Efficiency and integration in the Zambian sugar market : analysing price transmission, price formation and policy

Zambia ranks as one of the lowest cost producers of sugar. However, Zambia’s domestic sugar price has been high and volatile and is substantially higher than the world price. This has raised concern among stakeholders and further raises questions about the efficient functioning of the market. The study sought to determine and explain efficiency and integration in Zambia’s sugar value chain by analysing price spreads, price formation, and price transmission through a price transmission and partial equilibrium model. The study hypothesised that the Zambian sugar market is both inefficient and it is not integrated with the world market. This was tested through the price transmission and partial equilibrium models. Price transmission is conceptually premised on the Law of One Price (LOP) which postulates that in a frictionless undistorted market, the difference between markets spatially separated should only be explained by transaction costs. To test the hypothesis long-run equilibrium between prices was tested through a series of cointegration tests and an Error Correction model (ECM) was built for cointegrating price series. Model simulations were run and tests for asymmetry for cointegrating price series were conducted. A partial equilibrium framework was developed to determine price formation for Zambia’s sugar market from a number of behavioural equations. The study establishes cointegration in the spatial price transmission (between world sugar prices and Zambia’s wholesale prices) and vertically (between the domestic wholesale prices and sugarcane prices). The ECM for the spatial price transmission reveals low integration and efficiency evidenced by the low speed of adjustment, the Error Correction Term (ECT) of -0.09 and the model simulation, which shows that it takes approximately 3 years for the markets to revert to long run equilibrium after experiencing a price shock. The study also establishes that the spatial price adjustment is asymmetric. The vertical price transmission analysis reveals that it is relatively more integrated and efficient as it has a higher speed of adjustment (ECT of 0.199) which is twice that of the spatial price transmission. The model simulation reveals that it takes about 1 year and 6 months to revert to long run equilibrium after experiencing a shock. The vertical price adjustment is also found to be symmetric. A negative short-run elasticity of -0.29 is found for the spatial price transmission while the long-run transmission is found to be inelastic (0.91 ) which is close to unitary elasticity. The short-run vertical transmission is found to be very inelastic (0.009 ) while the long-run transmission of 0.94 is similar to the spatial transmission (inelastic but close to unitary). Farm to Retail Price Spreads are found to be widening with growing volatility owing to the volatile nature of the Retail Value. While the Farm Value has been increasing, recent spikes experienced in the Retail Value have resulted in an overall widening of the Farm to Retail Price Spread. The partial equilibrium analysis indicates that the price formation in Zambia’s sugar market is determined by the world price through the export parity price, domestic demand, supply conditions as well as policy. The elasticity between Zambia’s sugar price and the export parity price is found to be unitary (1.09). The price space analysis reveals that although Zambia’s domestic price is correlated with the export parity prices it is trending closer to the import parity price. This suggests that there are distortions in the sugar market, which may include high transaction costs, high concentration in the market structure as well as inappropriate policies such as high taxation, high interest rates and a policy requiring fortification of all sugar with Vitamin A, which are driving the domestic price upwards to exceed the export parity price. The sugar baseline for Zambia is generated for 2012 to 2015 based on a number of assumptions in the exogenous variables. Sugar production domestic use and exports are on the rise while the domestic price rises in 2011, falling between 2013 and 2014 then rising in 2014 to 2015. Model simulation of the removal and/or modification of the policy requiring sugar fortification reveals that there is an increase in the flow of imports to about 25,000 tons per year. This results in a 3.2 per cent loss in production and a 6.1 per cent gain in exports while the domestic sugar price falls by 23.9 US Cents/kg (18.8 per cent). Thus Zambia gains in terms of increased consumer welfare and producer welfare because production losses are offset by revenue gains through exports since the world price also increases. The study recommends that transaction costs which include transportation costs, energy, taxation which are pushing the domestic price upwards need to be lowered. The study emphasises the need to promote investments in the sugar industry especially for smaller emerging sugar mills by lowering interest rates and taxes as well as a need to strengthen competition laws governing the industry which will protect consumers,would-be- investors and cane producers from uncompetitive pricing. It further recomments the lifting and /or modification of the barrier on imports of unfortified sugar but stresses that government can allow raw sugar imports which can be fortified in Zambia. A more open and undistorted sugar market in Zambia will result in a competitive, efficient and integrated market governed by market dynamics. CopyrightDissertation (MSc(Agric))--University of Pretoria, 2012.Agricultural Economics, Extension and Rural Developmentunrestricte

