation workshops in both countries. Sakile Kudita and Rewa Misra from HarvestPlus – Alliance Bioversity – CIAT contributed to sections of the report. Sergiy Zoray and Manievel Sene of the World Bank as well as Herbert Matsikwa and Allan Mulando of the World Food Program provided technical advice as peer reviewers. Mara Warwick (Country Director - Tanzania, Malawi, Zambia and Zimbabwe), Mukami Kariuki (Country Manager, Zimbabwe) , Sahr Kpundeh (Country Manager, Zambia), and M. Yaa Oppong (Sector Leader, Sustainable Development - Tanzania, Malawi, Zambia and Zimbabwe ) provided strategic guidance and the resources to conduct the analytical work’. viii EXECUTIVE SUMMARY ix THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE The increased incidence of droughts and floods has The study involved desk research to establish led to food shortages in Zambia and Zimbabwe, the existing body of knowledge regarding the causing the number of vulnerable households in management of national grain reserves in Zambia both countries to increase over time. Strategic Grain and Zimbabwe. Data collection activities in both Reserves have been used as a tool to cope with countries mainly relied on publicly available emergency food needs. However, the efficiency information with additional information obtained and effectiveness of the SGR in addressing food directly from the source. In cases where information emergencies is less clear. The agencies responsible was not available or provided, assumptions for administering the SGR have faced mixed were made based on available information for reviews, with a clear indication that improvements purposes of drawing recommendations. In both are needed. Against this background, this study countries, the findings and recommendations in was commissioned to provide a diagnostic of this report were consulted and validated with the the SGR operations and management in the two key stakeholders. countries in relation to emergency food responses and make recommendations to improve their role The study identified three (3) broad areas for in enhancing food security. This report documents improvement across both countries. These the current SGR practices in relation to emergency include (a) reduction in the fiscal costs involving food responses, the issues, and challenges faced, the management of the SGR; (b) improvements and provides recommendations for improving in the delivery of emergency assistance; and (c) emergency food responses. the need to crowd in the private sector. ZAMBIA The management of the SGR for food to incentivize farmers to produce for the next emergencies and price stabilization in Zambia season, it is important that the FRA becomes has been a major cost on the Treasury. The Food buyer of last resort so that it can be available when Reserve Agency (FRA) operations in some years farmers fail to get a market or the market price fails have drawn a large amount of the resources to rise above the floor price offered by the FRA. allocated to the agricultural budget. In 2020, Therefore, to be a buyer of last resort, the FRA more than US$ 36 million was allocated to finance should buy at the tail end of the market. This will the FRA grain reserve operations. Apart from the also help limit the pressure on the Treasury, while huge costs to the Treasury the price stabilization giving farmers more options to market their crop. policy has had negative effects on private sector participation and depressed investments in the From a logistics point of view, the study found maize sector. Some large market players stopped that grain reserve storage facilities across the their maize market operations mainly because country are highly skewed, and in most cases of the ad hoc market participation of the FRA, inexistent in the disaster hotspots. This raises particularly when rotating the SGR stocks as well the cost to the Government since food must be as inconsistent trade policy. moved from the major consumption zones and tends to delay responses. The study recommends The study recommends that the FRA limit its the promotion of community-level grain banks and purchase to only the required SGR amount establishment of aggregation centers in disaster and should buy these stocks from areas where hotspots that can be operated in collaboration the private sector is less likely to operate. Also, with non-state actors. x EXECUTIVE SUMMARY There are also some gaps in the generation of relief foods. Because disaster prone areas are usually early warning information. Information on the the same, the inclusion of Vitamin A biofortified stocks position to inform decisions is only from maize (orange maize) in the SGR purchases and a few actors and there are capacity challenges relief food distributions could improve nutrition related to the conduct of rigorous analysis related to outcomes for affected households, particularly beneficiary identification and targeting. To address vulnerable women and children. In addition, it is these challenges, it is proposed that investments recommended that a study be carried out to assess be made to enhance the stock monitoring capacity the feasibility of fortifying maize released to millers in the Ministry of Agriculture and capacity building at the time of milling by adding important nutrient of Disaster Management and Monitoring Unit and elements to the milled maize to help address the relevant members of the vulnerability assessment malnutrition situation in Zambia. committee. Additionally, practices implemented in managing the grain reserve needs to be reviewed, It is important to highlight that the projected savings with possible enhancements to limit post-harvest from reducing the size of the stock procured losses during the storage of the crop. annually, in addition to the savings resulting from the improvement of the storage conditions will The study finds that current emergency food be significant, and can be re-allocated to provide responses can be diversified to provide nutrition other services either in the agriculture sector such benefits to food insecure households. Maize and as irrigation, technology transfer or in other areas of maize products are provided as a large part of the support such as social protection. ZIMBABWE The fiscal cost of Zimbabwe’s grain reserve poor who are the targeted beneficiaries. intervention has been high and unsustainable. In 2018, grain purchases by the Grain Marketing To reduce the fiscal cost the Government Board were US$ 473 million or about 3.4% of should consider cutting the size of the physical GDP and the price subsidy provided to millers strategic reserve. The current policy of making about 2.1% of GDP. The cost of such interventions GMB the sole buyer increases the burden on the were considerable as a share of Government Government limited budget. Private sector should expenditure and GDP, creating a significant fiscal be allowed to buy their own grain requirements imbalance. The GMB purchases large volumes at market prices. The output price subsidies to of maize and disposes the commodity at below- farmers and miller subsidies strain the Treasury market prices, resulting in significant losses. The and divert limited financial resources from other cost continues to escalate as the government pro-poor public support programs essential to recently introduced a new regulation (SI 145 of build resilience and ensure food security. 2019) making the GMB the ‘buyer of first resort’ – ensuring grain procured by the Government enjoys Currently, the purchase of maize is restricted to dominance in the market, leaving out the private the GMB. This excludes many private actors and sector. In this arrangement, the private sector limits their role to complementing government relies on the GMB to procure and store maize for efforts in food emergency responses. The them before obtaining the grain for processing at promotion of maize market liberalization with subsidized prices. This is inefficient and benefits free private sector participation and market price large and well-off farmers at the expense of the determination could improve the status quo. In xi THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE this situation, the GMB would retain its role as a role as a buyer of the staple food to maintain food buyer of last resort to address emergency food availability and the associated setting of a buying shortages and encourage production. This will price. We recommend a move toward liberalizing reduce the size of the GMB reserve holding. In this the maize market by allowing the procurement of case the current storage that will be vacant can grain by the private sector directly from farmers be leased to the private sector, generating income and storage and processing outside of the GMB. to finance the management of SGR. Current stock rotation practices in Zimbabwe are at variance with the market conditions and create It is important to improve the quality of early losses for the GMB. The government of Zimbabwe warning information both for weather and prices must invest in a market-based stocks rotations to to improve decision making related to disasters. avoid distortions and allow all actors to participate Crop forecasting faces challenges while market with transparency in the selection process and information systems are not fully developed, financial transactions. and this has implications for decisions around SGR size and trade policy. The study proposes There is poor targeting of vulnerable households investments in remote sensing capabilities at the for relief food provisions in Zimbabwe. Maize is Meteorological Department and developing a usually sold to millers at subsidized prices with centralized market information system. the goal of reducing the mealie meal retail prices. However, this does not achieve the intended goal. The private sector must be viewed as a partner in Instead, it creates arbitrage opportunities for responding to food emergencies in Zimbabwe. unscrupulous businesspeople. In the current high There are issues related to diminished private inflationary situation, the study proposals the use sector participation owing to the GMB’s increased of direct food delivery to vulnerable households. xii PART 1 | INTRODUCTION PART 1 | INTRODUCTION Zambia and Zimbabwe have experienced food institutions such as the FRA and GMB. security emergencies of varying severity, mainly caused by drought and floods in some areas. Like There is no doubt that these institutions require some several countries in Africa and elsewhere, the two reforms and to have their operations strengthened countries have developed and used Strategic Grain to be able to effectively address food security Reserves (SGR) to cope with food emergencies emergencies. In addition, market stabilization and other functions to ensure the availability of objectives are necessary while conforming to the food. Both countries have years of experience with rapidly changing marketing and trade environment. SGR as a key component of their respective food Against this background this report provides a review security policies. At the center of this strategy is the of the SGR operations and management in dealing availability and sufficient supply of white maize, as with food emergencies and market stabilization the single most important strategic crop. Zimbabwe and makes recommendations in the two countries. and Zambia have put maize at the pinnacle of The report was commissioned by the World Bank their food security policy, mandating government in order to assist the governments of Zambia and agencies, the Food Reserve Agency (FRA) in Zambia Zimbabwe to review their national strategic grain and the Grain Marketing Board (GMB) in Zimbabwe, reserve practices for domestic food security and to manage their strategic reserves. identify potential improvement interventions. The effectiveness of their grain reserve approaches The study involved desk research and interviews with and the management agencies has faced mixed key people. Data collection activities in both countries reviews, with some arguing that they need to be mainly relied on publicly available information disbanded because they have been marred with with additional information obtained directly from political interference that has bankrupted the the sources. In cases where information was not countries and are also irrelevant in liberalized market available or provided, assumptions were made based economies. Others argue that the institutions on available information. The report was subjected will always be relevant because they are key to to stakeholder validation in both countries before safeguarding the country’s food security and also it was finalized. The list of stakeholders consulted ensure that smallholder farmers are not taken during the validation workshops are presented in advantage of by the private traders, dubbed so- Annex 2a and Annex 3a. called ‘briefcase traders’. Still others say that the millions of tons of grain that were required in the The study is organized into four (4) parts as follows: past are no longer relevant because consumption Part 1 presents the introduction laying out the patterns have changed. They argue that levels of background, objectives, methodology and structure grain reserves should be revised downward and the of the report; Parts 2 and 3 present separate country reserves portfolio diversified to include grain, cash, analysis for Zambia and Zimbabwe containing and virtual stocks to save public resources for other subsections covering the overview of the food equally important social protection programs. As the security situation, strategic grain reserve operations debate rages, the incidences of climate shocks have and management in relation to food emergencies increased and the ability to maintain food security and recommendations to enhance the strategic grain has reinforced the arguments for strengthening management, and Part 4 presents the conclusion. 1 PART 2 FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA 2 PART 2 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA 2.1 Overview of food security situation in Zambia Despite consistent maize production surpluses farmers’ access to information. Also, there has been in recent years, Zambia remained relatively food limited funding to support agricultural diversification insecure. The 2019 World Hunger Report ranked into more nutritious crops as well as livestock and Zambia’s hunger status as ‘alarming’ together with fisheries products. The vast majority of the rural three other countries, Chad, Madagascar, and farmers (approximately 90 percent) predominantly Yemen.1 Using the national nutrition indicators produce maize and this is prevalent across the whole (wasting, stunting and underweight), Zambia country. The cereal (maize) centric production Statistics Agency (ZSA) et al reported that 35 percent system has resulted in limited household dietary of children under 5 in the country are stunted, a diversity that has contributed to high malnutrition slight improvement from 40 percent reported in rates in the country. the 2014 Demographic and Health Survey (DHS). Underweight (weight-for-age) rates reduced from 15 Zambia has emerged as a consistent surplus percent in 2013/14 to 12 percent in 2019, while acute producer of maize with production exceeding local malnutrition, measured by wasting or low weight- human consumption and industrial requirements for-height, now affects 6 percent of the children, (Figure 2.1). Despite many years of surplus stocks an increase from 4 percent recorded in 2013/14 at the national level, adverse weather in the (Mofya-Mukuka et al. 2020). form of frequent cycles of droughts and floods along with other factors negatively affect cereal Developing the agricultural sector is recognized as a availability at the household level, with the effects solution to dealing with food insecurity and nutrition most pronounced in the drought and flood-prone challenges in the country. Government policy for southern half of the country (see Braimoh et al. many years has focused mainly on becoming self- 2018). As shown in Table 2.1, the resultant shortage sufficient in maize production with direct support for in production at the household level necessitates input distribution, with limited public funding to key emergency food responses by the government, drivers of agricultural growth and resilience such as non-governmental organizations, and the United research and development, extension, irrigation and Nations Agencies. Figure 2.1: Zambia Trends in Maize Surplus/Deficit (1990/91 and 2018/19 Agricultural Years) 2,000,000 1,500,000 Metric Tonnes 1,000,000 500,000 0 -500,000 -1,000,000 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Source: Zambia National Food Balance Sheets (1990/91 – 2018/19) 1 See https://www.globalhungerindex.org/pdf/en/2019.pdf 3 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE There have been several food crises in Zambia, years, the number of affected individuals ranges particularly in the moderate to severe drought from 1,041,852 to 2,330,182 persons. Assuming years. This has been caused by an increase in 12.5 kilograms of maize per person per month the incidence and intensity of weather shocks for six months (using the WFP recommendation that adversely affect largely rain-fed agricultural of 400 grams per person per day), the food production (see Braimoh et al. 2018). As table 2.1 needs in the moderate drought years range shows, in moderate drought years, the number of from 29,184 metric tons to 95,179 metric tons. affected individuals ranges between 77,088 and In severe drought years, the requirements range 1,269,054 persons. In the more severe drought from 78,139 metric tons to 174,764 metric tons. Table 2.1: Historical Food Needs for emergency purposes in Zambia (2009-2019) Year No. of affected Affected People Total Cereal Food security Size of the SGR people (ZVAC) (% of the Popula- Requirements for conditions (Actual FRA tion) 6 months Purchases) 2009 - - - No drought 73,876 2010 - - - No drought 198,629 2011 - - - No drought 883,036 2012 389,124 2.7 29,184 Moderate drought 1,751,660 2013 1,269,054 8.5 95,179 Moderate drought 1,046,000 2014 - - - No drought 426,248 2015 612,840 3.9 45,963 Moderate drought 1,031,303 2016 1,041,852 6.4 78,139 Severe drought 595,883 2017 77,088 0.5 5,782 Moderate drought 280,045 2018 