High grain prices a concern for the world’s poor, says World Bank

I’m reading in all the bigger newspapers that the World Bank is very concerned about rising grain prices, especially in light of the world’s poor. Since mid June, 2012, wheat prices have risen 50 per cent, corn 45 per cent and soya 30 per cent, as a result mainly of a major drought in the USA. (http://www.worldbank.org/en/news/2012/07/30/food-price-volatility-growing-concern-world-bank-stands-ready-respond )

An Mpongwe family poses before their corn crib. Will they be able to hang onto their corn until the government comes to buy, or will they succumb to one of the many corn traders buying far below the floor price?

There’s a light side to this, the World Bank also says (and not only for Western Canadian grain farmers). “Higher prices can bring desperately needed income to poor farmers, enabling them to invest, increase their production and thereby become part of the global food security solution.” (http://www.theglobeandmail.com/report-on-business/international-business/grain-prices-threaten-growth-except-in-canadas-breadbasket/article4450686/)

Our small farmers in Zambia probably won’t realize higher prices anytime soon. They are already supposedly profiting from much higher than market prices. The government of Zambia set the floor price for maize on May 31/12 at 65,000 kwacha ($12.50) for 50 kg, unchanged from the previous crop year. Farmers were very happy to hear that.

This family seems to have harvested enough to be food secure. But will they sell what should be their food so they can send children to school or buy medicine?

Problem is, a large amount of small farmers don’t profit from the floor price. Instead, traders and millers do. The maize harvest starts in June and goes on throughout the month of July. From the beginning of harvest, small traders move throughout the rural areas, buying maize from small farmers for much below the floor price. Why would farmers sell to them? For the same reason farmers sell for a low price anywhere in the world – they need cash badly. A bird in the hand is better than two in the bush, many tell themselves.

And they could be right. Last year it was a long time before most of those who sold their maize to the government saw their money. In fact, David Muwaya of Mpongwe told me, some still haven’t been paid for last year’s maize. Farmers need money for school fees for children that may not have been in school for at least a semester already for lack of funds. They need money for medicine, to pay bills, for food. They just plain need money. That the money these traders are paying them doesn’t even cover the cost of the crop they’re selling, doesn’t weigh heavy at that moment. It’s money, at least.

Money that will run out far too soon, before it’s time to buy into the government subsidized fertilizer program, for instance.

Maybe World Bank Country Director for Zambia Kundhavi Kadiresan isn’t all wrong when she attacked the Zambian government’s policy of continuing support of the floor price. She said that the program encouraged traders to exploit farmers at low prices, that it encouraged mono cropping by setting artificially high prices for maize, and that the program doesn’t ensure long-term sustainable agriculture in Zambia. Her remarks were highly criticised in Zambia, where maize is the staple food. Food is always a political issue. Any criticism that gives a hint of reducing household income, of rocking food security will be highly attacked. (see what Zambians think – read comments to: http://www.lusakatimes.com/2012/05/31/world-bank-urges-zambia-stop-setting-maize-price/)

Is the small farmer really profiting from the government programs? Some are. But only those who can budget resources so they don’t fall prey to those traders trying to make a buck (or many bucks). And only those who can afford to hang on until the government gets around to paying. That leaves out far too many farmers, the way I see it. But the government probably isn’t going to change the program anytime soon. It would be a bad move politically. If you’re a small farmer in Zambia, tell me what you think.

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