Analysis of the 2014 Zambia s Agricultural Sector Budget

Transcription

1 Analysis of the 2014 Zambia s Agricultural Sector Budget Auckland Kuteya Presented at the ACF/IAPRI Budget Breakfast Meeting, Taj Pamodzi Hotel, Lusaka October 31, 2013 INDABA AGRICULTURAL POLICY RESEARCH INSTITUTE

2 Presentation Outline 1 Trends in Agriculture Budget Disaggregation of the Budget (absolute changes, relative changes, and in relation to the NAIP) Assessment of positive developments in the budget Areas of concern in the budget Conclusions

3 Budgetary allocations to agriculture 2 Category Allocation to Agriculture (KR million) 1, , , ,080.0 % of GRZ budget 6% 6.1% 5.8% 7.2% Accounting for inflation, allocation in 2014 is up by 58.1% Share of Agric allocation to GRZ budget is up from 5.8% to 7.2% in 2014, though less than CAADP target of 10%

4 Government s commitment towards CAADP 3 Share of agriculture to GRZ budget 14% 12% 10% 8% 6% 4% 2% 0% CAADP Target Allocations Actual Expenditure

5 Agriculture Sector Budget Structure 4 MAIN BUDGET LINES 2013 Allocations (KR million) 2014 Allocations (KR million) % change year-on-year minus inflation* Personnel Emoluments Recurrent Departmental Charges Grants and Other Payments Poverty Reduction Programmes 861 1, Capital Expenditure Agricultural show Agric Development Programs Arrears Total 1,749 3, *Inflation was 7% as at end of September 2013 Allocations through other Ministries in 2014 will be K288 million

6 % Key Spending Areas to Agriculture Budget 5 60 % of Key Spending Areas to Agric Budget % 9% 13% 9% 0.7 3% 49% 52% 5% 12% % PE RDC Grants PRP Capital Exp Agric show Ag. Dev. Pgms 11% 3% 0.03 Arrears

7 PRP allocations 6 % of Poverty Reduction Programs (2013) % of Poverty Reduction Programs (2014) Strategic Food Reserves 35% Other 7% Farmer Input Support Program 58% Food Strategic Reserves (FRA) 64% Other 4% Farmer Input Support Program (FISP) 32%

8 Ratio of RDCs to Personnel Emoluments 7 RDCs/PEs Despite a slight upward trend, operational funds are still lower than salaries Year * 2014* *Allocated

9 8 PROGRAM NAIP Key Spending Areas Vs 2014 Allocations 2014 NAIP Targets (K million) 2014 Budget Allocations (K million) % of GRZ Commitment Allocated Crops Production and Productivity 1, Livestock Production and Productivity 1, Aquaculture Production Market Access and Services Development 822 1, Food and Nutrition Security and Disaster Management 2,512 Sustainable Natural Resources Management 1,018 Not Available Not Available 0 Knowledge Support Systems Institutional Strengthening Provincial Allocations 591 Total 8,394 2,

10 9 Positive Developments in the 2014 Budget

11 I. Social Welfare Support 10 Activities 2013 Allocation (KR million) 2014 Allocation (KR million) % change year-on-year minus inflation* Social Cash Transfer (GRZ) % Social Cash Transfer (Donor funds) % Programme Total % *Inflation was 7% as at end of September 2013

12 II. Agricultural Feeder Roads 11 Increased allocations towards rehabilitation of over 1,300 kilometres of agric feeder roads Allocation increased by 140% from K26 million in 2013 to K63 million in 2014 If well targeted this investment can ease access to both input and output markets for smallholder farmers

13 II. Agricultural Feeder Roads Cont d 12 Agricultural Feeder Roads 2014 allocation (K million) Kaputa - periodic maintenance of feeder roads 3.4 Mungwi - periodic maintenance of feeder roads 4.3 Chipata and Katete feeder roads 6.5 Chipata & Katete feeder roads supervision contracts 1.0 Chongwe agricultural feeder roads 5.3 Lundazi agricultural feeder roads 4.0 Choma agricultural feeder roads 2.0 Copperbelt agricultural feeder roads rehabilitation 15.0 Luena farm blocks roads 20.0 Luena farm blocks roads supervision 2.0 Total 63.5