831,743 4.8 62,381 Moderate drought 513,547 2019 2,330,182 13.0 174,764 Severe drought N/A Source: Adapted from National Food Balance Sheets (2009-2019) of the Republic of Zambia, (2019). Historically, emergency food responses have has a predefined list of agricultural commodities involved the provision of (i) maize only (ii) maize, to buy. Operations of the FRA are governed by the pulses (beans or cowpeas), and vegetable oils and Food Reserve Act, Cap 225 of the Laws of Zambia, (iii) maize and maize meal to affected households. which came into effect in 2005, allowing the FRA The inclusion of pulses is a more recent practice to enter the market as a trader. Over the last years, and recognizes the need for nutritionally-balanced the role played by the FRA has helped to slightly food aid. The government through the Disaster improve the food security situation in Zambia. FRA Management and Mitigation Unit (DMMU) only releases maize, which is the major crop procured distributes maize sourced from the FRA directly by the agency to various governmental and non- for free since it is a government unit or paid for governmental agencies in Zambia. when this is done by other actors working with the DMMU. Non-state actors also include commodities other than maize in the distributed relief food Every year, on May 1, the FRA starts announcing (e.g. pulses, salt, and cooking oil), depending on its procurement plans for the year as the agency their budgets. Typically, other commodities are 4 PART 2 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA procured from the market by the emergency relief inclusion of other commodities has implications implementing partners (e.g. Save the Children, on the required resources, especially with the WFP, CARITAS Zambia, World Vision Zambia, Government’s tight fiscal position. World Renew, Adventist Relief Agency, and other faith-based organizations). The SGR maize stock Another element related to the efficacy of is released to implementing partners by the FRA responses is how food aid is disseminated to following a Government directive through the targeted persons. The FRA’s standard operating DMMU. The DMMU does not distribute relief procedures (FRA 2019), lists approaches to maize unless in emergency conditions that require addressing food emergency needs. The standard quick responses. approach is through community sales to affected individuals by the FRA in lean periods as was the The WFP have revealed that the maize requirements case for the 2019 crisis. Other approaches aimed were estimated at 12.5 kilograms of maize per at achieving similar objectives include a price person per month. However, the provided monthly stabilization intervention that involves the release package by WFP included 6.5 kilograms of mixed of maize to selected millers as has been done in beans/soya beans, vegetable oil, and 12.5 kilograms past years. of maize per household. The maize provided fell way below the recommended 12.5 kilograms Another approach involves distributing maize to per person per month. Assuming an average 5 individuals who are beneficiaries of the social cash members per household, this reflects a cereal deficit transfer scheme administered through the Ministry of 62.5 kilograms per household per month. This of Community Development and Social Services deficit reflects the government’s attempt to reach (MCDSS) (see DMMU 2019; FRA 2019a). The 2019 many households at the expense of an adequate food crisis was addressed through community response that meets daily calorific requirements. sales of maize. Affected individuals registered In the same year, there were challenges in locally through district commissioners and accessed sourcing pulses due to the depressed supply maize from the district FRA depots at ZMW 111 caused by the drought. The fact that beans and per 50 kilogram bag of maize. Around the same cowpeas have historically not been procured under time, the market prices for maize were higher than the strategic reserves compounded the problem the FRA price, for example in Gwembe district, as they had to be sourced from the open market. the price of maize was ZMW 248 per 50 kilogram Further, the increase in the number of affected bag (Banda, Mulenga and Chapoto 2019). Only people due to population growth contributed to a one 50 kilogram bag of maize was allowed per suboptimal response. household, however, the validation process was porous leading to some households accessing Zambia’s approach to emergency food responses multiple bags, with reports of reselling by some faces challenges. In the recent past, the focus has households. About 19,714 metric tons of maize been on the provision of maize or maize products were sold to communities between January and only. The provision of maize meal is in recognition October 2019 (FRA 2019b). of the fact that households may not be in a position to pay for the milling of relief maize they Another issue observed with the food emergency receive. In the distant past, stakeholders indicated needs response is that even in areas that are in interviews that emergency food responses by predominantly non-maize consuming, maize the government included other commodities, is the default relief food. This raises questions however, this is no longer the case due to an about the adequacy and rationale behind the increase in the number of affected people. The procurement of paddy rice for SGR purposes. 5 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE The interventions have in the past faced challenges sold to millers for the price stabilization role or to around targeting, tardy responses, a lack of some the region through agencies such as the World commodities, and inadequacy of the relief food. Food Programme. With targeting, past evidence shows that Zambia had limited information on the demography and While national SGR adequacy for maize is assured, problems of vulnerable households (Samatebele the distribution of the SGR stocks across the 2003). Related to this, in many periods leading country in any particular year is a critical issue. up to elections, politics creates problems for the The adequacy for affected areas depends on how efficacy of emergency responses and targeting. much maize the FRA can procure and store across Typically, some of the maize or maize meal meant the country. In some years, stocks may need to for the affected communities ends up in areas be transported from other areas to meet relief not designated for relief food provision. These are demand in deficit areas. usually areas with by-elections. The result is limited maize supply to affected communities as the food The FRA also stores other crops for SGR purposes requirement is distorted. This perhaps explains the including paddy rice and soya beans. Except for huge deficit observed in the 2019 response. 2012 when the agency released paddy rice to the DMMU, most relief efforts are for maize. There are At no time has the FRA been unable to supply indications that other commodities are not used cereal (maize) to the DMMU for relief purposes. To for relief purposes. One reason for this is that the contextualize this, for the most recent crisis in 2019, agency procurement is predominantly maize (99 between January and October, 19,714 kilograms percent), and because of the general perception of maize were sold through the communities by that the agency only stocks maize. This leaves the FRA. While the DMMU drew 56,107 kilograms room for use of rice for example as a relief food of maize over the same period. Other maize particularly for areas that are predominantly rice drawn for purposes of school feeding programs consuming. As earlier alluded to, the Agency is through the Ministry of General Education was empowered to also designate other commodities 10,354 kilograms of white maize. In total, maize as strategic crops. To date, the FRA has not grain drawn from the FRA for relief food purposes procured pulses (e.g. mixed beans and cowpeas) was 86,175 metric tons for the period January to for SGR purposes. It is for this reason that nutrition- October 2019 (FRA 2019b). All this is less than the related interventions in recent times struggle to current 500,000 metric ton reserve target. Note meet pulse demand as pulses procured from the that the relief food sales do not include maize market are never enough. 6 PART 2 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA 2.2 SGR Management Strategic Grain Reserves in Zambia originated to shore up prices. Between 1996 and 2002, from as far back as 1969 with the fusing of the the government assigned FRA to administer the Grain Marketing Board (GMB) and the African fertilizer credit program to the farmers, and pan- Rural Marketing Scheme (ARMS) into a single territorial pricing was introduced for fertilizer entity, the National Agricultural Marketing Board distributed by the FRA, which made the private (NAMBOARD) (Kydd 1986). Between 1964 and sector’s fertilizer uncompetitive in outlying areas. 1974, the Zambian government offered different However, the credit repayments were low (around prices for maize to farmers close to the rail line and 10 percent), leaving FRA in debt and unable to those in native reserves. The justification for this achieve its stated goals. policy was the transport cost differential between the locations (Andersen 1968). However, in 1974, The Food Reserve Act of 1995 was amended there was a policy shift toward the pan-territorial in 2005, to allow the FRA to participate in the pricing system for maize through NAMBOARD. marketing and trade of designated agricultural commodities. The current operations of the FRA Despite these efforts, years of mismanagement are governed by the Food Reserve Act, 2020 coupled with deteriorating economic conditions assented on 23 October, 2020. The Act was forced the government to dissolve NAMBOARD passed to “continue the existence of the Food in 1989 and all its functions were transferred to Reserve Agency and re-define its functions; re- the Zambia Cooperative Federation (ZCF). The constitute the Board of the Agency; to continue National Agricultural Marketing Act of 1989 was the existence of the National Strategic Food repealed in 1995 and this saw the passing of the Reserve; to repeal and replace the Food Reserve Food Reserve Act of 1995 which formed the FRA. Act, 1995; and to provide for matters connected The FRA was originally conceived to hold buffer with, or incidental to, the foregoing that repealed stocks to dampen price variability and provide the Act of 1995.” Under this Act, the FRA’s mandate liquidity in the maize market during the initial years is anchored on the following 3 pillars: of market liberalization while the private sector was establishing itself. 1. The management of government-owned storage facilities; Although FRA’s original mandate did not include 2. Administering the national strategic grain the provision of price support to farmers, FRA reserve; and maize purchases were increasingly relied upon 3. Providing market access to smallholder farmers. 7 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE 2.3 Fiscal cost of SGR Management The management of the SGR for food emergencies is performing its price stabilization function through and price stabilization in Zambia is a major item in millers and/or when it is paying off transporters public expenditure for agriculture. FRA operations in debt swaps. Typically, these activities involve have drawn a large amount of the resources maize sales at prices that do not reflect market allocated to the agricultural budget (see Table 2.2 conditions, and the associated costs of storage, column B). The size of the maize stocks held by handling and distribution of maize. As such, this FRA has been a major fiscal burden for a number of tends to translate into huge losses for the agency, years. For example in 2011, the size of maize held by requiring resources from the Treasury each year. FRA was ~ 2 million tons, while maize production In recent years, FRA has made significant progress was 3 million tons with FRA purchasing about 53 in reducing the size of stock to the recommended % of total domestic production with procurement amount of ~ 500,000 tons to meet domestic needs price $270/ton and release price $165/ton.2 The in case of lower maize production. Mainly due to total cost of FRA was about 1.9% of GDP and the Government’s constrained fiscal space, FAR 8.2% of total budget. The major issue has been has moved towards setting their buyer price close that the Agency buys large volumes of maize and to the prevailing market conditions. This allowed disposes the commodity at below-market prices, the private sector to compete with the FRA in resulting in losses. This happens when the agency purchasing grain directly from farmers. Table 2.2: FRA Budget Allocation, Maize Production, Expected Maize Sales, and SGR Purchases, 2014 to 2020 Year Budget % of MoA % of Expected Expected SGR FRA Buying Allocation Budget Total Ag Maize Maize Purchases Price/metric (ZMW Million) to FRA Budget Production Sales (metric ton) ton (A) (B) (C) (D) (E) (F) (G) 2020 660 19.7 16.6 3,387,469 na 350,179 2,200 2019 672 16.2 12.6 2004,389 956,369 85,044 2,200 2018 1,051 20.8 16.6 2,394,907 1,106,029 172,761 1,400 2017 943 17.3 17.3 3,606,549 1,969,993 517,959 1,200 2016 750 31.5 21.9 2,873,053 1,332,222 280,884 1,700 2015 993 22.8 22.8 2,618,222 1,533,980 596,193 1,500 2014 1,013 29.2 29.2 3,350,671 1,602,742 1,031,303 1,400 Sources: Ministry of Agriculture, Zambia Statistical Agency, Various Years Na Data not available 2 Food Reserves in Zambia: How to Use Them Better for Poverty Reduction and Diversification. World Bank Technical Assistance: Agriculture Policy Note. https://www.researchgate.net/publication/312630691_Food_Reserves_in_Zambia_ How_to_Use_Them_Better_for_Poverty_Reduction_and_Diversification 8 PART 2 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA Moreover, when purchases exceed the Agency’s country’s maize consumption requirements for ability to manage grain, the losses are in the form at least 3 months (lead time) necessary to allow of grain lost in storage (Kuteya and Sitko 2014; imports to arrive. It is important to note that the Nkonde et al., 2011). For example, in 2014, the level of SGR is higher than any import requirement FRA bought over 1 million metric tons of maize from 1990 to 2020, except in 1991/92 marketing grain, a quantity double the prescribed SGR season, and thus more than sufficient to meet target of 500,000 metric tons. Due to very high domestic needs in the case of lower maize and rising fiscal and economic costs, the FRA production in most years. Also, the savings from operations need to be improved. In particular, scaling back FRA activities to this level could it is recommended that the FRA should scale be channeled to social protection programs or back its activities in the market and target only other high-return public investments required to purchases between 300,000 -400,000 metric enhance the agricultural sector in the country ( tons, a quantity estimated to be able to meet the see Harman and Chapoto, 2017). 2.4 Strategic Reserves Facilities and Location Maize storage functions are performed by assemblers); the FRA, and millers. Zambia has a farmers (on-farm storage); grain traders total maize storage capacity exceeding 1.7 million (large multinationals, small-scale traders, and metric tons (Table 2.3). Table 2.3: Zambia’s Storage Capacity by Operator Storage Capacity of s Storage shed located in Storage shed located facility operator torage shed (MT) urban/peri-urban areas (%) in rural areas (%) FRA 850,000 95 5 Private Traders 558,050 85 15 Millers 200,000 ≈100% - Farmers 100,000 ≈5% ≈95% Total 1,708,050 Source: Chisanga and Kabwe (2014), verified to be the current state as at 2020 by key informants Table 2.3 shows that most of the storage facilities about 282 km, while for urban storage sheds, that in Zambia are owned by the FRA followed by distance is almost half at 153 km. The implication private, mainly large traders. Most of the storage of this skewed storage investments in urban areas sheds are in urban and peri-urban areas compared is that most of the maize produced in rural areas to rural areas. For the FRA, about 95 percent of the must be transported and stored in urban areas. storage sheds are in urban areas while 85 percent of the private sector storage sheds are in urban When the location of FRA storage facilities is areas. This leaves only 5 percent and 15 percent of superimposed on the districts that were targeted FRA and private sector storage sheds in rural areas for relief food in 2019, about 32 out of the 58 respectively. The average distance between rural districts that are disaster-prone do not have FRA storage sheds and main processing facilities is storage infrastructure (excluding slabs). However, 9 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE some of these districts are close to the provincial relief is done by implementing partners using capitals which have some FRA infrastructure (see hired vehicles from private transporters, or by Figures 2.2 and 2.3). Out of the 1,090,831 metric using DMMU trucks. However, the DMMU’s fleet tons storage facilities owned by the FRA across of trucks is very limited for this purpose and poses the country, 41 percent are located in the areas a challenge to the effectiveness of emergency identified as needing aid in 2019. food responses. In addition, the distribution of storage facility locations and the assessment of This means that in many cases, and in line with vulnerable districts (Figures 2.2 and 2.3) raises a the distribution of storage facilities across the real need to review the location of storge facilities, country, grain for relief purposes must be moved and propose a need to consider establishing new from the government storage facilities in the facilities in areas where there is an absence of major consumption hubs to the deficit or disaster- storage capacities, or to support communities in stricken districts. Typically, grain movement for establishing their own grain banks. Figure 2.2: FRA storage distribution in the disaster hotspots Figure 2.3: Vulnerable Districts with no FRA Storage as per ZVAC 2019 Source: FRA and ZVAC (2019). Source: FRA and ZVAC (2019). The main issue with FRA storage is that the moisture content is immediately checked on-site distance from these sheds to the affected areas using a moisture meter. Grains are then screened and communities poses a challenge for relief using grain sieves to remove foreign matter (stones responses. Typically, maize must be moved from and sand), insect-damaged, shriveled and discolored surplus production areas and/or urban-based grain (FRA 2019a). These important initial steps ensure facilities to disaster areas and back. This raises that grains and other crops procured by FRA adhere the cost of transportation and underscores the to the required standards. At the satellite depot, crops importance of facilities such as warehouses under are stored by stacking the bags on top of each other. the WRS or community. Worse still, when maize meal is used for relief purposes, it must be milled From the satellite depots, the grain is transported in the south, where the investments in storage and to a central storage facility. These are relatively milling facilities are concentrated and transported permanent storage structures located in different back to the production zones. regions of the country around district centers. There are typically three types of storage – (a) storage Grains received at the satellite depots are handled sheds, (b) slabs, and (c ) silos. Table 2.4 shows the by the buying agent engaged by the FRA and the storage capacity by type of storage. 