Achieving More with Less: Reform and Scaling Down of Food Reserve Agency and Farmer Input Support Programme and Boosting Social Protection

Zambia continues to suffer from a regime of ineffectual subsidies and insufficient social protection. Despite evidence showing how the country’s signature farming input and output subsidy programmes, i.e. the Farmer Input Support Programme (FISP) and the Food Reserve Agency (FRA) respectively, have failed to spur agricultural diversification, address low agricultural productivity, food security, and stubbornly high rural poverty rates, the country has continued to allocate significant resources towards their implementation. Notably, Zambia is currently grappling with the need to make some tough choices as it seeks to deliver on the Zambia-Plus Recovery Plan proposed by the Minister of Finance. Among other options, the government should consider how to scale back on discretionary spending whilst supporting economic growth and social development. Politically, maintaining the status quo is likely to be very costly given that the country can no longer afford the continued financial haemorrhage from the current operations of FISP and FRA. This paper presents a case for reforming FISP and FRA by providing alternative approaches that will work better for both the individual Zambians who rely on the state for support, and the country as a whole

Modelling wheat and sugar markets in Eastern and Southern Africa. Regional Network of Agricultural Policy Research Institutes (ReNAPRI)

The medium-term outlook for wheat and sugar markets in Kenya, Tanzania, South Africa and Zambia depicts a mixed picture with regard to production, consumption, prices and trade development. It takes the latest trends, policies and market information into consideration, but remains subject to many uncertainties on upcoming market development, macroeconomics or policy changes over the period 2015 to 2024.JRC.D.4-Economics of Agricultur

Assessment of Maize Yield Response to Agricultural Management Strategies Using the DSSAT-CERES-Maize Model in Trans Nzoia County in Kenya

Maize production in low-yielding regions is influenced by climate variability, poor soil fertility, suboptimal agronomic practices, and biotic influences, among other limitations. Therefore, the assessment of yields to various management practices is, among others, critical for advancing site-specific measures for production enhancement. In this study, we conducted a multiseason calibration and evaluation of the DSSAT-CERES-Maize model to assess the maize yield response of two common cultivars grown in Trans Nzoia County in Kenya under various agricultural strategies, such as sowing dates, nitrogen fertilization, and water management. We then applied the Mann-Kendall (MK), and Sen's Slope Estimator (SSE) tests to establish the yield trends and magnitudes of the different strategies. The evaluated model simulated long-term yields (1984-2021) and characterized production under various weather regimes. The model performed well in simulating the growth and development of the two cultivars, as indicated by the model evaluation results. The RMSE for yield was 333 and 239 kg ha(-1) for H614 and KH600-23A, respectively, representing a relative error (RRMSE) of 8.1 and 5.1%. The management strategies assessment demonstrated significant feedback on sowing dates, nitrogen fertilization, and cultivars on maize yield. The sowing date conducted in mid-February under fertilization of 100 kg of nitrogen per hectare proved to be the best strategy for enhancing grain yields in the region. Under the optimum sowing dates and fertilization rate, the average yield for cultivar KH600-23A was 7.1% higher than that for H614. The MK and SSE tests revealed a significant (p < 0.05) modest downwards trend in the yield of the H614 cultivar compared to the KH600-23A. The eastern part of Trans Nzoia County demonstrated a consistent downwards trend for the vital yield enhancement strategies. Medium to high nitrogen levels revealed positive yield trends for more extensive coverage of the study area. Based on the results, we recommend the adoption of the KH600-23A cultivar which showed stability in yields under optimum nitrogen levels. Furthermore, we recommend measures that improve soil quality and structure in the western and northern parts, given the negative model response on maize yield in these areas. Knowledge of yield enhancement strategies and their spatial responses is of utmost importance for precision agricultural initiatives and optimization of maize production in Trans Nzoia County

Multicriteria Risk Ranking of Zoonotic Diseases in a Developing Country: A Case Study of Zambia

The integration of a multicriteria decision analysis approach, including techniques such as the Analytic Hierarchy Process (AHP) and the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS), has yielded valuable insights in the realm of zoonotic disease risk assessment. This analytical framework draws from the OIE-supported manual, utilizing impact assessments, transmission pathways, and categorizations as provided by the OIE itself. Moreover, the consideration of specific zoonotic disease scenarios tailored to individual countries enhances the contextual relevance of the analysis. Through this approach, the ranking of zoonotic diseases is systematically established, offering a comprehensive evaluation of their potential impacts and risks. This methodology encompasses pivotal criteria, including prevalence, economic impact, health impact, transmission pathways, and healthcare capacity, collectively offering a holistic perspective that mirrors the intricate nature of zoonotic diseases. The resultant rankings, derived from both ECDC and OIE data, illuminate diseases that harbor significant threats to both human and animal populations. This ranking fosters the identification of diseases with potential for rapid spread and substantial impact, guiding resource allocation towards prevention, control, and mitigation strategies. The alignment between ECDC and OIE rankings underscores the robustness of the applied methodology, with Plague and Zoonotic TB consistently emerging as high-ranking diseases, reinforcing their acknowledged significance. A consolidated ranking, amalgamating data from both sources, provides an insightful overview of potential risks linked to various zoonotic diseases. Plague, Zoonotic TB, Brucellosis, Trypanosomiasis, and Rabies consistently occupy top positions, presenting a valuable instrument for policymakers, public health officials, and stakeholders in prioritizing resource allocation and intervention strategies. The implementation of a multicriteria decision analysis approach, integrating AHP and TOPSIS methodologies, underpins the generation of informed rankings for Zambian zoonotic diseases. The intricate interplay of criteria like prevalence, economic impact, health impact, transmission pathways, and healthcare capacity forms a comprehensive framework for evaluating the potential risks of diverse diseases. The ensuing ranking, led by Plague and succeeded by Anthrax, Rabies, and others, mirrors their collective risk scores calculated via the adopted methodology. This approach empowers strategic decision-making by pinpointing diseases with heightened potential for adverse impacts on both human and animal populations. The rankings serve as invaluable aids in directing resources, devising strategic interventions, and formulating targeted measures for prevention and control. However, acknowledgment of the dynamic disease landscape and the imperative of adaptive strategies underscores the ongoing importance of monitoring and managing zoonotic diseases effectively in Zambia. By amalgamating data from authoritative sources and embracing a systematic, evidence-based approach, this study accentuates the necessity of addressing zoonotic diseases with a holistic lens, fostering proactive perspectives that augment public health and avert future outbreaks

Competition Law and Economic Regulation

Shaping markets through competition and economic regulation is at the heart of addressing the development challenges facing countries in southern Africa. The contributors to 'Competition Law And Economic Regulation: Addressing Market Power In Southern Africa' critically assess the efficacy of the competition and economic regulation frameworks, including the impact of a number of the regional competition authorities in a range of sectors throughout southern Africa. Featuring academics as well as practitioners in the field, the book addresses issues common to southern African countries, where markets are small and concentrated, with particularly high barriers to entry, and where the resources to enforce legislation against anti-competitive conduct are limited. What is needed, the contributors argue, is an understanding of competition and regional integration as part of an inclusive growth agenda for Africa. By examining competition and regulation in a single framework, and viewing this within the southern African experience, this volume adds new perspectives to the global competition literature. It is an essential reference tool and will be of great interest to policymakers and regulators, as well as the rapidly growing ecosystem of legal practitioners and economists engaged in the field

Evaluating the efficacy, impact, and feasibility of community-based house screening as a complementary malaria control intervention in southern Africa : a study protocol for a household randomized trial

BACKGROUND : Concerted effort to control malaria has had a substantial impact on the transmission of the disease in the past two decades. In areas where reduced malaria transmission is being sustained through insecticide-based vector control interventions, primarily long-lasting insecticidal nets (LLINs) and indoor residual spraying (IRS), non-insecticidal complementary tools will likely be needed to push towards malaria elimination. Once interruption in local disease transmission is achieved, insecticide-based measures can be scaled down gradually and eventually phased out, saving on costs of sustaining control programs and mitigating any unintended negative health and environmental impacts posed by insecticides. These non-insecticidal methods could eventually replace insecticidal methods of vector control. House screening, a non-insecticidal method, has a long history in malaria control, but is still not widely adopted in subSaharan Africa. This study aims to add to the evidence base for this intervention in low transmission settings by assessing the efficacy, impact, and feasibility of house screening in areas where LLINs are conventionally used for malaria control. METHODS : A two-armed, household randomized clinical trial will be conducted in Mozambique, Zambia, and Zimbabwe to evaluate whether combined the use of house screens and LLINs affords better protection against clinical malaria in children between 6 months and 13 years compared to the sole use of LLINs. Eight hundred households will be enrolled in each study area, where 400 households will be randomly assigned the intervention, house screening, and LLINs while the control households will be provided with LLINs only. Clinical malaria incidence will be estimated by actively following up one child from each household for 6 months over the malaria transmission season. Crosssectional parasite prevalence will be estimated by testing all participating children for malaria parasites at the beginning and end of each transmission season using rapid diagnostic tests. CDC light traps and pyrethrum spray catches (PSC) will be used to sample adult mosquitoes and evaluate the impact of house screening on indoor mosquito density, species distribution, and sporozoite rates.The multi-country trial is funded as part of the AFRO-II project by the Global Environment Facility (GEF Project ID 4668) through the United Nations Environment Programme (UNEP) and the World Health Organization Regional Office for Africa (WHO-AFRO). Co-financing support is provided by the respective project countries for in-country activities and for technical support by icipe’s core funders including the UK’s Foreign, Commonwealth & Development Office (FCDO); the Swedish International Development Cooperation Agency (Sida); the Swiss Agency for Development and Cooperation (SDC); the Federal Democratic Republic of Ethiopia; and the Government of the Republic of Kenya. The views expressed herein do not necessarily reflect the official opinion of the donors.http://www.trialsjournal.comdm2022School of Health Systems and Public Health (SHSPH

Efficiency and integration in the Zambian sugar market: analysing price transmission, price formation and policy

Zambia ranks as one of the lowest cost producers of sugar. However, Zambia‟s domestic sugar price has been high and volatile and is substantially higher than the world price. This has raised concern among stakeholders and further raises questions about the efficient functioning of the market. The study sought to determine and explain efficiency and integration in Zambia‟s sugar value chain by analysing price spreads, price formation, and price transmission through a price transmission and partial equilibrium model. The study hypothesised that the Zambian sugar market is both inefficient and it is not integrated with the world market. This was tested through the price transmission and partial equilibrium models. Price transmission is conceptually premised on the Law of One Price (LOP) which postulates that in a frictionless undistorted market, the difference between markets spatially separated should only be explained by transaction costs. To test the hypothesis long-run equilibrium between prices was tested through a series of cointegration tests and an Error Correction model (ECM) was built for cointegrating price series. Model simulations were run and tests for asymmetry for cointegrating price series were conducted. A partial equilibrium framework was developed to determine price formation for Zambia‟s sugar market from a number of behavioural equations. - v - The study establishes cointegration in the spatial price transmission (between world sugar prices and Zambia‟s wholesale prices) and vertically (between the domestic wholesale prices and sugarcane prices). The ECM for the spatial price transmission reveals low integration and efficiency evidenced by the low speed of adjustment, the Error Correction Term (ECT) of -0.09 and the model simulation, which shows that it takes approximately 3 years for the markets to revert to long run equilibrium after experiencing a price shock. The study also establishes that the spatial price adjustment is asymmetric. The vertical price transmission analysis reveals that it is relatively more integrated and efficient as it has a higher speed of adjustment (ECT of 0.199) which is twice that of the spatial price transmission. The model simulation reveals that it takes about 1 year and 6 months to revert to long run equilibrium after experiencing a shock. The vertical price adjustment is also found to be symmetric. A negative short-run elasticity of -0.29 is found for the spatial price transmission while the long-run transmission is found to be inelastic (0.91 ) which is close to unitary elasticity. The short-run vertical transmission is found to be very inelastic (0.009 ) while the long-run transmission of 0.94 is similar to the spatial transmission (inelastic but close to unitary). Farm to Retail Price Spreads are found to be widening with growing volatility owing to the volatile nature of the Retail Value. While the Farm Value has been increasing, recent spikes experienced in the Retail Value have resulted in an overall widening of the Farm to Retail Price Spread. The partial equilibrium analysis indicates that the price formation in Zambia‟s sugar market is determined by the world price through the export parity price, domestic demand, supply conditions as well as policy. The elasticity between Zambia‟s sugar price and the export parity price is found to be unitary (1.09). The price space analysis reveals that although Zambia‟s domestic price is correlated with the export parity prices it is trending closer to the import parity price. This suggests that there are distortions in the sugar market, which may include high transaction costs, high concentration in the market structure as well as inappropriate policies such as high taxation, high interest rates and a policy requiring fortification of all sugar with Vitamin A, which are driving the domestic price upwards to exceed the export parity price. The sugar baseline for Zambia is generated for 2012 to 2015 based on a number of assumptions in the exogenous variables. - vi - Sugar production domestic use and exports are on the rise while the domestic price rises in 2011, falling between 2013 and 2014 then rising in 2014 to 2015. Model simulation of the removal and/or modification of the policy requiring sugar fortification reveals that there is an increase in the flow of imports to about 25,000 tons per year. This results in a 3.2 per cent loss in production and a 6.1 per cent gain in exports while the domestic sugar price falls by 23.9 US Cents/kg (18.8 per cent). Thus Zambia gains in terms of increased consumer welfare and producer welfare because production losses are offset by revenue gains through exports since the world price also increases. The study recommends that transaction costs which include transportation costs, energy, taxation which are pushing the domestic price upwards need to be lowered. The study emphasises the need to promote investments in the sugar industry especially for smaller emerging sugar mills by lowering interest rates and taxes as well as a need to strengthen competition laws governing the industry which will protect consumers,would-be- investors and cane producers from uncompetitive pricing. It further recommends the lifting and /or modification of the barrier on imports of unfortified sugar but stresses that government can allow raw sugar imports which can be fortified in Zambia. A more open and undistorted sugar market in Zambia will result in a competitive, efficient and integrated market governed by market dynamics.MSc. Agric (Agricultural Economics) Department: Agricultural Economics, Extension and Rural Development. Degree Supervisor : Dr Ferdinand Meye

How Is Multinational Investment in Grain and Oilseed Trading Reshaping the Smallholder Markets in Zambia?

African agrifood systems are being transformed by an influx of multinational capital. Research on this transformation focuses primarily on the rise of supermarkets and demand for African land. An under-appreciated facet of this transformation is multinational investment in African grain trading. This paper uses basic descriptive statistical data and qualitative evidence to examine the implications of the recent multinational investment wave into cereal and oilseed trading in Zambia