Optimal grain pricing and storage policy in controlled agricultural economies: application to Zimbabwe

Increased emphasis on food security in developing countries has heightened attention to domestic pricing and grain stock policies. Analysts frequently have concluded that consumer and producer prices in controlled agricultural markets tend to be too low, although Jabara has argued this is not the case for producer prices in Kenya (Adoyade; Pollard and Graham). Governments of middle-income countries also have been blamed for holding excessively high food and cash crop stock

Agricultural input supply

A research paper on agricultural input supply for small-holder farmers in the rural areas of Zimbabwe.The preconditions for the development and growth of agricultural input supply systems for smallholders were established in the 1940s and 1950s, mainly as spin-offs from public and private investments targeted at large-scale commercial farmers. These included government agricultural research stations that released new cultivars, nutrients, pesticides and farm equipment technologies that private sector firms could sell to farmers at a profit. They also included public extension services that cooperated with private firms, farm credit, market channels and favourable government policies. Agribusiness firms entered the input markets by initially focusing on large-scale commercial farmers and later expanding to smallholders in favourable areas. This chapter discusses the historical development of the fertilizer and chemical industries from the pre-independence and post-independence eras to the introduction of structural adjustment reforms in 1991, changes during the economic reforms in the 1990s, and finally changes and challenges emanating with the land and agrarian reforms since 2000. After 70 years of servicing mainly large-scale commercial farmers, the fertilizer and chemical industry is now being challenged to re-invent itself and supply relevant farm management information, knowledge, technology, capital and services to an increased number of black commercial and smallholder fanners, scattered in all parts of the country. The smallholder fertilizer problem is complex and has been debated for decades

Farm size protection, informal subdivision: the impact of subdivision policy on land delivery and security of property rights in Zimbabwe

A position paper on the impact of Zimbabwe's land sub-division policy to national agricultural output and individuals' constitutional property rights.Beyond Phase I of Zimbabwe’s Land Reform and Resettlement Program (1980-1998) and fast track resettlement, the private land market has created an important process of shadow land reform and de facto land redistribution. However, legal constraints on subdivision and the high costs of subdividing and defining property rights on the ground are creating a legal limbo where the current owner is de facto subdividing property but the new claimants are unable to secure land rights or financial capital to aid in development. This paper analyzes the legal and institutional constraints to subdivision and consolidation, the financial and time constraints to subdivision, and the contribution of subdivisions and consolidations to the expansion and/or contraction in land supply. It also presents findings of current case study research contrasting subdivision constraints with de facto subdivision that is nonetheless occurring on the ground, and the detrimental effects informal subdivision is having on land use management and capital investment unless current policies are modified

Social welfare-optimal policy rules : application to the Zimbabwe corn industry

Government intervention in food grain markets is a common feature of most LDCs. Inasmuch as liberalizing markets is difficult for some of these governments, researchers have offered suggestions to reduce detrimental affects of intervention. The general advice for pricing policy has been for governments to set prices at c.i.f. or f.o.b. border prices. In countries where c.i.f. and f.o.b. prices are very different and the countries are marginally self-sufficient, this advice is inadequate. Analysis on which this general advice is based fail to take this and government motivations explicitly into account. This thesis develops a more flexible model that rationalizes controlled price and stock policy making and takes into account the case of marginally self-sufficient economies. In the framework used, government is assumed to set policy levels as a result of optimizing the expected weighted sum of social incomes to consumers, producers, and taxpayers. Resulting from this optimizing are revealed preferences. Assuming Zimbabwe was optimizing such an objective function from 1954 to 1986, these revealed preference functions were estimated using policy levels and exogenous factors affecting policy for this period. Estimation of the model on Zimbabwe showed that the government set price and stock policies with the expectation of future exports. Results also show that Zimbabwe has, on average, fully adjusted its producer prices to world prices during the 1954 to 1986 period. Wholesale prices have only partially adjusted to world prices. The government in addition was influenced by supply and demand conditions. Estimates also show that government held stocks in order to speculate on world prices and that stocks were influenced by previous years' net domestic supply. The model estimated also allowed for recovery of implicit weights the government has accorded the different economic groups in policy making. Results show that the Zimbabwe government has weighted consumer, producer, and public sector interests roughly in proportions 0.30, 0.35, and 0.35. Since these differ little, results seem to indicate on the average the government has been setting prices to maximize long-run efficiency. Tests showed the model was not very sensitive to small changes in demand and supply slopes. A number of simulations were conducted to determine effects of exogenous factors and alternative weighting schemes on income distribution and social income stability. Weighting all groups equally resulted in Z$3.13 million more social income than had the optimal solution. However, it reduced stability of incomes in the face of varying exogenous shocks such as in world prices, prices of substitutes, and wage-income. It also reduced total production and exports. Reduction in production was not enough to convert the country from a net exporter to net importer. Thus, intervention has helped growth in the corn industry and stabilized incomes. Also tested were the scenarios in which economic groups are weighted on the basis of populations and the scenario in which government exercises full monopoly power. The former resulted in less total income and more instability in social income and export earnings. The later resulted in maximal revenue to the government agency but reduced production far enough that corn self-sufficiency gave way to net imports