10 PART 2 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA Table 2.4: Types of Storage Facilities and their Capacity Storage Facility Capacity (metric tons) Sheds 973,760 Concrete Slabs 74,000 Silos 15,000 Total 1,062,760 Source: FRA (2019a). The condition of the storage sheds has been a cause the quality of maize from the FRA exceeds private for concern within government, with the Auditor sector maize on the market in recent times because General’s report highlighting in the past (i.e., FY of the strict grading standards set by the Agency 2013,2014,2015 and 2016) that FRA storage sheds when buying from the farmers. On the other hand, needed renovations as they failed to meet standards, private traders do not pay by grade and often pay a partly due to the lack of periodic maintenance discounted price to take into account the losses that (Republic of Zambia 2017). However, despite this, will be incurred when the grain is cleaned. 2.5 Grain Buying Modalities The FRA has a list of grains that it can purchase, and procured; method of procurement and payment these are referred to as “designated commodities”. to farmers; purchase locations; and purchase This list varies from season to season depending price of designated agricultural commodities (FRA on the availability of surpluses nationally and the 2019a). Quantities to be purchased are determined strategic importance of that crop to smallholder by the Ministry of Agriculture informed by the farmers. In 2017, a statutory instrument (SI) was Crop Forecast Survey (CFS) and the National Food passed that designated paddy rice, white/orange Balance Sheet (NFBS). The actual quantities to maize, sunflower, soya beans, mixed beans, and be purchased are based on a 3-month cover, groundnuts as strategic crops. However, the crops meaning that the country would remain food that have well-established markets are usually not secure over this period in case of emergencies. procured by the FRA to avoid disrupting private sector activity. For example, in the 2020/21 In line with the Food Reserve Act of 2005, the marketing season, only white maize, paddy rice, FRA makes the announcement of its plan for and soya beans are being purchased by the agency. purchases (Gazette notice) by May 1 of each The marketing season opens on May 1 each year year (FRA 2019a), through several satellite depots and runs until April 30 of the following year. spread throughout the country. Satellite depots are temporary buying points located within the Following the Food Reserve Act, Cap 225 of the proximity of the communities where they intend Laws of Zambia, the FRA is mandated to announce to purchase crops. The setting up of satellite its plan for purchases within the following depots varies from year to year depending on parameters: the type of designated agricultural the production levels across the country. Farmers commodities to be procured; commencement deliver the crops in their bags and pay for a and end dates for the crop marketing exercise; designated bag with FRA labels. In the 2020/21 quantities of designated commodities to be marketing season, the FRA is purchasing the 11 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE designated crops through a total of 1,200 satellite farmers to opt-out of maize in preference for other depots across the country (Kasama 2020). crops such as wheat and soya beans, where there is less perceived interference by the government. The FRA also purchases maize with the moisture Currently, over 90 percent of the maize is supplied content of 12.5 percent and below to minimize grain by smallholders. damage from moisture, reduce weight losses in storage and ensure an SGR with good quality grain. It is worth noting that although the FRA price This normally causes delays for the commencement generally tends to be above that of the market rate, of crop purchases as the grains take longer in the there have been years when the private sector season to attain this threshold moisture content. In has out-competed the Agency, resulting in FRA comparison, private traders often move in earlier in failing to buy the announced target. This normally the season because most do not adhere to the 12.5 happens when expected maize production is percent moisture requirement. close to the national consumption requirements. A good example includes maize production Farmers are paid as and when budgetary shocks due to El Niño weather condition in the allocations to the FRA are released from the 2015/2016 and 2019/2020 agricultural seasons. Treasury. This has often caused delays when the However, it is important to note that in both years Government is in a tight fiscal position. In some the country had a sizeable surplus as shown in seasons, farmers have had to wait for several Figure 2.1 in section 2.1. months before they receive their payment from the FRA. In comparison, private traders pay on the Another challenge is that the FRA tends to be the spot. This discourages some farmers from selling main buyer rather than the buyer of last resort. to the FRA, opting for the private traders even if This is because the agency tends to establish the price offered is lower. The current marketing its purchasing points even in areas that are well season, 2020/21, seems to be an exception served by the private sector buyers. Stakeholders regarding the timeliness with paying farmers as have for a long time recommended that the FRA some farmers have been paid immediately after concentrate on serving remote areas and not supplying to the FRA—this is usually the case in areas well covered by private sector players. election years or as the country draws close to an election year. The FRA’s purchases have not been consistent as they fluctuate from year to year, creating an As a large player on the market, the announcement uncertain market environment for the private of the FRA buying price tends to influence the level sector (Figure 2.2). The main challenge is that of market prices. For example, in large surplus years, FRA purchases are not rule-based and change most smallholder farmers start selling their maize depending on supply conditions and are amenable only after the FRA has announced its buying price, to political interference. an indication that FRA holds an important position in the market. This price is pan-territorial and pan In general, the FRA’s maize purchases have seasonal, as it does not vary by location or time. trended downward in the last five years, with declarations that the FRA would only purchase FRA market activities and the ad hoc trade policy about 300,000 metric ton in the 2018/19 are cited as the two main reasons for production agricultural season. At the time, this seemed to of maize among commercial farmers declining. agree with the government’s pronouncements, The FRA’s “buy-high and sell low” strategy coupled particularly in the national budget address by with ad-hoc export bans has led most commercial the Minister of Finance that the government was 12 PART 2 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA committed to reducing the size of the SGR. This plans to purchase 1 million metric ton of maize for also coincided with the tight fiscal position that the SGR, a significant departure from the 300,000 the country found itself in, leaving fewer resources metric ton in 2018/19. All this highlights the ad- available for the purchases of maize. However, in hoc and unpredictable nature in the actual size the 2019/20 season, the government announced of the SGR. Figure 2.4: Maize Sales and FRA Purchases in Zambia 100% 2,5000,000 Percentage of total sales 80% 2,000,000 Meric tonnes 60% 1,500,000 40% 1,000,000 20% 500,000 0% - 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 % large scale sales % smallholder sales Total anticipated maize sales (MT) FRA purchases (MT) Source: Ministry of Agriculture /Central Statistical Office various years. 2.6 Selling and Distribution Practices There are several modalities through which the to the FRA for these commodities. FRA releases maize to stakeholders in fulfilling its mandate and also arising from demand from Fifth, the Agency works closely with the Ministry international sources. The first is by conducting of General Education and supplies maize to community sales in collaboration with the DMMU. the Home-Grown School Feeding Programme These sales are meant to help mitigate food (HGSFP) targeting 1 million pupils who are provided insecurity in rural areas during lean periods (FRA with school meals. During the 2019/20 season, 2019a). Community sales beneficiaries access several vulnerable households were reliant on commodities directly from the FRA storage facilities. maize released by the FRA for emergency purposes while the Ministry of Community Development and Second, the FRA works closely with the district Social Services (MCDSS) can also draw maize from leadership in identifying needy communities and the SGR for the social cash transfer. households. The aim is to provide a 50 kilogram bag of maize to each household in the affected The government also allows the export of maize communities. Third, the FRA releases maize to for relief purposes to neighboring countries who the DMMU for relief purposes and this targets are in deficit. Even when there are export bans vulnerable households who cannot afford to in place, the World Food Programme (WFP) is purchase maize. Fourth, the FRA sells commodities usually offered a special window within which directly to schools and hospitals working closely to export commodities (mostly relief maize) to with the district structures. These institutions apply deficit countries. 13 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE There are two main issues that arise with the FRA impeded the development of a Warehouse selling and distribution practices. Receipts System (WRS), as it is unprofitable to store maize in warehouses for sale later. 1. FRA stock rotation and the disposal of maize is often done at below-market prices and 2. The practice of buying high and selling low at a time when private traders would like to selected millers has had minimal effect to offload their stored grain to processors. on lowering consumer retail mealie meal This practice of releasing stocks to selected prices. Instead, the subsidy has increased millers has discouraged investments in the financial burden of the Treasury at the private storage. Thus, poor stock rotation and expense of other equally important social price stabilization practices by the FRA have protection programs. 2.7 Food Needs and Implications on the size of SGR In many years, the size of Zambia’s SGR has been 2012 (Kuteya and Sitko 2013). Any FRA activities to larger than the requirements for SGR purposes do with maize sales or buying has significant effects (see Figure 2.5), owing to the higher price offered, on the market. and to the political economy of maize in the country. For example, in the 2019/20 season, FRA purchases have also largely exceeded the one million metric tons of maize was procured size of the SGR in election years. Election years for SGR purposes. This made the FRA the single i.e. 2006, 2011 and 2016 correspond with the largest player on the market. Past years also reveal 2006/2007, 2011/2012 and 2015/2016 purchases heavy FRA involvement in the market, with the respectively. In these years, the FRA purchases Agency procuring 83 percent of the cumulative exceeded the prescribed SGR of 500,000 metric 4.4 million metric tons of maize between 2010 and tons (Figure 2.5). Figure 2.5: Trends in the Size of Zambia’s SGR 2,000,000 Metric Tonnes (MT) 1,500,000 1,000,000 500,000 0 2003/04 2004/05 2005/06 2006/07 2007/08 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 FRA total purchases (MT) Size of the SGR (Targeted MT) Source: Ministry of Agriculture /Central Statistical Office various years. 14 PART 2 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA One of the biggest challenges confronting the the private sector. The AMC’s mandate would be maize market and the management of the SGR to make decisions on agricultural marketing in the is the lack of a rules-based approach in grain country to create a level playing field for all players marketing. This has created policy inconsistencies and avoid discretionary decisions. The process of discouraging more private sector investments enacting this bill has stalled for years, consequently, into the maize sector. In the Second National the marketing of maize concerning the SGR has Agricultural Policy, the government committed continued to be discretionary and highly uncertain. to the enactment of the 2010 Marketing of Specifically, trade policies (i.e. import/export bans), Agricultural Products Bill at the recommendation the ad-hoc setting of the size of the SGR by the of stakeholders in 2010. This bill, if enacted, would government, and inconsistent marketing policies see the creation of an Agricultural Marketing continue to discourage private sector investments Council (AMC) consisting of the government and in the country. 2.8 Food Emergency Responses and Country-Level Coordination Food emergency response coordination is co-lead following droughts that affected production in by the Disaster Management and Monitoring Unit some districts. More recently, in 2019/2020, (DMMU) under the Vice President’s Office and the the President has not declared national hunger United Nations resident coordinator (Government disasters related to food insecurity following severe of Zambia, 2019). Technical committees under each droughts in the southern half of the country and sector are activated at various levels when needed floods in some areas. This was partly driven by for the drought response (i.e., district, province) the national availability of the staple food, despite (DMMU/UN/HCT 2019). Annex 2b presents the shortages in some areas. food emergency response coordination structure. The response to food-related disasters are Typically, the declaration of national disasters is coordinated by the DMMU. In responding to food the preserve of Zambia’s President following crises, the DMMU instructs the FRA to release maize recommendations from the National Disaster to affected communities through community sales Management Council (NDMC).3 As provided for in what is termed a market-based intervention. in the Disaster Management Act. No. 13 of 2010,4 The DMMU may also purchase maize from the the NDMC is charged with recommending such FRA for release to implementing partners such as an action to the President. Input into this activity World Vision Zambia, the WFP, and Adventist Relief follows periodic vulnerability assessments that are Agency. The implementing partners are responsible conducted by the DMMU. The President has in for the distribution of the maize for relief purposes, the past declared national disasters, for example, while the DMMU only conducts distribution when in 2002, the President declared a national disaster the response is very urgent. This approach ensures 3 The National Disaster Management Council is made up of part time members appointed by the President: Vice President, Ministers of Defence, Agriculture, Home Affairs, Health, National Planning, Energy, Local government, Communication, Education, Works and Supply, Environment and Natural Resources, Community Development, and Minerals Development (Republic of Zambia, Government of, 2015). 4 The Act states that “the council may recommend to the President, the declaration of national disasters” (Republic of Zambia, Government of, 2010) 15 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE that the DMMU is free from any accusations of bias 3. There are logistical challenges related to grain in the distribution of relief food. The implementing movement that reduce the effectiveness partners may also add other commodities based of disaster responses. The DMMU and its on their institutional budgets. These commodities implementing partners rely largely on private have included pulses, salt and vegetable oil. When trucks to ferry relief food from the major FRA the disaster is deemed very big, maize meal is storage facilities in the consumption zones distributed to take away the need for affected to the disaster hotspots. This is problematic households to spend money on milling the maize. as some vehicles on the market may be inappropriate for some terrains. There are There are a number of issues raised in relation to food challenges around the transportation of relief emergency response and coordination, including: commodities in the country. The DMMU only has four functional trucks, the ideal 1. Storage location in relation to food emergency situation is to have one truck in each of the hotspots impedes the ability of the implementing 10 provinces. This is because implementing agencies to effectively respond to emergency partners sometimes request trucks from needs in disaster-prone areas. This also raises the DMMU for hire. Moreover, 4 trucks are the cost of responding to emergencies as grains inadequate in case of emergency responses are procured from rural areas, stored in urban that may not be conducted through the areas, milled in urban areas, and sent back to usual coordination structures. these regions for relief purposes. 