14 III. Research Spending 13 Agric R&D allocations increased by roughly 40% from K61.9 million in 2013 to K86.6 million in 2014 To keep ahead of changing agricultural conditions public investment in agric R&D is necessary While it takes time to reap benefits, investments in R&D has potential for agricultural growth

15 Allocations to Research Stations 14 Research Station 2013 Allocations (K million) 2013 Released up to August (K million) % Released versus Allocations 2014 Allocations (K million) % increase year-on-year allocations minus inflation* Agriculture Fisheries Livestock Development Veterinary & Livestock *Inflation was 7% as at end of September 2013

16 IV. Land Audit 15 Allocation of K100 million on land audit exercise is a critical investment Will enable the state to track and monitor allocation of title deeds It will help to ensure reliable land market dev. This will increase number of farmers who use land as collateral when accessing credit This will help commercialize smallholder agriculture

17 16 Areas of Concern in the 2014 Budget

18 I. Continued high allocation to FISP & FRA 17 52% of agric budget goes to PRPs 96% of the total PRPs goes to FISP and FRA This increase is occurring despite well-known problems with these programmes, including: Delayed input distribution to farmers Crowding out the private sector (both agro-dealers and grain traders) Late payment to farmers High food prices despite bumper harvests Stagnant yields and rural poverty

19 FISP and FRA allocations and releases 18 Programs 2013 Allocation (K million) % of total Allocation 2013* Released (K million) 2014 Allocation (K million) % of total allocation FISP FRA Other PRPs Total PRP , , *Released as at end of August 2013

20 Putting FRA Spending in Perspective 19 Assuming government buys 500,000 mt maize for strategic reserve Of the K1,013,000,000: K650,000,000 to farmers (K65 per bag) Remaining 363,000,000 to transport, storage, security, and other operational costs

21 2014 MAL Budget Vs Operational Spending on (K363 million) on FRA 20 MAIN BUDGET LINES 2014 Allocation (KR million) FRA Operational Spending (KR million) FRA Operational Spending Personnel Emoluments Almost Equal Recurrent Departmental Charges Higher Grants and Other Payments Higher Poverty Reduction Programmes 1, Capital Expenditure Almost Equal Agricultural show Agric Development Programs Higher Arrears

22 21 II. Allocation for silos construction K179.7 million was allocated towards construction & rehabilitation of silos Greater than the combined spending on R&D (86.6 million) plus rural feeder roads (63.5 million) in ag budget Gov investment in grain storage infrastructure will increase from 0.7 to 1.3 million MT in 2014 This exceeds the 500,000 MT strategic reserve requirements of the country Question: what is the future role of Gov and private sector in agricultural marketing?

23 22 III. NCZ Fertilizer Production Allocation of K1m to NCZ to produce fertilizer is plausible in the short run This year NCZ produced over 70,000 MT of compound D and intends to include urea in 2014 However, private sector businesses in this area will be stifled by this move From experience, parastatals are not very efficient in managing commercial activities. Can NCZ fertilizer compete with fertilizer imports in terms of price?

24 Conclusions and Recommendations 23 Allocations have increased in absolute terms but in relative terms still below 10% CAAPD target Budget contains some positive developments i.e. Increased allocation towards social cash transfer Increased spending in agricultural feeder roads Increased spending towards agricultural R&D However, our concern is on implementation challenges and targeting

25 Conclusions and Recommendations 24 Continued large state presence in input production, distribution and agricultural commodity marketing is another area of concern Can a status quo budget yield different results?

26 Thank You Plot No. 26A Middleway Road, Kabulonga PostNet Box 99 Lusaka, Zambia Tel: /97 Fax: