The cost of maize production by smallholder farmers in Zambia

Type Working Paper
Title The cost of maize production by smallholder farmers in Zambia
Publication (Day/Month/Year) 2011
Many agricultural policy discussions in Zambia revolve around the cost of producing maize. A major topical issue that can be informed with accurate production cost estimates is the price offered to farmers by the Zambian Food Reserve Agency (FRA) each year. The FRA sets its maize buying price each year to compensate farmers for the costs incurred during production and provide a reasonable return to their own land, labor, mechanical, and animal inputs. Our first key observation is that the FRA pan-territorial pricing policy does not reflect the wide geographic differences in costs and even among farmers in the same village. The second key observation from the analysis of 2010 production costs is that 86% (2.06 million MT) of Zambia’s total maize output was produced at a total cost lower than the ZMK 65,000 FRA buying price. Thirdly, the majority of Zambian maize could be sold at a profit competitively in regional markets. Fourth, there is a strong correlation between higher yields and lower costs of production. Fifth, rural smallholder production remains highly labor-intensive. Finally, we find that many productivity enhancing technologies are in use in Zambia and in many cases, they are cost effective. We demonstrate that, rather than driving up cost of production per bag, fertilizer use is profitable under the right conditions. Extending knowledge of tillage practices and their benefits as well as appropriate input use to smallholders may be a relatively high-return policy option.

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