4. The FRA draws its resources from the 2. FRA purchases and distributes maize across Treasury along with other quasi-government the country despite differences in the main institutions. When the Government has no staple foods across the country. For instance, resources, the FRA cannot effectively respond cassava and rice consuming communities still to changing market conditions. receive maize for relief purposes. 2.9 Grain Reserves and Synergies with Early Warning Systems This section largely draws from the DMMU’s 2019 The DMMU relies on various data sources to inform response plan (Government of the Republic of decisions, some of which complement their data Zambia 2019), and interviews with the DMMU collection (e.g., the CFS and Post-Harvest Survey and the WFP. The plan explains the early warning (PHS). The major approach to food-related disaster system in place to facilitate disaster responses. Both early warning in Zambia involves an number of historical and current (annual) data inform decisions. activities as summarized in Box 2.1 below. 16 PART 2 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA Box 2.1: Zambia SGR Early Warning System • Rapid assessments are conducted annually assessment that is used to determine the degree to to identify needs for a response. Districts for which markets for goods and services are available the rapid assessments are selected using to meet demand in drought years. This is done bi- information from the Zambia Meteorological annually, first in May/June, and later in October/ Department (ZMD) on areas with below-normal November (the start of the lean season). rainfall and information from the District Disaster Management Committee (DDMCs). • Reports based on district rainfall performance. • Hydrological data analysis from the Water • The PHS, on the other hand, provides actual crop Resources Management Authority), and the production as opposed to estimates provided by Zambezi River Authority. the CFS, this assessment is conducted after harvest (i.e. September – October each year). • Historical data analysis: Typically, a contingency plan is drawn up before the commencement of • The Southern African Regional Climate Outlook each rainy season based on historical data analysis Forum (SARCOF): This is an early warning forecast to predict which areas are likely to be affected by produced by Southern African Development droughts or floods. A major observation is that Community Member States and downscaled affected districts have remained almost the same, to Zambia’s context by the ZMD before the save for a few additions each year. beginning of the season by August. The SARCOF produces medium-range rainfall forecasts that is • Production information from the annual CFS – used to update national contingency plans for the district and nationally representative survey – coming season. conducted by the Ministry of Agriculture between March and April every year. The CFS serves as an • The SGR also feeds into decision-making around early warning system in that the information on grain markets through the stocks monitoring anticipated production is used to assess the food committee meetings/reports. Typically, a few security situation in the country and to produce industry players that sit on the stocks monitoring the NFBS. This dataset complements the DMMU’s committee (except FRA, which is mandated by law assessments. However, DMMU’s data collection to declare stocks), voluntarily declare how much does not cover all districts. stocks they have during the year, and this informs government decisions around how much to procure • In-depth vulnerability and needs assessments for SGR purposes, relief food responses, and trade are conducted annually building on the rapid policy. These stocks are only for sources that have assessments, district reports, and the CFS. The representation on the stocks monitoring committee vulnerability assessments are used to determine (i.e. commercial farmers, grain traders, millers, and the number of people affected, their geographical the FRA) and thus do not comprehensively capture areas, and their food and non-food needs. the maize stocks position in the country (Mulenga et The needs assessment also includes a market al. 2019). The current approach to early warning is conducted Also, the Post-Harvest surveys are often not carried annually (i.e., around May for the Crop Forecast out due to intermittent funding, sometimes four surveys, October/November for the Post-Harvest years pass without a survey. The most recent one surveys, and around April/May for the DMMU’s was prompted by the 2019 crisis. This was a quick in-depth vulnerability and needs assessments). snapshot survey with a smaller sample size than However, there is a need for medium-term early would normally be the case. The main advantage warning information generation to help update of the PHS is that unlike other production data contingency plans drawn earlier in the season available (e.g. CFS), it gives a more realistic picture considering new and updated information. as it accounts for post-harvest losses. 17 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE The early warning system is mostly annual (short The recently registered private sector initiative, term) hence, save for the historical data analysis Zambia Agricultural Information Services (ZAIS)5 used to plan for disasters, there is a lack of medium- lacks the legal mandate to collect information to-long term early warning information generation. from stakeholders, has no income flow to ensure sustainability, staff positions such as data Also, there is lack of a fully operational grain collectors, data entry staff and accountant are yet information service to facilitate improved grain to be filled, and the required ICT infrastructure is information flow for early warning purposes. yet to be installed. 2.10 Reserve Targets Under Different Scenario of Emergency Needs The Zambian SGR is primarily for emergency recommend a SGR of 300,000 metric tons of purposes within the country. In recent times, the maize. However, SGRs are usually a political tool reserve target has been 500,000 metric tons. In and subject to fluctuation (Ibid). Typically, the the 2019/20 season, the Government announced SGR is almost double the norm in years leading intentions to purchase 1 million metric tons up to elections. Moreover, the SGR is seldom (almost twice the normal SGR target)—a practice 500,000 metric tons, instead, the Government still common in years before the elections. However, announces that they will buy 500,000 metric tons this pronouncement is also special as the maize is or more each year, adding what may be in storage also meant to be a COVID-19 disease contingency during the purchasing period, which increases the plan under the Ministry of Agriculture. Aside from actual figure of the SGR held. the government agencies, the SGR also serves UN-agencies such as the WFP, and foreign Table 2.5 shows the quantity of food that would governments (e.g. Malawi and Zimbabwe during be required for emergency purposes (and the 2015/16 El Niño crisis) for relief purposes, thus the SGR), using population projections and the private sector for commercial purposes for Zambia into 2030 (CSO 2013) the monthly when the need arises. Kuteya and Samboko (2018) cereal requirement of 12.5 kilogram per person, argue that the national SGR should range between and assuming 3-6 months of food requirements 150,000 metric tons and 350,000 metric tons. Their (which also coincides with the 3-month lead time calculation is based on the recommended daily to imports). We also assume that 20 percent of caloric intake, social protection level (i.e. percent the population is affected, a higher ratio than the of the vulnerable population), consumption 13 percent worst-case scenario witnessed in the patterns, and the lead time to imports. At the 2019 agricultural season. Since 2012, the second- time of the study, the recommended SGR was highest share of the population in need of food 250,000 metric tons. Harman and Chapoto (2017) was in 2013 at 8.5 percent. In all years listed, results 5 ZAIS was incorporated in September 2019 as a body independent from the government. The organisation currently runs on funding from Musika Development Initiatives Limited, a local NGO supporting market development in the country. The owners of ZAIS include the Zambia National Farmers Union (ZNFU), Millers Association of Zambia (MAZ), and the Grain Traders Association of Zambia (GTAZ). A board of directors currently exists, and the organization has made submissions to the Ministry of Agriculture requesting guidance on the legal mandate, and a proposed grain levy to be charged to the ZAIS owners. 18 PART 2 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA indicate that the current 500,000 metric tons tons would still be sufficient under the same SGR size is sufficient for Zambia. The future SGR conditions (i.e. number of affected individuals requirements are almost 70 percent of the size of and monthly requirements per person). However, the current reserves. This suggests that research it must also be noted that maintaining SGRs is recommending a 300,000 metric ton reserve only one aspect of the government’s objective target is within the required range (e.g. Kuteya and through the FRA. The FRA’s smallholder market Samboko 2018; Harman and Chapoto 2017). If provision function is also a key determinant of the we set the requirements at two years, the highest SGR. In areas underserved by the private sector, requirement is in 2030 at 699,054.60 metric tons. FRA maize purchases remain crucial to providing This means that an SGR of about 700,000 metric smallholder farmers with a market. Table 2.5: Zambia’s Relief Food Requirements (Worst Case Scenario) Year Projected Population Affected people Assumes Food Requirements Food Requirements (No. of people) 20% of the population (3 Months) (6 months) (No. of people) 2019 17,885,422 3,577,084 134,141 174,763.65 2025 20,574,134 4,114,827 154,306 308,612 2030 23,576,214 4,715,243 176,822 353,643 Source: Authors’ calculations based on Central Statistical Office data (2013) and Government of the Republic of Zambia (2019). 2.11 Recommendations to Enhance Management of SGR in Zambia Based on the discussion above, there are of emergency assistance; and (iii) support private three broad recommendations to enhance the sector development and collaboration. Details management of the SGR in Zambia. These are (i) about the specific issues and recommendations Reduce the fiscal costs; (ii) Improve the delivery are listed in Table 2.6. 19 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE Table 2.6 Summary of Key Issues and Recommendations to Enhance the Effectiveness of SGR Management and Emergency Food Responses in Zambia Issue/Challenge Recommendation 1. Reduce the fiscal costs 1.1 Inefficient price FRA should limit its purchase to only the prescribed SGR stocks and buy these stocks from stabilization policy areas where the private sector is less likely to operate due to remoteness or high transport costs. Also, to create incentives for the farmers to produce the next season’s crop, it is important that the FRA becomes the buyer of last resort and guarantees a floor price that is applicable when the farmers fail to get a market or the market price fails to rise above the guaranteed floor price. Therefore, to be a buyer of last resort the FRA should buy at the tail end of the market ensure that it is a buyer of last resort. This would help to limit the Treasury’s exposure because the private sector would compete for available stocks and this will help prop up maize market prices. If maize market prices rise above the floor price then the government does not need to honor the floor price. Instead, the FRA could use the commodity exchange to purchase its SGR stocks. 1.2 Inconsistent post-harvest Finance the MoA Early Warning Unit to conduct annual post-harvest surveys to help surveys due to financial improve data collection and verification of crop forecast surveys. In future, crop forecasts challenges limit the need to be more cost-effective by doing away with the need for a post-harvest survey. This adequacy of early calls for a shift from the survey approach to production estimation in favor of more effective warning information innovations such as remote sensing. • Promote partnership between the FRA and the private sector through LuSE/ZAMACE 1.3 Disabling policy actions by limited and become more efficient in its operations. For example, the FRA can limit the FRA on the market due the quantity of physical stocks held through partnerships with the private sector. to political interference This could limit the fiscal exposure of the government through storage costs and around SGR management. losses. For this relationship to work it is important for government grain marketing policies to be predictable and consistent in order to instill confidence among financial institutions to provide pre-financing facilities. Services offered by ZAMACE if sustained would help to offer viable alternative market services which will help to manage market risks (price volatility). • Expand available market options to include the use of futures market, leveraging the current partnership between LuSE/ZAMACE and Johannesburg Stock Exchange (JSE), can help build an efficient and transparent commodity market for maize and other commodities. The futures market in the form of secured forward contracts (possibly with set margin percentages established by LuSE), would have the secondary advantage for the private sector’s liquidity and stable supply challenges, and help normalize expenses and reduce cash flow issues through the payment of advances in an institutionalized setting (thereby reducing their risk), while also reducing their risk of financial loss due to price fluctuations. Additionally, this would be another sustained 20 PART 2 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA Issue/Challenge Recommendation revenue source for government through trade facilitation on the platform while at the same time providing visibility to FRA on available stocks. 2. Improve the delivery of emergency assistance 2.1 Lack of community storage • Promote community grain banks in the disaster hotspots in line with the WRS facilities for emergency development plans. food storage in disaster hotspots. • Set up FRA rural aggregation centers for various commodities close to the drought/ flood-prone areas, which are the hot spots for food emergencies. These should be operated in collaboration with private sector players, DMMU and non-state actors such as the WFP, World Vision, among others. 2.2 Disaster hotspots • There is a need to invest in storage facilities and complementary milling infrastructure underserved due to skewed in the northern half of the country and investments in milling infrastructure are also distribution of storage crucial. The investments can be done using Public-private Partnerships (PPPs). About facilities across the country. 895,000 MT in capacity would be needed to match what is currently obtaining in the southern half of the country. In the short to medium term, this may include helping local communities in establishing their own grain banks. 2.3 The lack of comprehensive • Enhance stock monitoring capacity and refine parameters used in the vulnerability information on maize stocks assessments. in the country to inform maize market decisions. • Establish a fully functional and self-sustaining grain information service that could improve decision-making in maize markets to benefit emergency food responses. In particular, ensure the sustainability of ZAIS through the enactment of legislation to allow ZAIS to collect grain levy from its members. This levy would be on all commercial producers and traders of grain, and not the smallholder farmers. As such, buy-in is expected as these are the owners of ZAIS. • Speed up providing ZAIS with the legal mandate to collect data from its members through delegated authority under the Agricultural Statistics Act CAP 229) or the FRA (Food Reserve Act CAP 225). Given that the enactment of legislation for grain levies may take time, it is recommended that ZAIS operations be funded in the very short term. 2.4 Logistical challenges Provide funding to capacitate the DMMU to improve transportation and early warning related to grain movement preparedness. This will involve procurement of trucks, information technology equipment that reduce the for short to mid-term early warning systems and human capacity building. effectiveness of disaster responses. 21 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE Issue/Challenge Recommendation 2.5 Current relief food provided • Study the possibility of fortifying maize released to millers at time of milling by adding is nutritionally insensitive – important nutrient elements to the milled maize to help address the malnutrition only includes maize and situation in Zambia. maize products. Inclusion of other commodities is • Include a set target volume of nutrient dense crops, such as Vitamin A biofortified unlikely given maize (orange maize) in the SGR purchases and relief food distributions. cost implications. 2.6 Inadequate capacity at Provide training of DMMU staff and relevant members of the Zambia Vulnerability the DMMU to conduct Assessment Committee to conduct more rigorous and informative quantitative and more rigorous and qualitative analysis to improve emergency food beneficiary identification and targeting. informative analyses to improve beneficiary identification and targeting. 2.7 Finance challenges limiting The Treasury should establish procedures that ensure that the FRA has ready access to FRA effectiveness in finances to ensure they can better take advantage of evolving market conditions. This executing its mandate. follows from international best practices since currently, the agency does not manage its The FRA must compete with own resources. In ensuring finance availability, care should be taken to not commercialize every other government the FRA. agency for resources. 