Maize Marketing and Trade Policies in Southern Africa: Toward Defining Appropriate and Mutually Supportive Roles for the Public and Private Sectors

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1 Maize Marketing and Trade Policies in Southern Africa: Toward Defining Appropriate and Mutually Supportive Roles for the Public and Private Sectors Government policy with regard to smallholder agriculture and food security in Mozambique Higino de Marrule, Department of Policy Analisys Ministry of Agriculture (MINAG) Centurion Lake Hotel, June 21, 2005 Structure Food System: past transition Government objectives Agriculture Marketing Strategy I ( ) PROAGRI I ( ) Maize subsector (examples) Challenges for the next 5 years

2 Food System: past transitions... from a command to a liberalized market economy; from a cereal market dominated by food aid deliveries to a two-tier market with deficit production in the south and export-oriented surplus production in the north; to a more market-oriented production behaviour and an increased diversification of agricultural production into cash crops by farmers reacting to market opportunities and price developments. Government objectives Increase productivity Improve competitiveness and sustainability of ag sector Increase availability of good services within the value chain Promote access to domestic, regional and international markets Promote agricultural marketing

3 Agriculture Marketing Strategy I ( )- ECA I ECA I approved by the government in 2001 Main objective: Improve and develop agricultural marketing at medium and long run ECA I How: By developing inter-sectorial actions in terms of policies, legislation, infra-structures, trade and marketing information as well as finance What for: Improve business environment in agricutural sector ECA is currently being revisited for another 5- year period

4 PROAGRI I From Has made important strides in improving financial management and getting away from a project to a program approach There is general recognition that first 5 years of investment were mainly directed to building institutional capacity within the sector PROAGRI I Little improvement was made in the rural economy Productivity continued at low levels Little improvements in R&D NGOs and local projects have been responsible for most of the ground-level activity Will the current weaknesses be corrected in the next 5 years?

5 Maize subsector (examples) Open-Doors Economy for regional trade Need to continue efforts for investment in infrastructure having in mind Domestic trade and investment in milling industry Regional trade Farmers and consumers will benefit from such an investment In the case of maize Export from the north Import to the south There is need to analyze The impact of VAT on maize Milling industry vs. imports of maize for trade as grain to the south Overall impact on consumers ability to access affordable food. Value Added Tax (VAT) Applied to maize, not to rice and wheat Reimbursement if maize is processed So in principle It favors wheat and rice imports over maize Favors the availability of maize meal over maize grain in markets, and thereby Favors industrial millers (and their large scale import procedures) over hammer milling and small-scale marketing sector. Is government willing to phase it out for maize? What would be the impact?

6 The challenges for the next 5 years Financial Services: Formulate and implement a plan to address smallholders needs for financial services Roads: Address important feeder road constraints to agriculture at province and district levels Markets for agricultural inputs, products and services: Stimulate markets for key inputs, products and services. The challenges for the next 5 years (cont d) Access to agricultural technology and advice: develop an effective research and extension system Farmers organizations: develop and implement a program for widespread facilitation of sustainable farmers groups Create an enabling environment for the development of the smallholders agricultural businesses