Zambia has capacity to produce up to 8 million tonnes of maize. To reach this goal, millers are calling on the government to provide clear and consistent policies while at the same time allowing them to operate freely as an industry.
FBA: Andrew, welcome to this edition of Food Business Africa Connect, where we talk to various leaders across the Africa and world on the opportunities, challenges, and the trends in our industry
ANDREW: The Millers Association of Zambia is a registered trade organisation that was established to promote the interest of the milling industry in Zambia by providing a platform and creating linkages between the sector players within the country and outside the country. We represent over 80 big scale or commercial millers in Zambia.
FBA: We are talking a few days after a very critical elections period and with the new President in place in Zambia. What is the kind of impact do you think the new leader will have on the milling industry in Zambia? What is association looking forward to?
ANDREW: We have already sent in congratulations to the new President, as well as the Vice President. We are quite excited, and we are looking forward to his Cabinet and more so to the promises that were made during the campaign trail. The new administration has been well received not only our Association, but other stakeholders as well across the country – individuals, corporates, as well as organization’s such as ours.
You know, the President is a farmer, and he is a very proud farmer. Given an opportunity he has always introduced himself and identified himself to be a farmer – so he’s a person who understands agriculture, both livestock as well as crop agriculture. We are quite excited because apart from that, he is an accomplished businessman who also believes in trade and understands and respects trade protocols and so forth.
We are looking forward to the policies that his administration is going to introduce in the food value chain, because time and again, we have continuously criticized the inconsistences in the previous government, especially regarding its border policies on grain exports. These policies affected the growth of the industry, making most of the players get frustrated. We were dealing in an environment where certain policies were very unpredictable, making it difficult to make informed decisions because you did not know whether if you went out in the market and bought some grains, if you would be allowed to add value and be able to export.
We are hoping that this new government will be able to respect and to follow through what they have put on the table – the time the new President was declared winner, we saw the exchange rate of the Kwacha to the US$ strengthen within 24 hours, which portrays that he has won the confidence from the investors and those who would like to do business with Zambian business entities.
We are ready and willing to align ourselves with the policies of the new government. As far as our industry and other food industries are concerned, we are quite hopeful that he is bringing a message of hope to the milling industry and to the food value chain players. We also expect the government to give us space to operate as an industry, with less or absolutely no interference from the government, but providing direction and guidance in as far as the industry is concerned.
FBA: Zambia is a large country with lots of opportunity in agriculture. How could the country take advantage of this huge opportunity?
ANDREW: We have always said that Zambia is a landlocked country, but I believe that it may be a landlocked country but is actually a land-linked country – with various countries we can trade with across our borders.
The question is how to position ourselves and then I am quite excited to see also how this Africa free trade area (AfCFTA) agreement protocols can be one vehicle that will provide linkages to the market for some of the produce that we produce in Zambia.
This deal must encourage pan-African trade with minimum or no restrictions and create a platform for us to supply and trade with other African countries – including in such countries such as Sudan, Kenya and South Africa and our immediate neighbours – the only thing is to deal first with are the trade barriers that exist
I have always made an example of Angola. When I visited, we had discussions with other captains of the industry – it was quite glorifying to see how much money they spend on food imports from South American countries such as from Brazil and other countries!
Zambia has got the capacity to produce food at primary level such as maize, sorghum, millet, fruits etc. and we have got a very good compared to other countries in terms of the climate. We can do better; we can produce more that we can supply to the entire region. As a country, Zambia has the potential – we have the land, water and adequate human resource. We have got what it takes to produce more crops than just the traditional maize grain – soya bean, cassava and more
What has hampered the growth and our ability to maximize our production capacity in Zambia has been the restrictions in terms of the policy framework. I am hoping that AfCFTA will also be able to address such issues to promote regional trade within Africa.
However, it is also glorifying to note that we have made reasonable progress in the last 2 years in terms of increasing the cassava production at primary level. We are producing a lot of cassava, which now for us in the food value chain industry are trying to think what else are we be able to produce from the cassava apart from just the flour – such as opportunities to blend cassava with the wheat or maize.
FBA: We are looking at the tail end of the season – give us a review of the season just past.
ANDREW: The crop’s marketing season is almost ending, but the market delayed starting, owing to the weather patterns that were prevailing in the last three months or so. It was very cold; we have never experienced this kind of weather in a long time in Zambia.
Commodities such as maize grain and soyabeans delayed coming to the market because moisture content was quite high. We saw the peak towards the end of July in terms of the maize and soya supplies.