2.8 High regional demand Current reserve targets are adequate in meeting emergency food needs for Zambia, for maize in deficit countries going into 2030. However, given regional demands for grain from Zimbabwe, Malawi and reducing and unfavorable the Democratic Republic of Congo. There is a need to strengthen cooperation between trade policies stifling the countries in vulnerability assessments and trade policy to improve effectiveness of effectiveness of emergency responses across countries. food responses. 22 PART 2 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZAMBIA Issue/Challenge Recommendation 3. Support private sector development and collaboration 3.1 Restricted movement of Promote the private sector’s role in addressing food insecurity by always allowing free grain across the country movement of grain across regions at all times. in some years undermines the private sector’s role in addressing food insecurity. 3.2 Inefficiencies in the market Improve the marketing of agricultural commodities by: triggered by FRA actions a) Promoting a rules-based marketing system that promotes private sector development such as poor timing of and predictability in the maize market in relation to the size of the SGR, timing of stocks stock rotation practices, rotation, trade policy and inclusivity in release of maize to millers by the government. This ad-hoc setting of the SGR can be enhanced by the enactment of the Agricultural Marketing Bill. size especially in election b) Decentralizing market assistance at the sub-national level through the operationalization years and ad-hoc trade of marketing boards. policies that undermine emergency food responses within Zambia and for neighboring countries. 23 PART 3 FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZIMBABWE 24 PART 3 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZIMBABWE 3.1 Overview of Food Security Situation in Zimbabwe Zimbabwe is one of the food insecurity hotspots continuous maize deficits with the exception of in Sub Saharan Africa. The country has been 2016/2017 and 2020/2021, mainly attributed to facing food emergencies caused by El Niño- more frequent droughts and generally low maize induced droughts and the devastating effects productivity. The country used to experience a of a series of cyclones –Cyclone Eline in 2000, drought at least every 5 years, but these have Japhet in 2003 and Idai in 2019. Figure 3.1 now increased in frequency, occurring every shows that since 1996, the country has had other year or every year in recent periods. Figure 3.1: Zimbabwe: Trends in Maize Surplus/Deficit (1986/87-2019/20) 850 1,000 567 494 433 397 235 253 500 173 0 Metric Tonnes -50 -73 -139 -173 -229 -500 -303 -239 -232 -274 -307 -341 -431 -516 -700 -1,000 -791 -806 -843 -858 -919 -960 -982 -1,016 -1,154 -1,500 -1,247 -1,288 -1,398 -2,000 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 Source: Zimbabwe National Food Balance Sheets. The increasing weather risks and the recurrent grain a huge jump in the number of people requiring deficit has resulted in an increase in the proportion food assistance in the following year (see figures of the population requiring food assistance. In all 3.2). However, it is also very important to note the drought years, the country had severe food that the amount of food assistance available is deficits, where in some years over 5 million people dependent on the time of the year. In general, (nearly 40 percent of the population) were reported the food assistance requirements decrease soon to be food insecure and requiring emergency food after harvest and increase as the marketing season assistance. In these years the government had to progresses and peaks between January and March declare national food emergency in order to receive (see figure 3.3). Also, the trend shows that over support from both local and international partners. time the proportion of households requiring food The advent of the COVID-19 pandemic in March assistance has increased due to the more frequent 2019 has induced additional food emergencies due maize grain production shortfalls. to supply chain disruption. In addition, the country faces a huge burden of The proportion of the population requiring food micronutrient deficiencies. Anemia and Vitamin A assistance is correlated with the previous harvest, deficiencies affect 31.5 percent and 21.2 percent thus a shortfall in the previous season results in of children under five years respectively, while 25 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE 23.9 percent of women are deficient in Vitamin reduction and food and nutrition security. A and 25.8 percent of women are anemic. However, frequent droughts plus limited resilience, The government of Zimbabwe recognizes that inadequate resource allocation to key drivers of agriculture is one of the key priority sectors in agriculture growth make it difficult to achieve the achieving sustainable economic growth, poverty stated goals. Figure 3.2: Maize production and proportion of Figure 3.3: Proportion of Households Requiring households requiring food assistance, 2009-2020 Food Distribution By Quarter: 2015 - 2020 2,500,000 80 70 requiring food assistance (%) requiring food assistance (%) 59 Proportion of households Proportion of households 60 Maize production (MT) 2,000,000 60 50 50 42 1,500,000 40 38 35 40 28 1,000,000 30 23 21 20 20 20 13 16 500,000 10 11 10 6 6 7 5 3 2 1 0 0 0 April-June July-Sept Oct-Dec Jan-Mar 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 National maize production (MT) 2015/16 2016/17 2017/18 Proportion of households (%) 2018/19 2019/20 Source: Maize production figures from MLAFWRR and Source: Author’s computation based on ZIMVAC reports proportion of households computed from ZIMVAC reports The government has used various approaches maize production and use of the SGR. The SGR to address food emergency needs with has been used to stabilize domestic prices by Strategic Grain Reserves (SGR) being the main providing maize to millers at subsidized prices instrument (see table 3.1). The effectiveness and provide incentives to producers through of these approaches has been mixed but in direct procurement at above market prices general the prominent goal of the government with a motive of increasing their incomes and has been to ensure food security by supporting encourage maize production. 26 PART 3 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZIMBABWE Table 3.1: Food relief responses during years declared national disaster Interventions Period/s Food Emergency Storage shed located Responses Implemented in rural areas (%) Food/cash 1995 Free Food Program • Is estimated to benefit about 733,000 transfers people. • Number of beneficiaries were lower than those in need • Delays in distribution 2019-2020 Distribution of food and cash transfers targeting • Selection of beneficiaries for in- kind vulnerable groups in both urban and rural areas. food transfer not transparent. While there is poor targeting in the Harmonized Cash Transfer (HCT) due to the use of an outdated (2012) beneficiary list to inform targeting in recent years. • Monthly food assistance through cash or in- • Food relief efforts inadequate as over 5 kind transfers to food insecure households in million people were in need. collaboration with local stakeholders for the • Some notable delays in distribution period April – June 2020. Food 2019-2020 Introduced unrefined maize meal (roller meal) • Inadequate as only a few are accessing subsidies subsidy targeting the vulnerable groups. • Hoarding of subsidized mealie-meal for resale on black market. Feeding 1995 Supplementary Feeding Program • An estimated 800,000 children benefited. programs Micro-nutrient / under five feeding program 2016 School feeding program; Support the provision of school meals in all districts 2019-2020 Procure and distribute nutrition commodities for • Program affected by COVID-19 restrictions treatment of severe acute malnutrition, prevention and treatment of moderate, acute malnutrition in children 6 – 59 months and acute malnutrition in pregnant and lactating women. Grain loan 1995 Grain Loan Scheme. • Estimated to have benefited some 5.05 million Zimbabweans. • Repayment was poor. Source: Authors’ compilation (2020). 27 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE 3.2 Management of the SGR The severe droughts experienced during the the GMB which offered the minimum viable price, 1991/92 and 1994/95 agricultural seasons as the buyer of last resort, while private traders persuaded the Government of Zimbabwe that it could offer higher prices, as buyers of first choice. needed to have a SGR to effectively deal with any future drought- induced food supply shortages In 2019 at the peak of food emergency crisis a and emergencies. Through a Debt Take-over total of 59 percent of the country’s population Agreement (DTA)6 signed between the Grain was food insecure and maize deficit estimated Marketing Board (GMB) and the Government of at 206,250 MT, the Government introduced a Zimbabwe in 1996, the country started holding regulation ( SI 145 of 2019), which prohibited food reserves. Since then, the GMB has a mandate exports of maize and banned individuals, statutory to maintain the 500,000 MT of physical stock. the bodies or companies from buying maize directly GMB is a corporate body established pursuant to from producers except GMB and registered private the Grain Marketing Act [Chapter 18:14] and its key contractors including Delta, PHI Commodities, role is management of the Strategic Grain Reserve Staywell Trading and Northern Farming. Registered through its extensive grain crop storage silos and contractors were allowed to purchase from their bag depots situated across the grain farming areas contracted growers only and GMB was declared as well as major consumption areas within the the sole buyer of maize from all the farmers country’s 10 provinces. In addition, the GMB is outside outgrower contracts (Government of mandated to be a grain buyer of last resort as Zimbabwe 2019). well as have the responsibility of managing the Government Initiated Inputs Schemes. The impact of SI 145 in terms of improving grain inflows still needs to be evaluated but indications The policy environment under which the GMB point to the same results experienced under SI operated has evolved over time. In February 235A in 2001, which led to the suspension of all 2009, the Ministry of Finance announced the agricultural trading by the Zimbabwe Agriculture liberalization of the grain marketing system Commodity Exchange (ZIMACE). At that time, where the GMB was mandated to announce the private sector firms that had been purchasing grain floor prices related to import parity and while directly from farmers stopped buying, which created assuming the role of buyer of last resort, reverting cash flow issues to maize surplus households. to 1996 reforms. This marketing arrangement Rendering private trade illegal meant maize trading was succeeded by SI 122 of 2014, introducing in particular went ‘underground’ resulting in sharp Minimum Grain Producers Prices (MGPP) allowing price increases due to the risk premium associated farmer’s choice to sell either to the GMB or private with the illegal trading. The rising inflation and rapid traders. This was done in order to encourage erosion of the currency at that time meant that farmers to continue to produce grain and sell to farmers with a surplus preferred to withhold their 6 Under the DTA, the government mandated the GMB to continue its grain and associated products trade business on a commercial basis and handle the SGR for the nation as an agent. The Government assumed all prior GMB debts to allow it to operate viably. The Government made a commitment to create a fund to be managed by the Board on its behalf for the purpose of financing the procurement and management of the SGR that will range between 500,000 metric tons to 936,000 metric tons per year (Government of Zimbabwe, 1996). The DTA gave the GMB flexibility to determine its own pricing and marketing policy to avoid losses from its commercial operations and achieve profit and return on capital employed. 28 PART 3 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZIMBABWE commodity than sell it to GMB at a lower price marketing season farmers withheld their maize, which was against GMB’s monopoly objectives. preferring to illegally trade directly with millers The impact of the current grain market control at prices ranging between US$ 270 to US$ 280 policy is much worse due to a combination of per metric ton, while the GMB fixed price was several factors including the quoting of prices in US$ 265 per metric ton. The GMB only managed local currency in a hyperinflation environment and to purchase 150 000 metric tons by the end of farmers failing to buy inputs for the next season November 2020 against an initial projected target due to inflation. Similarly, in the 2020/2021 of 500 000 metric tons. 3.3 The fiscal cost of SGR Management The fiscal cost of funding the SGR interventions prices amount to about US$ 285 million or about is very high and unsustainable. In 2018, grain 2.1 percent of GDP.7 The cost of such interventions purchases by the Grain Marketing Board were US$ was considerable as a share of government 473 million or about 3.4 percent of GDP and the expenditure and GDP, creating a significant impact difference between the procurement and sales on the fiscal deficit (see figure below). Figure 3.4 : Fiscal deficit (% of GDP) 2011 2012 2013 2014 2015 2016 2017 2018 2 0 -2 % of GDP -4 -6 -8 -10 -12 Other Other command agriculture GMB net purchases Fiscal balance Fiscal balance excl. grain purchases Source: Zimbabwe Agriculture Public Expenditure Review (WBG 2019). A recent assessment indicated that the to industrial processors. Besides grain purchases Government would require nearly US$ 470 and sales, there are other major drivers of million (more than the total budget allocated costs related to transportation of grain from for agriculture in 2019/20) 2020) of which 18 surplus to deficient areas, bagging operations, percent goes toward subsidizing maize supply maintenance of storage infrastructure, 7 World Bank 2019. Agriculture Subsidies for Better Outcomes: Options for Zimbabwe. Internal Discussion Paper. 29 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE fumigation and handling. The costs related 2012/2013 and 2017/2018 marketing seasons to GMB operations are directly related to the respectively – with the highest expenditure in the quantity of grain handled in a particular season. later period associated with a significant increase For example, the Treasury spent between US$ in the amount of grain reserved, which was more 145 million and US$ 900 million annually in the than 1.2 million metric tons. Table 3.2: SGR Budget Allocation, Maize Production, SGR Purchases and GMB Buying and Selling, 2012 to 2020 Marketing Total Budget Actual % MLAFWRR National GMB Transport GMB GMB Year Allocation to Allocation SGR Budget Maize Purchases Costs Buying Selling MLAFWRR to SGR Expenditure Allocated Output (metric tons) (US$) Price price (US$ (US$ (US$ to SGR (metric tons) millions) millions) millions) A B C D= (B/A) E F G H I 2012/13 147.00 30.0 89.4 20.4% 968,000 81,190 966,322 285 - 2013/14 155.00 36.0 33.8 23.2% 798,596 33,273 2,302,923 310 - 2014/15 161.00 41.0 19.4 25.5% 1,456,153 220,366 3,957,650 390 462 2015/16 173.00 46.0 379.6 26.6% 742,225 67,945 4,107,590 390 462 2016/17** 225.15 48.08 393.62 21.4% 511,816 217,726 17,147,062 390 445 2017/18** 248.69 56.50 204.00 22.7% 2,155,526 1,209,998 33,463,258 390 270 2018/19** 116.39 27.65 174.04 23.8% 776,635 1,209,998 - 390 250 2019/20** 221.38 100.47 N/A* 45.5% 907,629 1,149,117 - 240 - Source: MOFED and MLAFWRR (Various Years), GMB Annual Reports (various years) B Capital contribution relates to funds advanced to the Grain Marketing Board by the Treasury for the purchase of grains and payment of related expenses C Unaudited Expenditure outturn figures provided by MOFED not verified by the Auditor General’s Office H announced Producer prices at which the government through the GMB is buying maize from farmers I Prices at which the GMB sells maize to millers - Figures missing *actual expenditure figure for 2020 not yet finalized by time of compilation of report **Budget Figures between 2017 and 2020 converted to US$ using annual average exchange rates of 1US$ = 1.3 ZWL (2017); 1 US$= 2 ZWL (2018); 1US$ =8.5 ZWL (2019)8 and 1US$= 51.3 ZWL (2020; RBZ) The scaling of government control over grain goes toward grain reserve interventions than markets following regulation making GMB to investments that can directly enhance the sole buyer of maize, has further increased agricultural productivity and resilience in the the fiscal burden of the government’s grain long term. Despite massive public spending on reserves operations, destabilizes private sector grain reserves both at producer and consumer participation in grain markets and diverts scarce points there is little evidence on the economic public resources from investing in long-term gains of such spending and contribution to agricultural productivity and resilience. As table food security. A set of reforms will be needed 3.2 shows, a bulk of expenditure for agriculture to reduce the fiscal cost of grain reserve 8 Zimbabwe 2019 Article IV Consultation, International Monetary Fund; https://www.imf.org/-/media/Files/Publications/ CR/2020/English/1ZWEEA2020001.ashx 30 PART 3 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZIMBABWE management and ensure the effectiveness of The following sections provide a review of the its operations to achieve the desired economic SGR management and operations and identify gains and contribution to food security. main issues for reform consideration. 