Rural Income Generation and Diversification - A Case Study ... - Doria

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Zambian farmers fall into three categories (e.g., CSO 1994; Wichern et al. 1999; Siegel and
Alwang 2005). Smallholder farmers with less than five hectares of land (often less than 1.5
hectares) are the most numerous, at approximately 800,000, and their production is based on
the use of hand-tools and the limited use of external inputs. At the other extreme, 1,000
commercial farmers are located in the most favourable agricultural areas close to the railway
line and use modern technology to produce a large proportion of cash and export products.
The medium-sized group of about 50,000 farmers utilise animal draught power and cultivate
between five to 20 hectares (Wichern et al. 1999). Small-scale farm households constitute 56
per cent of the total population, and poverty among this group is high, 90 per cent of the
smallholders being below the poverty line (Seshamani 1998).
Agro-ecologically the country is divided into three zones. Zone 1 is located in the southern
parts of Southern and Western Provinces, Zone 2 covers the central parts of the country, and
Zone 3 comprises large areas in North-Western, Luapula and Northern Provinces. Zone 2 has
the highest agricultural potential and also the largest population. The rainfall in the Zone 3
the is normally abundant, but the quality of the soil limits agricultural production, whereas
Zone 1 often suffers from insufficient rainfall (CSO 1994; GRZ 2005).
2.1.1 Policy reforms
The Zambian government played a heavy controlling and regulating role in the agricultural
sector immediately after independence in 1964 until the early 1990s (Wichern et al. 1999).
Since the aim of government policy was to ensure the availability of cheap staple food i.e.,
white maize for urban dwellers, hybrid maize production was promoted through research,
extension, credit, input supply, marketing, and price-subsidy programmes funded by the
government and various donors (Holden 1997). The government also wanted to favour
remote smallholders over large farms by securing pan-territorial maize pricing (Wichern et
al. 1999). The producer prices were kept attractive to smallholders in order to reduce shifting
cultivation (slash and burn), to settle smallholders permanently, and to implement the
government's "back-to-the land" policies (Moore and Vaughan 1994).
In this policy environment maize production was meant to be largely free of uncertainty,
which led to a rapid expansion from the 1970s until the early 1990s. Smallholders enjoyed
conditions close to contract farming even in the more remote areas, the government
providing them with seed and fertiliser, and guaranteeing marketing, transport, and prices
through parastatal (National Agricultural Marketing Board NAMBOARD) and later through
cooperative channels (Wichern et al. 1999). The cost to the government of such agricultural
policies was high and the system was considered inefficient (Kydd 1989). In 1990 13.7 per
cent of the government budget was used for producer and comsumer subsidies in order to
maintain low maize prices for urban consumers (McCulloch et al. 2000). There was a decline
from the 1980s when the average annual budget share for subsidies was 20 per cent
(Deininger and Olinto 2000). Because of the escalating government budget deficits, the