As millers, we anticipated 3.8 million metric tonnes of maize to be harvested in Zambia this season, while as we only require only 1.8 million tonnes for consumption for the year – so we have around 2 million tradable surplus crops for export.
This is a very exciting yield, but we are looking forward to seeing what the new government will bring in terms of what policy framework will be given to guide how we are going to trade with these commodities such as maize, soyabean, rice, cassava and sorghum.
In terms of the soyabeans, we equally have a very fair and a very good crop. We have seen that the byproducts of soyabean also are dropping and stabilizing, because the supply is surpassing the demand out there.
The good harvests give us the opportunity to also think of diversifying and not only just to stick to the traditional milling, while Zambia should start positioning itself to feed other countries that have rising demand for commodities such as maize and its products, soyabeans and so forth. We must position ourselves in as far as meeting the demand, not only on the domestic market, but the regional demand for some of these commodities that we produce in abundance in the country.
FBA: DRC has traditionally been a huge market for Zambia. What is the possibility for more trade with DRC this year, considering the huge surplus?
ANDREW: Zambia has the capacity to produce up to 6 million, or even 8 million tonnes of maize production like per annum, but obviously restrictions at the border has curtailed our ambition. In terms of export markets, DRC is key for Zambia.
However, in terms of the outlook within the region, we are also aware that DRC this time around also increased its area of production for the maize grain, which is quite interesting. To some extent, this is a bit worrying for us because this is our traditional market and they are now also producing their own grains! I must say that they did very well, coming from the previous season.
I think, looking at the cost of production both at primary and commercial levels, Zambia is well positioned to give DRC quiet a fair competition in terms of cost of doing business and producing some of these crops. What is quite interesting is just when our President was declared, we saw the Kwacha strengthen and now that trade between ourselves DRC and any other exporting market has been dollarized, we saw the price on the other side was almost was at the par with the domestic price. There is still some potential and the market for us to push close to 60-70% of the surplus maize to DRC because they consume more of the maize products.
Across the SADC region, we have also seen good crop harvests, for example, South Africa has produced a bumper harvest and it is also targeting the DRC market – so we have good competition.
FBA: Looking at the other markets beyond DRC, could there be an opportunity around the East African side of Africa?
ANDREW: Well, the possibility is there, and I must also mention also something very important. A few years back, we had signed a Memorandum of Understanding (MoU) between the Millers Association of Zambia and stakeholders in Kenya but generally, DRC has always been an easy market for us.
Most of the exporters, traders and millers are more used to this market and understand it more but we are very much aware, and we have received a few enquiries from Kenya for maizemeal as well as the maize.
But we should pull ourselves together with our counterparts in Kenya to begin to talk and see how best we can take care of some of the logistics challenges that was faced last time we tried to access that market. One way is for the grain traders to approach the Kenyan government to reduce duties and granting them waiver if they were to import things such as maizemeal, maize grains, soyabeans etc. from Zambia. We should work together to create an enabling trading environment between the two countries to improve trade flow in the region.
There is nothing that stops us from supplying that market, because there is always a deficit in Kenya, but we also do not fully understand the way the market in Kenya operates. With DRC now increasing their production, we must start looking for other alternatives such as Kenya. I must admit that we haven’t as the captains of the industry, taken a keen interest in growing that market for our produce from Zambia.
FBA: What are the opportunities other grains in Zambia?
ANDREW: For soyabeans it’s quite very interesting to note that the number of soyabean crushers have increased over the last few years.
There is an increase in demand within the country and export demand for cooking oil, soya cake and other byproducts of the soyabeans, which has seen more players coming into the soyabean crushing sector, which is very good, and I must say that even the way they are positioning themselves, they are moving closer to the where the production of the soyabean, as our farmers face big challenges with accessing the market.
There is also an increase in terms of animal/stock feed production in the country. We are seeing the industry positioning itself to supply the regional market with stock feed and soya products. We have also seen an increase in cassava to produce it can see that people are trying to explore and find other alternative users for the cassava – in the next season we should be able to do much more cassava production, so as the milling industry we are looking at ways to start blending the cassava with maize. I think over the years, the concentration has been largely about commercial and economic value of the commodity, but we have overlooked the nutritional value of some of the commodity. We also have potential to increase sorghum and millet production and consumption in the country.
INTERVIEWER: What are the possible interventions by the Food Reserve Agency (FRA) this season?
ANDREW: The vibes on the market are quite interesting. This season the FRA is paying the highest prices in the country! They have offered a very attractive price to small scale farmers, which should be quite commendable. They have also increased the satellite depots reaching out into the country to serve farmers.