3.4 Strategic Reserves Facilities and Location Grain storage in Zimbabwe is done at local and Lions Den, Bulawayo, Chegutu, Norton, Karoi, national levels involving private and public players. Murehwa, Magunje, Chiweshe, and Mukwichi. It is common in the Zimbabwean farming sectors to store grain at household level to ensure food Figures 3.4 and 3.5 show the GMB depot network availability for the family throughout the year given throughout the country and cereal sufficiency the seasonality of production. Millers in the country status in Zimbabwe to illustrate hotspots for food handle about 500,000 MT of grain in good years insecurity/security in the country. These maps through their combined private storage capacity of show a high concentration of silo network in food 100,000 MT such that at business peak, they will production hotspots of Mashonaland Central and require leased storage space. Mashonaland West Provinces while other storage facilities such as hard stands and sheds are in grain GMB has at least one depot in every district9 and deficit areas to facilitate storage during distribution. all depots are located relative to grain production A total of 22 depots are served by a rail network, an and strategic grain distribution centers. The GMB important key factor for grain distribution during storage infrastructure covers 86 sites countrywide distress periods and delivery into depots by local with up to a storage capacity of 2,813,000 metric farmers and importers. Some depots in drier regions tons. This storage capacity is made up of 736,500 of the country like Matebeleland South, Matebeleland metric tons of silo storage, 124 608 metric tons North, Masvingo and parts of Mashonaland East and sheds, 1,272,489 MT hard stands, and 679 500 Manicaland were established primarily as maize metric tons compacted ground. The GMB owns 12 distribution centers and have fewer farmers that silo complexes in Banket, Concession, Aspindale, produce surplus grain for markets. Figure 3.5: GMB Depot Network in Zimbabwe Figure 3.6: Cereal (maize and small grains) sufficiency Source: GMB. Source: Second Round Crop and Livestock Assessment Report 2019/2020 Season. 9 Zimbabwe has 59 districts. 31 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE Only 26 percent of GMB storage facilities consist GMB to buy and store as a buyer of last resort. of durable infrastructure. The GMB has silo depots Mashonaland West Province is endowed with the which are made from concrete, two made from largest number of silo and bag depots, however, metal and the rest of the depots are hard stands. there is still a gap in terms of storage capacity These require different levels of maintenance in remote locations. Mashonaland West is the and rehabilitation. The silo plants are in need of hub of maize farming. The storage capacity rehabilitation in terms of waterproofing on joints in the province of about 230,000 metric tons and basements. The GMB, in February 2021, is inadequate to accommodate both maize floated a tender to address the same. The silos also and wheat intake in one season. Stakeholders require automation by way of installing sensors to indicated that it was prudent to invest in two other manage grain moisture content and pest regimes bulk handling depots or facilities in the Mhangura in the storage facilities. Modern silos installed with and Raffingora areas. computerized systems to manage grain intake and conveyance systems are required. Automation of In addition, in the southern parts of the country GMB silos will improve efficiencies in grain storage where food relief needs are high, depots are and handling while reducing grain losses. Over widely spaced with households travelling the last five years the GMB has managed to keep more than 200 km to collect food in times of grain losses below 3 percent annually. need. This results in distribution hassles and beneficiaries failing to access food relief when In terms of adequacy of the storage facilities, needed. In general, the increased capacity in it was noted that more depots are needed in remote locations will allow the GMB to lease high potential marginalized areas to allow the existing silos in more accessible locations. 3.5 Grain Buying Modalities The government through the GMB prefers to already stretched Treasury as the GMB is the sole source maize for the SGR from the local market buyer of all non-contracted maize under the SI using agreed grading standards as incentives 145 statutory instrument. Second, the region and to farmers to produce by availing conformed indeed Zimbabwe is projected to produce a huge markets for the commodity and as well as buying crop due to favorable weather conditions coupled at favorable prices. The GMB purchases grain with a massive government input distribution directly from farmers who deliver to its collection program during the 2020/21 agricultural season, depots across the country. a situation likely to create marketing challenges as market prices are projected to crash and The MLAFWRR after approval by the Cabinet there will be limited export opportunities in the announces producer prices at which the GMB region. This means the country has to store would buy maize from farmers during the a large portion of the harvest. The expected marketing season that starts on April 1 of each bumper harvest of more than 3 million metric year. In 2020, the government adopted the tons requires that the Government secures huge strategy of announcing indicative pre-planting resources to enable the GMB to purchase grain prices to provide certainty to farmers wishing to at the promised pre-planting price. Any payment produce maize. Unfortunately, this poses several less than the promised price will meet resistance challenges. First, a very high pre-planting price from the farmers, a situation that can affect future will likely increase the financial burden on the grain production. 32 PART 3 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZIMBABWE It is commendable that the government is In the 2016/17 agricultural season, the considering the GMB participation in the government of Zimbabwe, with the desire to Warehouse receipts System and Commodity become self-sufficient and a regional grain bread Exchange, a space that can crowd in private basket introduced the Special Maize Production sector financing of the SGR. However, this would Programme (SMPP) for Import Substitution or require the repeal of SI 145. The current situation Command Agriculture.10 This program came with where the GMB carries all the cost to procure, a guaranteed producer price of US$390/metric store and distribute grain to the private sector who ton calculated based on cost of production and would otherwise finance their local procurement average yields was set well above the prevailing and storage is overburdening the Treasury. A market price. While the price was favorable to repeal of S1 145 would help to unlock private the farmer and motivated farmers to increase sector financial resources for grain purchases or the hectarage under maize, the above market imports instead of creating an artificial demand price resulted in other unintended effects. For for subsidized maize from the GMB. example, the contracted producer maize price of $390/metric ton was at variance with the During the buying season, the GMB submits regional and domestic supply and demand weekly returns of grains purchased to the Treasury position. This created arbitrage opportunities in to trigger the release of cash to pay farmers. the local maize market by making informal maize Purchases are conducted through the GMB’s imports more lucrative given that there was an depots or established and mobile collection import ban in place. Inevitably this increased points. Collection points aggregate grain from the the cost of policing the bans and an increase farmers for onward movement into main depots. in discretionary funding to support consumer The requisite processes between GMB and the subsidies through the GMB sales of subsidized Government authorities availing funding for grain maize grain to millers. purchases results in delays in payments to farmers and high transaction costs that discourage The producer pricing policy was revised during participation of smallholder farmers. the 2019/20 marketing season to a production cost plus profit producer pricing model and Another issue that was raised involves the pan- benchmarked to the import parity prices prevailing territorial pricing policy itself. Thus, GMB pricing at the time of price announcement and to be paid policy does not consider silo discounts as they in Real Time Gross Settlement (RTGS) $. The have one price throughout the country. The pricing in RTGS$ was met with fierce resistance pricing policy, has implications on the operation from farmers who felt that the price was not of private sector players who have to incur varying reflective of the real cost of production in 2018/19 transport costs depending on their distance from agricultural season as it ignored the prevailing the nearest collection point. exchange rate volatility. 10 Command agriculture – a special import substitution program initially targeting production of maize and now including wheat, soybeans, cotton, livestock, fisheries, forestry – is an intended private-sector-backed input and price support program implemented by the Government of Zimbabwe through joint command structure. Under the program, all beneficiaries (including all farm sectors – communal, old resettlement, A1, small-scale and A2, irrigation schemes and institutions such as Mission and Church farms, Universities, Colleges, Schools, Police and Prison Services and Zimbabwe Defence Forces) are contracted to deliver a specified quantity to a specified government agency (Grain Marketing Board, GMB) after harvest as a repayment for support rendered. In turn the recipients who sign up receive fertilizers, seed, agro-chemicals and irrigation and mechanized equipment on a cost-recovery basis. In addition, the Presidential Input Scheme targets vulnerable households who receive a free standard package of seed and fertilizer for maize and cotton. 33 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE Benchmarking the maize price on import parity to fluctuate removed the incentives for farmers pricing was the correct decision as the country and traders to participate in the market actively. was in a grain deficit situation. However, the Table 3.3 demonstrates how the revised maize decision to fix the price based on the RTGS rate prices were quickly eroded by the depreciating on the day of announcement and not allowing it Interbank market RTGS $ to US$ rate. Table 3.3: Maize producer prices - RTGS converted to US$ at Interbank rates Maize price in RTGS$ Date RTGS $: 1 US$ 390.0 776.0 1400.0 2100.0 15-Mar-19 2.75 141.8 30-Mar-19 3.01 129.6 02-Apr-19 3.00 130.0 258.67 14-Apr-19 3.16 245.57 Maize grain US$ price as at RTGS Interbank rate 30-Apr-19 3.26 238.04 02-May-19 3.26 238.04 14-May-19 3.37 230.27 30-May-19 5.23 148.37 12-Jun-19 5.50 141.09 254.55 14-Jun-19 6.00 233.33 30-Jun-19 6.62 211.48 02-Jul-19 7.80 179.49 10-Jul-19 8.67 161.48 11-Jul-19 8.71 160.73 16-Jul-19 8.52 164.32 246.48 17-Jul-19 8.84 237.56 18-Jul-19 8.85 237.29 19-Jul-19 8.86 237.02 Source: Adopted from Chapoto et al, 2020. This situation resulted into increased demand for compliance with the SI 142 instrument of 2019, the cheap maize grain from GMB by millers and created recommendation is that farmers should be paid grain allocation nightmares for the government RTGS dollar equivalent to the real US$ import parity as well as increased arbitrage opportunities price using the daily official interbank exchange for well-connected individuals or entities. This rate instead of fixing it at the RTGS rate on the date situation increases the burden to the Treasury. In when the price is announced. 34 PART 3 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZIMBABWE 3.6 Reserve Selling and Distribution Mechanisms Zimbabwe used grain reserves for three main releases the stated monthly allocation to the objectives - (i) price stabilization; (ii) food; and Food Distribution Committee(s) which are led (iii) sales to rural households. The utilization or by District Social Welfare Officers. The GMB release of the reserves and pricing of procurement raises an invoice for the quantity of maize and sales is decided by the Cabinet based on released for payment by Department of Social recommendations from MLAFWRR. Welfare. Although the country has a robust food emergency coordination structure it 1. Price stabilization: The reserve is maintained takes not less than a month from the date a where GMB historically buys most of the request or application for food assistance is maize from farmers at higher than import submitted and final approval of the request parity prices and sells it to processors at cost by Cabinet (see Annex 3b). There is a need to plus margin during normal seasons and at set or put in place self-triggering thresholds subsidized prices during food crisis periods to ensure local authorities do not always as a consumer price stabilization strategy. go back to Cabinet for approval. In addition For example, during the 2020/21 marketing actual payment for the grain is in most cases season, the GMB was buying maize at a challenge as the Treasury takes time to Zimbabwean Dollar (ZWL) 21,000/metric release the resources for the payment of ton and releasing it to millers at ZWL 12,330, the grain. This strains GMB financially. GMB constituting a 41.3 percent subsidy. This level should always have resources to cover social of subsidy was generally higher than given welfare needs and acquit the resources on in previous years, averaging 33 percent per a quarterly basis or after every six months. metric ton. Logistical arrangements for the transportation of the grain is usually a challenge as affected 2. Food emergency: Based on the results of households are required to fund transport annual vulnerability assessment (ZIMVAC) costs to the nearest distribution center or the GMB holds stocks for distribution to travel long distances to GMB depots. There chronically food insecure households is a need to have GMB structures at lowest through the government Department of administrative levels to ensure ease access of Social Welfare during the the periods July households by food service providers. – September and October – December of the year of assessment, and January 3. Sales to rural households who do not fall – March and April – June of the following under the vulnerable group category on a year. The MLAFWRR communicates to GMB cost recovery basis: Grain can be accessed the Cabinet-approved grain distribution through the GMB depots or it is moved closer requirements for social welfare needs across to the people at ward centers that serve as all districts. The Department of Social Welfare selling points. The GMB sells grain to these at the district or ward level approaches the households at breakeven price. This is meant nearest allocated depot11 with a release order. to curb people reselling the grain back to the After checking the release order, the GMB GMB. The Government meets the costs of 11 All wards or districts are allocated depots from which they collect their allocations. 35 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE transportation, handling and storage before it seasons. In the 2020/21 marketing season, is sold to the households. The GMB estimated GMB discontinued these sales to focus on this category of sales to be less than 5 percent distribution of maize to vulnerable groups of total maize sales for the year in previous through the Department of Social Welfare. 3.7 Emergency Food Needs and Implications on the Size of SGR The national annual cereal requirement is According to discussions with the GMB, the estimated at over 2 million metric tons (2,115,837 current lead time to get imports into the country metric tons to be exact). This calculation is is close to six (6) months. This long lead time based on the country’s population and per is due to the logistic procedures required to capita requirement of 120 kilogram/person/year import grain in the country and this has largely and 450,000 metric ton cereal requirements been contributed by inefficiencies and the need for the stock feed industry (MLAWRR Crop and to comply with set procedures and processes Livestock Report, 2020). The bulk of the 120 when it comes to the procurement. For example, kilogram/person/year is composed of maize during a bad season such as the one in 2019/20, grain, however, the cereal basket also includes where according to the Zimbabwe Vulnerability 13 kilogram of traditional grains, 28 kilogram of Assessment Committee (ZIMVAC) report of 2020, wheat and 1kilogram of rice per year. Based on close to 8.3 million people required food relief. these estimates, the annual maize requirements The country needed about 319,424 metric tons alone is estimated at 1,532,794 metric tons. of physical maize reserves as well as financial reserves to allow for procurement/importation As was shown in Figure 3.1 in the overview section of the same amount to cover the whole year. and Table 3.4, the country has not been producing enough to meet the human consumption and the stock feed industry requirements. Also, in most of the years the SGR was less than the prescribed 500,000 metric tons even with imports. While the grain reserves are below the required level of 500 000 metric tons as at April 31 of each season, they are above the food needs for food insecure people at peak hunger season except for 2009/10, 2010/11, 2014/15 and 2016/17. These include the elderly, who are currently estimated at 2 percent of the total population, the disabled, pregnant women and children from poor households. However, the SGR in Zimbabwe is not designed to address the micro-nutrient deficiency in special groups such as children, pregnant women and the elderly (see Box 3.2). 