Effects of U.S. commodity programs on farm growth

The U.S. farm sector has undergone dramatic structural change during the past fifty years, a chief result being that the number of large farms has increased relative to the number of small farms. Numerous agricultural policies have been instituted, with the partial objective of preserving the family farm. At the same time, a number of studies have attempted to ascertain the contribution of various forces, including farm programs, toward the observed changes in average farm size. These studies have tended to concentrate on aggregate effects, ignoring farm-level and dynamic effects of program and nonprogram factors on farm growth. The present study overcomes such limitations by utilizing a farm-level dynamic growth model which links consumption, production, and investment decisions. Steady-state comparative static and local comparative dynamic analysis of the dynamic model solutions indicate qualitative effects of program and nonprogram factors on farm growth. Simulation of quantitative effects are conducted on econometric estimates of the dynamic model solutions, using Kansas wheat farm data. Empirical results show that set-aside-percentage-type instruments (required and voluntary set-aside percentages) induce longrun net equity increases in small farms and longrun net equity decreases in large farms. In both size classes, set-aside instruments increase longrun land holdings, the increases being greater in larger than in smaller farms. After considering effects on rented land, the effect of set-aside-type instruments on overall scale of operation is negligible. Payment-rate-type instruments (per-acre deficiency, voluntary and paid diversion payment rates) increase longrun net equity and consumption in both small and large farms. They lead to longrun land ownership increases in small farms and decreases in large farms. However, they lead also to increases in rented land, the increase being greater in larger than in smaller farms. Net effect on scale of operation is nonsignificant. Finally, nonprogram factors affect growth also. Technical change increases net equity and landholding in large farms more than in small farms. In both large and small farms, increases in prices of land's substitutes, lead to net equity increases, whereas increases in prices of complements reduce net equity. In the longrun, output price increases encourage consumption and reduce net equity

Land reform in Zimbabwe

There is widespread agreement on the need for land reform in Zimbabwe as a means of reducing poverty. This paper assesses the potential consequences of a land-reform scheme that draws on proposals from Zimbabwe's government in 1998 and 1999. The authors analyze the impact of the reform on resettled farm households and as a development project for which they conduct cost-benefit analysis. The analysis, which considers costs and benefits during a 15-year period, relies on a set of models of family farms that are typical of those that would benefit from land redistribution. The cost-benefit analysis is more comprehensive, also considering the different costs and benefits that affect the government. The results of the analysis indicate that a government-supported land reform could be economically viable under what the authors consider as realistic assumptions regarding the performance of the beneficiaries and the costs that will be faced by the government and other stakeholders. Land reform can generate sustainable livelihoods for the beneficiaries. If viewed as a project, the NPV of the reform is positive for a discount rate that is as high as 20%. The project can also increase employment in the agricultural sector. The analysis takes a long-run perspective, covering a 15-year period. During the first resettlement years, some disruption of agricultural production should be expected. These results are preliminary and based on a partial equilibrium perspective. They are driven by the assumption that the land reform is carried out in a manner that allows farmers on the resettled lands to achieve their productive potential. Such an outcome depends critically on the assumption that the farmers are able to operate in an enabling environment, including critical government support, especially during years 1-5.TMD ,Land capability for agriculture. ,Land use Zimbabwe. ,Land use Economic aspects. ,Rate of return. ,Sustainable livelihoods. ,Poverty alleviation Zimbabwe. ,Agriculture and state. ,Farm income. ,Government spending policy. ,Agricultural productivity. ,

Space, markets and employment in agricultural development: Zimbabwe

Growth in the agricultural sector has long been assumed to automatically benefit the rural non-farm sector, chiefly through various production or consumption expenditure ‘linkages’ including local expenditure by farmers and their workers (Davis et al., 2002). However, the economic and employment benefits of agriculture crucially depend on the spatial patterns of agricultural production, processing and marketing (and their linkages to local markets). How these work in Zimbabwe is examined in what follows. These policy findings draw on detailed, area-based research that examined agriculture and its linkages in two areas marked by ‘resettlement’ by emerging small- and medium-scale farmers since the Fast-Track Land Reform of the early 2000s (Sukume et al., 2015). Two study sites in Mvurwi and Masvingo Districts were examined, focusing on a range of commodities including tobacco, horticulture and beef