An economic analysis of sunflower production in Zambia: the case of Kalomo district

Abstract

The government of Zambia has intervened in sunflower production to stimulate its production and achieve selfsufficiency. A number of interventions including the pricing and marketing policies have been used to stimulate production. However, self sufficiency has not been attained. About 62% of the country's vegetable oil requirements are still met by imports. Existing literature highlights that there is a link between policies and low agricultural production in the developing countries. The interventions create disincentives for production. This study was undertaken to determine the incentive effects of policies on sunflower production. The other objectives were to determine the efficiency of sunflower production in Zambia and estimate the likely effects of further devaluation and of price liberalisation on sunflower production. Using the Policy ,Analysis Matrix (PAM) methodology the study found that the interventions had not been conducive to attainment of self-sufficiency. Only a few agricultural marketing institutions had emerged, prices had been depressed while the provision of inputs and payment of farmers for their produce had left much to be desired. The policies had ultimately caused distortions and induced market failures creating disincentives for farmers. The study found that the sunflower producer price was depressed by 87% relative to its world market equivalent. This translated into the depression of production by 59% given the sunflower producer price elasticity of 0.68. (iv) As compared to maize it was found that the disincentives for sunflower were greater. Not only revenue was depressed for sunflower (97% for sunflower and 92% for maize) but input provision was also worse for it. Sunflower was at an added disadvantage because maize is a staple food besides being a cash crop. Thus even if it was unprofitable maize would still be grown for food needs. The social profitabilities for the 2 categories of sunflower production were greater than zero. They were found to be ZK20,530/HA for small-scale and ZK37,600/HA for medium-scale. This indicated that producing sunflower in Zambia was an efficient undertaking. It was therefore recommended that sunflower production should be encouraged in Zambia . In relation to devaluation of the Kwacha and liberalisation of input and output prices, the study found that these measures were likely to induce increased sunflower production. These measures would move sunflower production from being unprofitable to profitable in private prices. It was further noted that if these changes were accompanied by better marketing services such as improved input (particularly improved seed and fertiliser) provision, sunflower production was likely to rise even more. The study concluded that sunflower production was an efficient enterprise. However, the interventions had created disincentives for sunflower production and consequently depressed its production