36 PART 3 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZIMBABWE Table 3.4: National Production, GMB Stocks, Imports, Disbursements to Social Welfare, Millers and Local Sales and Food Needs, 2009-2020 Year National GMB GMB GMB Inflows Disbursements Millers/ No of People Food Needs Production Opening Intake Imports into to Social Local Food Insecure (MT) at Peak (MT) Stock Grain Welfare Sales at Peak Hunger Period Reserve Hunger Period A B C D E =B+C+D F G H I 2009/10 1328 531 63,459 417,825 481,815 58,976 382,774 1,600,000 60,000 2010/11 1452 40,065 241,702 3,580 285,347 5,326 15,646 1,300,000 48,750 2011/12 968 264,375 212,622 0 476,997 3,129 175,254 1,026,000 38,475 2012/13 799 298,614 81,190 0 379,804 9,365 227,991 1,668,000 62,550 2013/14 1456 142,448 33,273 18,888 194,609 1,544 189,810 2,194,737 82,303 2014/15 742 3,255 220,366 0 223,621 243 75,476 538,849 20,207 2015/16 512 147,902 67,825 67,132 282,859 64,691 139,147 1,530,326 57,387 2016/17 2156 79,021 217,726 500,989 797,736 355,405 241,423 2,934,377 110,039 2017/18 1709 200,908 1,209,998 110,420 1,521,326 146,680 552,916 1,075,938 40,348 2018/19 777 821,730 1,149,117 1,970,847 308,570 969,375 2,869,517 107,607 2019/20 901 692,902 261,173 154,024 1,108,099 251,942 784,357 5,500,000 206,250 Source: MLAFWRR various years. Box 3.1: Integrating Nutritionally-Enhanced Maize in National Procurement: Zimbabwe Access to nutritious food is a key pillar of food security. intake can cause stunting and increases children’s risk The Strategic Grain Reserve (SGR) plays a critical role for diarrhea and pneumonia. While daily diets should be in ensuring food security by distributing food to the the principal source of micronutrients, nearly 80 percent poorest regions during lean seasons or at times of of Zimbabwe’s population cannot afford a healthy, economic shocks. The nutritional sensitivity of the diverse diet and nearly 58 percent cannot afford a basic Strategic Grain Reserve can be increased through the nutritious diet (SOFI, 2020). inclusion of nutrient dense crops, such as Vitamin A biofortified maize (orange maize). Staples like biofortified orange maize are an affordable source for micronutrients. Biofortified crops have Zimbabwe bears a significant burden of disease due the potential to dramatically improve micronutrient to “hidden hunger” or micronutrient deficiencies. In- deficiencies. HarvestPlus in partnership with national country studies done have shown that in children ages agriculture research institutes, private sector and 6 to 59 months, one in four have Vitamin A deficiency, country governments identifies locally preferred, high- about 72 percent are living with iron deficiency, while yielding and drought-tolerant varieties and enriches one in three have iron deficiency anemia (see https:// these with iron, zinc or Vitamin A by using conventional www.unicef.org/zimbabwe/nutrition). In women of (non-GMO) methods. Zimbabwe’s Department of reproductive age one in four have Vitamin A deficiency Research and Specialist Services has released five and nearly 60 percent are iron deficient while 26 percent varieties of Vitamin A-fortified maize which are then are anemic. Vitamin A deficiency lowers immunity, licensed to private seed companies to produce seed impairs vision, and may lead to blindness and even for sale to farmers. HarvestPlus also supports forward death. Iron deficiency impairs mental development and linkages with grain off-takers and processors. To learning capacity, increases fatigue, and can increase date, 45 million consumers globally and more than 1.6 the risk of women dying in childbirth. Inadequate zinc million consumers in Zimbabwe, are benefiting from 37 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE nutritious staples such as Vitamin A-enhanced maize, National Agriculture Policy Framework (2019-2030). high iron beans, and other biofortified crops. Farmers Biofortification is integrated and tracked through the adopt these crops not only for their taste and nutritive Ministry of Agriculture, Lands Resettlement and Climate value but also for improved productivity and better Change annual National Agricultural Survey. Given economic return under drought conditions. There is that biofortification is a nutrition sensitive agriculture a growing body of peer-reviewed publications on intervention, complementary agriculture and safety nets the efficacy of Vitamin A maize in improving not only policy reforms can play a significant role in its scaling. Vitamin A status but also health outcomes. Monitoring surveys have reflected strong uptake of orange maize Vitamin A-enhanced maize delivered through the SGR seed by farmers and equitable daily consumption can significantly address food challenges, including by all household members. Meenakshi et al. (2010) nutritional security. The procurement of specific showed that biofortification is highly cost-effective and targets of orange maize for the SGR and its subsequent estimates that every dollar invested can yield an average distributing as food aid to the poorest regions can play of US$ 17 returns in benefits. a critical role in addressing persistent hidden hunger. Official procurement targets would encourage private There has been strong policy support for biofortification sector participation in the biofortified maize value in Zimbabwe, shown through its inclusion in the chain and complementary support for farmers (such as Zimbabwe National Nutrition Strategy, (2014 -2018), the a short-term working capital facility for nutritionally- Zimbabwe National Food Fortification Strategy (2014 – enhanced crops) can help motivate adoption of 2018), the food and nutrition security policy and the draft nutritionally enhanced maize varieties. Source: Sakile Kudita, Rewa Misra, Ekin Birol (HarvestPlus 04/21/2021). Table 3.3 shows that the GMB is handling more indicated that millers diverted maize meant for the grain for millers than for social protection and food subsidy program to super refined meal, which was security (compare Columns F and G). However, not subsidized. Merchants and well-off consumers there is evidence suggesting that the subsidy passed on the other hand bought the subsidized meal and through millers does not translate to a reduction in diverted it onto the black market where it was sold the cost of grain for the rural or urban consumers as above market price and in some instances at US$5 it is open to all.12 For example, during the 2019/2020 per bag. As a result of the distortions created by marketing season the customer price of ZWL 70 the subsidy to millers the government abandoned per 10 kilogram bag against a market price of ZWL the subsidy program to millers in August 2020. 136.9/10 kilogram and higher created arbitrage Instead, the Government through the Social Welfare opportunities for millers, merchants and well-to-do Department has put in place a cash transfer program consumers. The Ministry of Industry and Commerce directly to vulnerable groups. 12 A complete database of the vulnerable is under construction under the Ministry of Public Service, Labour and Social Welfare to enable the tracing of the actual number of beneficiaries. 38 PART 3 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZIMBABWE 3.8 Size of the SGR under Different Scenarios of Emergency Needs In this section we present different scenarios of of poverty. The pressure in food emergency emergency needs to demonstrate that the size of needs are very high given that the population was the reserve is always dependent on the assumptions already struggling prior to the severe disaster. For that are made. We consider 4 scenarios based in all scenarios, we assume that there is a group of the severity of the emergency and level of poverty. people that will require permanent assistance. Figure 3.6 summarizes the assumptions of each Informed by the ZIMVAC and Social Welfare scenario. For example, Scenario 1 is a situation Department, there are 540,000 people (6 percent in which there is relatively low impact disaster in of total population) in the country that requires an economy that is characterized by low levels permanent food assistance. Also, the results of poverty. In this quadrant, the pressure in food generated from these scenarios do not take into emergency needs is low as the impact of the account other dimensions of food security such emergency is low against an economy that is as food diversity and micro-nutrient deficiency for performing very well. While Scenario 4 (critical), special groups such as pregnant women, children is a situation in which there is high impact disaster and the elderly, which are also critical. The details in an economy that is characterized by high levels about these scenarios are presented in Annex 3c. Figure 3.6: Scenario of Emergency Needs POVERTY SCENARIO 3 (MODERATE) SCENARIO 4 (CRITICAL) • Mild disaster, not widespread • Severe disasters, widespread • Economic recession with high levels of poverty • Economic recession with high levels of poverty • Poor agriculture season • Lack of functional institutions • Limited support from regional and international • LImited support from regional and international communities communities • 28% of population food insecure i.e. 3 million people • 59% of population food insecure i.e. 55 million requiring food assistance people requiring food assistance SEVERITY OF EMERGENCY SCENARIO 1 (GOOD) SCENARIO 2 (MANAGEABLE) • Mild disaster, not widespread • Severe nation wide disasters • Economic good with low levels of poverty • Economic growth with low levels of poverty • Agriculture performance good • Agriculture prosperity prior to disaster • Support from regional and international communities • Support from regional and international communities • 6% of population food insecure i.e. 0.54 million • 16% of population food insecure i.e. 1.53 million people requiring food assistance people requiring food assistance Source: Authors’ illustration. 39 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE In general, these scenarios show that a severe Zimbabwe has for most of the years been emergency disaster with high levels of poverty in between Scenario 2 and Scenario 3 mainly due the country (Scenario 4), about 854,260 metric to widespread drought conditions experienced in tons of grain reserves are needed while in fairly the past decade with two exceptions, the 2020/21 reasonable times, only 84,500 metric tons are and 2016/2017 agricultural seasons. In all the needed to ensure food security. The SGR levels scenarios, it is assumed that the Government will computed from these scenarios are summarized allow private sector imports to complement GMB in Table 3.3 below. SGR stocks and imports. Table 3.5: SGR requirements under 4 different Scenarios of Emergency Needs Scenario Computed SGR level Scenario 1 84,500 metric tons Low levels of poverty and mild emergency disaster Scenario 2 237,900 metric tons Low levels of poverty and severe emergency disaster Scenario 3 468,260 metric tons High levels of poverty and mild emergency disaster Scenario 4 854,260 metric tons High levels of poverty and severe emergency disaster Source: Authors’ illustration. 3.9 The GMB’s social functions and commercial function Over the years, there has been public outcry on jam, packed sugar beans, and traditional grains potential conflict of interest in the management to their product portfolio. The supply from SFI is of SGR and commercial grain business by GMB. expected to stabilize market prices of these basic The Government of Zimbabwe in May 2018, commodities by increasing the supply when there passed a cabinet resolution authorizing the GMB are shortages and ensuring that there is fair pricing. to undertake a demerger of its SGR operations SFI continues to enjoy Government support in terms from its commercial operations. This led to the of capitalization. There is an opportunity for the SFI formation of Silo Food Industries (SFI) in July 2018. to partner with private investors to increase their All former commercial activities of the GMB that maize processing capacity. This may go a long way came into being after the 1996 DTA were hived in reducing their reliance on the Treasury. off from the GMB to be managed under the commercial SFI. The Government has been commended for separating the commercial and non-commercial SFI’s mandate is to ensure the availability of responsibilities of the GMB. However, the history basic commodities like maize meal, stock-feeds on the success of parastatals is not so positive (poultry, piggery, cattle), rice, salt, and flour. and in this case, the operations of the SFI and Recently, they added cooking oil, kapenta fish, the GMB are difficult to separate because of the 40 PART 3 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZIMBABWE political economy of staple grains. A stabilization This is not a viable and sustainable relationship. policy hinged on the SFI is likely to become a The SFI installed milling capacity stands at 2,700 financial burden to the nation because it is difficult metric tons/week while the contracted capacity to balance the social and commercial functions (tolling) is 2,800 metric tone/week. This is against of these parastatals. a weekly requirement of 12,750 metric tons of maize meal nationally. A strong SFI backed by Currently, the SFI is relying on toll processing by private capital will benefit farmers in terms of millers who also compete with them on the market. access to viable markets. 3.10 Synergies of SGR management with Early Warning Systems An efficient SGR management requires an effective There are three main early warning systems that Early Warning System (EWS). Timely availability are used with the grain reserves in Zimbabwe. of quality information plays an important role These include weather forecasts by the in alerting the government, humanitarian Meteorological department, Crop and Livestock organizations, development partners and traders Assessment Reports conducted annually by to the likelihood of food emergencies and informs MLAFWRR and the Zimbabwe Vulnerability response planning. Advance warning ensures Assessment Reports produced by the ZIMVAC sufficient time to take appropriate action to cope see box 3.3. with a pending emergency. Box 3.2: Zimbabwe SGR Early Warning System Meteorological forecasts of a good rainfall season help food distribution during the year. Such information is the GMB mobilize adequate financial resources to essential in planning for the GMB in terms of where and procure grain and ensure that there are adequate grain when stocks should be made available, the magnitude storage facilities. A below- normal rainfall forecast warns of relief needed and strategies to mobilize required of a low and inadequate grain production which requires grain depending on the seasonal outlook. MLAFWRR and the GMB to put in place grain import programs to boost the grain reserve and ensure that Zimbabwe vulnerability assessment report and there is enough for consumption up to the next season’s grain reserves. The Food and Nutrition Commission harvest. Each year, the Department of Meteorological (FNC), through the ZIMVAC, conducts vulnerability Services and MLAFWRR carry out workshops to assessments between May and June every year to disseminate information on seasonal forecasts and identify rural and urban areas that face food shortages. advisories to extension workers who will cascade the The assessment also projects the proportion of the information down to the farmers in all districts. population that would need food distribution during the periods July to September and October to December of The crop and livestock annual assessment reports the year of assessment, and January to March and April produced by the MLAFWRR show the level of self- to June of the following year. This information is essential sufficiency per district and expected national production in planning for the GMB in terms of when stocks should and are a proxy of how much grain will be delivered be readily available, the magnitude of relief needed and into grain reserves. These assessments project the strategies to mobilize required grain depending on the proportion of the rural population that would need seasonal outlook. 41 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE The early warning system functions well with and Livestock Assessments. opportunities for enhancing remote sensing capabilities to improve the crop forecasting The absence of a robust centralized marketing capacity of the Meteorological Department. information system (MIS) to inform the SGR Rainfall predictions from the weather forecasts in Zimbabwe requires immediate attention. A are at times not accurate and do not allow for robust MIS system integrated into the proposed appropriate forecasts, therefore food emergencies Agricultural MIS when in place will help provide planning is reactive rather than proactive. So, early warning information on food prices, grain enhancing the Meteorological Department’s stock levels and the supply and demand situation remote sensing capabilities will help the country in the country. A good example is the private sector to prepare for emergencies, project grain financed SAGIS in South Africa (see https://www. imports and provide early warnings on areas of sagis.org.za/). Stakeholders and decision makers the country or populations that may be in need will have access to quality information that will help of emergency food assistance. The information them make better decisions in terms of determining generated could be verified through the current grain producer prices, size of the strategic reserve annual Vulnerability Assessments and the Crop and/or import or export quantities. 