An assessment of the effects of diversification policy in Zambia

Abstract

Diversification of farming is very useful investment to mitigate risk, an engine for ensuring food security and assured sustainable incomes to farmers. This present study was conceived to assess the efficiency of maize and sorghum production, hence shedding light on the efficiency of crop diversification policy in Zambia. Two competitive crops (maize and sorghum) are selected to assess the efficiency of production using a modified policy analysis matrix (PAM) approach. The findings suggest that Zambian trade and domestic policies aimed at achieving both food security and crop diversification through high procurement price and heavy subsidization of inputs in maize production have induced major inefficiencies in crop diversification. The study revealed through three key policy analysis indicators that sorghum production is efficient (DRC= 0.03) comparable to maize production (DRC= 0.87). Maize private price is 10.8 percent above social price (NPC= 1.08), and sorghum private price is 6.1 percent below social price. Also, maize producers enjoy heavy subsidy of 10.3 percent (EPC= 1.03) for their value added whereas sorghum producers face a net tax of around 6.1 percent (EPC= 0.61) for their value added. This indicates positive incentives for maize producers which is a cost on national budget given that domestic resource utilization is inefficient (DRC= 0.87) as compared to sorghum production (DRC= 0.03) In that regard, it is recommended that diversified farming should be implemented through Private-Public Partnerships to reduce on costs that impede sorghum production growth.