3.11 Recommendations to Enhance Management of the SGR in Zimbabwe Based on the discussion above, a number of the management of SGR. The key issues and recommendations are made in order to enhance recommendations are summarized below in Table 3.6. Table 3.6: Summary of Issues and Recommendations for Enhancing SGR Management in Zimbabwe Issue/Challenge Recommendation High cost of managing SGR Reduce the fiscal costs. In the current grain marketing context, the Government is bearing and inadequate financing all costs related to grain procurement, storage, distribution and subsidy to consumers. This from the government. is a major cost and the cost of government intervention in grain markets must be reduced to a sustainable level to free up fiscal space for investments that drive long term resilience and complement Zimbabwe’s broader economic growth strategy. The government should re- consider its price stabilization strategy by letting the private sector procure their own grain requirements, which is now a major driver of fiscal pressure. Scaling down on the price subsidy to grain processors can reduce the cost of the SGR on the budget by more than US$50 million. This will allow the Treasury to fully fund the procurement of grain adequate to meet the needs of permanently food insecure people as well as those that may require food assistance when there is a shock. The government could benefit from technical assistance to efficiently update the current methodology of determining the required size of the SGR that is based on the number of people requiring permanent food assistance, the changing consumption patterns and the timing when food assistance is required. This is key because the cost of SGR management depends heavily on the size of physical stocks that are in storage at any given time. 42 PART 3 | FOOD SECURITY AND STRATEGIC GRAIN RESERVES IN ZIMBABWE Issue/Challenge Recommendation Improve the delivery of Establish self-triggering thresholds for timely mobilization of food emergency emergency assistance. funding. Given the delays in funding food emergency activities because of the approval procedure, it is recommended that the government put in place self-triggering thresholds to ensure local authorities do not always go back to the Cabinet for approval. This can be based on an ongoing assessment of climatic conditions that can potentially affect production, and accordingly crop supply. Also, the GMB should always have reserved financial resources to cover up for social welfare needs and acquit the resources on a quarterly basis or after every six months. Weak early warning and Improve the early warning system by enhancing rainfall and crop forecasting in particular crop capabilities of the Meteorological Department and create a robust centralized forecasting and market market information system. A management information system providing timely information systems. information on food prices and grain stock levels is vital. Stakeholders and decision makers need to have access to quality information to ensure that grain producer prices are informed by the market, size of the strategic reserve and/or import or export quantities. Poor targeting of vulnerable There is need to progressively increase the use of food and cash vouchers to improve households for relief the targeting of emergency food assistance. However, the current poor macroeconomic food provisions. conditions (i.e., high inflation and currency instability) and limited availability of food on the market in Zimbabwe do not favor the use of cash vouchers. Instead directing food delivery to affected households is likely to be more effective. In this case, global experience indicates that transfer mechanisms such as food vouchers, food-for-work programs, school feeding, emergency relief and other targeted safety-net programs are more effective than food distribution at subsidized prices.13 Poor stocks rotation Investments in an effective stock rotation system are urgently needed. There is practices that are at variance need for strengthening the GMB institutional capacity in terms of how the SGR stock should with market conditions and be rotated to further reduce the post-harvest losses as well as minimizing the impact on the inclusion of all actors the market. In general, the SGR stocks rotation modalities should be based on market adversely affect the market. prices and the prices should allow cost recovery by the GMB in procurement, storage and handling. The rotation practices should also provide equal access to all market players, not just a selected few and promote transparency and accountability in the transactions. SGR and relief food system To address micro-nutrient deficiencies in the target groups such as children, solely focused on maize. pregnant women and the elderly there is need to integrate nutritionally-enhanced maize in national SGR procurement. The procurement of specific targets of orange maize for the SGR and its subsequent distribution as food aid to the poorest regions can play a critical 13 World Bank 2012. ‘Using Public Food Grain Stocks to Enhance Food Security’. 43 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE Issue/Challenge Recommendation role in addressing the persistent issue of hidden hunger. Official procurement targets would encourage private sector participation in the biofortified maize value chain and complementary support for farmers (such as a short-term working capital facility for nutritionally-enhanced crops) can help motivate adoption of nutritionally enhanced maize varieties. Limited participation of The Government should crowd in the private sector. In light of the current GMB sole private actors in the maize buyer policy there is a need to revisit the policy and crowd in the private sector to achieve market since the GMB is the desired economic gains and food security. This will require maize market liberalization currently the sole buyer with private sector participation and market price determination with the GMB retaining of maize. its role as a buyer of last resort rather than sole buyer. This requires a repeal of SI 145. An efficient grain sector can be attained when private sector participation is encouraged, thus there is a need to create space for private sector activity by liberalizing part of grain trade such as procurement directly from farmers and outside, storage and processing. Lease part of the GMB grain storage to the private sector to enhance the operation of WRS as part of the country’s agricultural recovery pathway. The private actors in the grain market handle about 500,000 metric tons/year yet their storage capacity is only 100,000 metric tons/year indicating that they will need to lease storage at some point in their operations. 44 CONCLUSION 45 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE There have been increasing incidences of climatic owned by the GMB while options were sought shocks affecting the production and availability to self-finance the ‘social functions’. Zambia of food in Zimbabwe and Zambia. In Zambia, the on the other hand is proposing to pursue the impacts have been mild and localized in certain same course. Although the motive for these geographic areas particularly in the southern considerations is justified, it is often difficult to and western parts of the country. Zimbabwe balance the commercial and social functions of has been hardest hit due to other confounding these entities without affecting the operations of macroeconomic and political factors. This the market. The Treasury has to bail out the entities situation requires building the resilience of the because their functions are subject to political agriculture sector to ensure production and food inference and cannot fully operate commercially. security are sustainable. While a separate analysis will be needed to advise the Governments on these options, this study The study showed that Zimbabwe and Zambia underscores that the social functions must be have used strategic grain reserves to stabilize financed by the Government with careful design domestic prices and provide emergency food. to ensure efficiency and effectiveness of the GMB The fiscal cost of such interventions, particularly operations. The fiscal cost can be reduced by the price stabilization programs have been very limiting the sizes of the reserves to the required high. The management in both countries tend to level to stabilize prices (as needed) and provide destabilize the market and hence crowd out private emergency food access. The study provides a set sector investments from the grain sector, often of scenarios to determine the size – hence volume overburdening the Treasury through unstainable of grain to be procured and related operational production and marketing subsidies. The political expenses to maintain the stock. The findings show economy of SGR management and national that this should be complemented with reforming food security interventions in the two countries regulations and policies to crowd in the private differs somewhat though there is a tendency for sector into grain markets. advocating for more Government intervention. The study outlined several improvements that can Both countries use selected millers to cushion be considered to enhance the effectiveness of the consumer retail prices of processed mealie meal. SGR operations. The size of the reserves needs to However, evidence from both countries suggest be limited to amounts needed to meet emergency that this is a less than optimal strategy because needs. Improving the early warning systems will the strategy creates opportunities for arbitrage, be vital to determine the reserve size and improve and rent-seeking behavior at very high fiscal cost. decision making processes. Storage locations and infrastructure quality need improvement to The study also showed that there is a realization ensure adequate storage and distribution access of the high cost incurred to procure grain, of to markets and targeted beneficiaries. Besides grain, price subsidy to processors and cover meeting food needs, the SGR interventions can the operational expenses of reserve operations also deliver nutritional benefits by integrating in both countries. To minimize the fiscal cost, Vitamin A fortified maize as part of the reserve. Governments in both countries are exploring options to make the SGR management self- Zimbabwe and Zambia should also consider sustaining by proposing that the GMB and FRA collaborating more on SGR management. The perform both commercial and social functions. In two countries can enter into mutually beneficial Zimbabwe, the commercial functions have been bilateral arrangements, depending on the level of hived off to Silo Industries, a company wholly production in each country. For example, due to 46 CONCLUSION the production shortfalls currently experienced security only when the fiscal cost is under control in Zimbabwe, Zambia could commit to export keeping the reserves to amounts sufficient to some of its surplus to Zimbabwe to meet its SGR meet emergency food shocks. SGRs should be shortfalls. Both countries would benefit from low considered as tools to address short term food transaction costs in the process. security challenges, while the main food security strategy should focus on addressing drivers of In summary, the strategic grain reserves in both food insecurity through investments that raise countries have a potential to contribute to food long term resilience and productivity. 47 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE REFERENCES Al Mamun, A., Chapoto, A., Chisanga, B., CSO (Zambia Central Statistical Office). 2013. 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Lusaka: 51 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE ANNXES Annex 1A List of key informants interviewed in Zambia for the study Name Organization Position Contact Details Mr. Allan Mulando World Food Programme Head-Social Protection and allan.mulando@wfp.org Field Office Coordination Mobile: +260 977 451793 +260974 771955 Mr. Humphrey Musonda Food Reserve Agency Market Information Coordinator hmusonda@fra.org.zm Mobile: +260 977/967 701950 Mr. Philip Mwenya Kabwe Food Reserve Agency Monitoring & Evaluation pkabwe@fra.org.zm Coordinator Mobile: +260 977 851 453 +260 961 126 648 Mr. Alex Valeta Zambia Agricultural Information Chief Executive Officer alexvaleta@africamail.com Services Limited alexvaleta@icloud.com Mobile: +260 977 773 191 +260 955 752 091 Mr. Likezo Musobani Disaster Management Principal Early Warning & likezomusobani@gmail.com and Mitigation Unit Preparedness Officer Mobile: +260 977 738 760 Mr. Lusajo Ambukege Disaster Management GIS Expert a.lusajo@yahoo.com and Mitigation Unit Mobile +260 977 874 597 Mr. Sakala Food Reserve Agency Mr Yotam Mkandawire Grain Traders Association of Manager yotammkandawire4@gmail. Zambia com Mobile: 0979611317 52 ANNEXES Annex 1B Coordination Structure for Disaster Responses in Zambia (2019/20) 53 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE Annex 2A List of People Interviewed in Zimbabwe Name Organization Contact Details 1 Mrs Nancy Zitsanza Agricultural Marketing Authority zitsanza20@gmail.com 2 Mr Rockie Mutenha Grain Marketing Board mutenhar@gmbdura.co.zw 3 Mr Clemence T Bwenje MLAFWRR ctbwenje@gmail.com 4 Mr Paul Zakaria ZFU pzakaria@zfu.co.zw 5 Mr Chris Mununga CFU chrismununga@cfu.co.zw 6 Dr Shepherd Siziba UZ shepherdsiziba@gmail.com 7 Mr Tawanda Magorimbo WFP tawanda.magorimbo@wfp.org 8 Mr Tafadwa Musarara Grain Millers Association tafadwam@natfoods.co.zw 9 Dr Chrispen Sukume Livestock and Meat Advisory Council chrissukume@gmail.com 10 Mrs Veronica Mutiro FAO vmutiro54@gmail.com 54 ANNEXES Annex 2B Scenario of Emergency Needs International and Cabinet Regional Support Multi-Stakeholder Working Groups at All Levels: MPSLSW Cabinet Committee on Environment Disaster MLAWRR Preparedness and Management (CCEDPM) MLGPW, MECHI WFP, NGOs (Plan International, World Vision, etc) Meteorological Service Department (MSD) Weather Forecasts and Monitoring Ministry of Local Government and Public Works Department of Agriculture Technical and National Civil Extension Services (AGRITEX) Protection Committee Crop and Livestock Assessment (Department of Civil Protection) Food and Nutrition Council (FNC) Zimbabwe Vulnerability Assessment Committee (ZimVAC) Provincial Development Coordinator’s Office Provincial Level Civil Protection Zimbabwe National Water Authority (ZINWA) Rural Water Information Management System (RWIMS) District Development Coordinator’s Office District Level Civil Protection Traditional Leaders Source: Adopted from GoZ, WB and GFDRR (2019), GoZ, WFP and African capacity (2019). 55 THE ROLE OF STRATEGIC GRAIN RESERVES IN ENHANCING FOOD SECURITY IN ZAMBIA AND ZIMBABWE Annex 2C Scenario 1: Low levels of poverty food production and the strategies to manage and mild emergency disaster the emergencies. Close to 1 million more people are pushed into poverty by drought. Strategies to In this scenario there is relatively low impact manage emergency needs under this situation disaster in an economy that is characterized by low would involve the following: levels of poverty. The pressure in food emergency needs is low as the impact of the emergency • Food reserves needed to feed about 1,530,000 is low against an economy that is performing people including the already permanent very well. A typical year was that of the 2014/15 food vulnerable households (6 percent of season. The rainfall was fairly average and the population or 540,000) economy was still under a multi-currency system • 65,000 metric tons required for permanent with reasonable levels of inflation and fairly stable food vulnerable households in rural areas incomes. Strategies to manage emergency needs • 118,000 metric tons required to feed 990,000 under this situation would involve the following: more people pushed into poverty by drought. • Requirements for urban poor are estimated at • Minimal SGR to provide for vulnerable 30 percent of rural poor requirements, thus an populations that are not able to produce. additional 54,900 metric tons will be needed These are permanently food vulnerable to be distributed in urban areas bringing the households that number about 6 percent total grain requirement to 237,900 metric tons. according to ZIMVAC reports. • About 540,000 people in rural areas will need Scenario 3 (high levels of poverty food aid of about 65,000 metric tons of grain. and mild emergency disaster) • Requirements for urban poor are estimated at 30 percent of rural poor requirements, thus In this scenario there is a low impact disaster in an an additional 19,500 MT will be needed to be economy that is characterized by high levels of distributed in urban areas bringing the total poverty. The pressure in food emergency needs grain requirement to 84,500 metric tons. are fairly high given that the population is already struggling prior to the disaster. A typical year is Scenario 2: Low levels of poverty the experience of 2018/19 when the economy and severe emergency disaster started dove tailing downwards, the multi- currency system was abandoned and inflation Under this scenario there is high impact disaster in started ticking upwards, eroding peoples’ incomes an economy that is characterized by low levels of against rigid wages. In this scenario, the economy poverty. The pressure in food emergency needs is is weak and the disaster is mild. Strategies to moderately high as the impact of a severe drought manage emergency needs under this situation is felt on a population that is fairly better off. A would involve the following: typical year is that of the 2015/16 season when the country experienced consecutive droughts. • Food reserves needed to feed about The economy was still under a multi-currency 3,000,000 people including the already system with reasonable levels of inflation and fairly permanently food vulnerable households (6 stable incomes. In this scenario, the economy is percent of population or 540,000) strong but the disaster has devastating effects on • 65,000 metric tons required for permanently 56 ANNEXES food vulnerable households in rural areas people’s incomes. In this scenario, economy is • 295,200 metric tons required to feed weak and the disaster intense. This will require 2,460,000 people affected by drought. heavy investment in social protection as a cushion • Requirements for urban poor are estimated against the devastating effects of food insecurity. at 30 percent of rural poor requirements, Strategies to manage emergency needs under this thus an additional 108,060 metric tons will situation would involve: be needed to be distributed in urban areas bringing the total grain requirement to • Food reserves needed to feed about 468,260 metric tons. 5,500,000 people including the already permanently food vulnerable households (6 Scenario 4-high levels of poverty percent of population or 540,000) and severe emergency disaster • 65,000 metric tons required for permanently food vulnerable households in rural areas Scenario 4 is a situation in which there is • 595,200 metric tons required to feed high impact disaster in an economy that is 4,960,000 people affected by drought. characterized by high levels of poverty. The • Requirements for the urban poor are estimated pressure in food emergency needs are very high at 30 percent of rural poor requirements, given that the population would already have thus an additional 198,060 metric tons will been struggling prior to the severe disaster. A be needed to be distributed in urban areas typical year is the experience of the 2019/20 bringing the total grain requirement to season where the country experienced severe 854,260 metric tons that is distributed as food and consecutive droughts when the economy handouts and subsidized for economically was already in poor shape. The economy had active groups. been in depression, inflation at around about 700 • Feeding programs for children, the elderly and percent per year and there was rapid erosion of pregnant women. 57