Global Leadership Training Programme in Africa 20172014
Activity Report of Field Research
Policy Interventions of the Food Reserve Agency to Maize Grain and Maize Meal
Markets in Zambia
Yoshihiro YAMADA1
I.

Summary

English Summary
This is a fieldwork report conducted in Zambia from October to December 2017 under the Global
Leadership Training Programme (GLTP) provided by the United Nations University Institute for the
Advanced Study of Sustainability (UNU-IAS). This study will consist one chapter of my master’s
thesis. This opportunity was great to develop my master’s research but also to understand the life andculture in Zambia. Through the fieldwork, I encountered many challenges but now I am remembering
them even as great memories in my heart.
Below is the summary of this research.
The Sustainable Development Goals (SDGs) was set as part of a new sustainable development agenda
in 2015 and this study contributes to the achievement of Goal 2: ZERO HUNGER. Increasing price of
staple foods is a very serious issue especially for people who belong to the poor group. Providing
market information of those grains will benefit making food and agricultural policies better and resultin mitigating the hunger of poor people.
Government’s strong interference to markets may interrupt the competition and decreases theefficiency of the markets. During 2010 to 2013, the Zambian government’s Food Reserve Agency(FRA) purchased over 80% maize grain from small-holder maize market and sold it to the selectedmaize millers with the strongly subsidized price. Maize millers who had no access to the FRA’s
subsidized maize incurred price disadvantage. This study examines the difference of pricetransmission between maize grain and meal prices before and after the FRA’s subsidy program.
Threshold cointegration tests, symmetric and asymmetric error correction models were employed inthis study. The results indicate that the speed of adjustments towards positive deviation from the longrun equilibrium is different between before and after the FRA’s subsidy. In another word, maize meal
prices adjustment to the price decrease in maize grain price became slower after the subsidy programof the FRA, which could imply that market power of maize milling sector became relatively stronger
against maize grain wholesaling and farm gate level due to the subsidy selection. I concluded that one
possible reason for the recent high maize meal prices is the strong market power of maize millers in
the market.

1

2nd Year Master Course Student, Laboratory of Food and Agricultural Policies, Graduate School of Bioresource andBioenvironmental Sciences, Kyushu University, Fukuoka, Japan/Research Period; 10th Oct. to 12th Dec./Host University;
University of Zambia
1ザンビア国における政府の政策的介入がメイズとメイズミール市場へ及ぼす影響
本稿は、国連大学サスティナビリティ研究所が提供するグローバルリーダシップトレーニングプ
ログラム(GLTP)の支援のもと、ザンビア国において行ったフィールドワークの報告書である。また、本研究は修士学位論文の一つの章を構成する。
このフィールドワークの機会を通し、修士研究を発展させるのみならず、ザンビア現地で生活し、文化に触れることができた。多くの困難があったことは確かであるが、今思い返せばそれもよい思
い出の一部として振り返ることができる。
以下は本研究の概要である。
2015 年に持続可能な開発目標(SDGs)が立てられた。本研究はその SDGs のうち目標２に掲げられている、「飢餓をゼロ」に貢献できると考える。主食となる穀物価格の高騰は特に貧困層にとっては深刻な問題となる。それらの穀物市場の情報を提供することは、よりよい食料・農業政策の策定に有益であり、貧困層の飢餓削減の一助となるだろう。
政府の市場への強い介入はその市場参加者の競争を妨げ、市場の効率性を損なわせる。2010 年から 2013 年の間、FRA は小規模農家が生産するメイズの 80%以上を購入し、その購入したメイズを一部のメイズ製粉業者へ補助金付き価格で販売した。FRA の補助金付きメイズを手に入れることができないメイズ製粉業者は価格競争の点で不利益を被った。本研究は FRA の市場への介入の前後でのメイズとメイズミール価格間の価格伝達の相違を検証するものである。閾値共和分検定、対称と非対称誤差修正モデルを分析に用いた。分析結果は、FRA の市場介入以前ではメイズとメイズミール
価格間に正の不均衡が生じた場合の調整速度に相違が観察された。言い換えると、FRA の市場介入
以前ではメイズの価格下落に対するメイズミールの調整速度は速く、FRA の市場介入後では調整速度が穏やかになっており、より下方硬直的である。それは、FRA が特定のメイズ製粉業者にのみ補助金付きのメイズを販売するという行為により、メイズ製粉業者の市場支配力がメイズ農家、メイズ卸売業者に対して相対的に強くなったことを示唆している。最後に、近年のメイズミールの高価格の原因の一つはメイズ製粉業者の市場支配力が強まったことによると結論づけた。

2

II.

Research Activity

1. Introduction
Since the initiation of market liberalization in 1991, the Government of Zambia has been playing
important rolls in domestic maize markets. Kuteya and Sitko (2015) note that there are two periods of
weak and strong state intervention. The first period began with the inception of the FRA in 1996 andcontinued to 2009, in which periods, the FRA was taking on a minority role in the domestic maizemarket. During the first period, the FRA purchased less than half of the available marketed maize, thus
the period was characterized as active participation of private sector in the market. The second periodbegan at the record harvest of 2009/10 marketing year. The second period is characterized as a highlevel of involvement in the maize market by the FRA, with on average 80% of the available maizewere purchased by the FRA. Under the second period, little maize was available for private sector.
Since 2009/10 production season, maize harvests have been above 2.5 million metric tons each year
in Zambia. Despite maze surpluses, there were nationwide maize meal shortages and skyrocketing
maize meal prices. In response to this price spike, the Government of Zambia started heavily
subsidizing the price of maize held by the Food Reserve Agency (FRA) to maize millers. Before
August 2011, maize millers purchased maize from the market or from the FRA at $265 per metrictonne. However, from September 2011 to March 2012, the FRA started the subsidy program toselected maize millers, which selling maize at $140 per tonne. The FRA even provided transport forthis maize to the millers’ factories, such that the maize millers’ effective acquisition price wasapproximately $80 per metric tonne (Kuteya and Jayne, 2012). The FRA maize subsidies were only
conferred to some selected millers, not all of the maize millers in Zambia.
As a result of the thinly traded private market channels, urban and rural consumers became
increasingly dependent on an access to the maize meal produced by the commercial millers. With thehighly limited number of private market actors and the volume of maize held by them, the supply
market of maize in Zambia has faced significant risks of shrinking supply chains between consumers
and commercial processors or the FRA and processors (Kuteya and Sitko, 2015). It suggests that
FRA’s strong market intervention adversely changed the structure of maize grain to meal marketing
channel. So far, no research has used threshold cointegration test and analyzed the effect of FRA’s
behavior on the interrelations between maize grain and maize meal markets using thresholdautoregressive model.
This study, therefore, shows the empirical results that FRA’s strong market intervention seriously
affected the efficiency of maize meal market based on the comparison of two different regimes. Two
regimes are separated referencing Kuteya and Jayne (2012) which mentioned FRA’s subsidy was thestrongest from September 2011 to March 2012. The first phase covered the period between January
2006 to August 2011 before FRA’s intervention was recognized as strong and the period of the second
phase is between September 2011 to January 2017 after the strong intervention by FRA.

2. Data
The data collected and used in this study are monthly maize grain price and maize meal prices(Breakfast and White roller) provided by the Central Statistical Office of Zambia and consumer priceindex in Zambia from January 2006 to January 2017. The maize grain and maize meal prices are
represented in Zambian kwacha (ZMW) per kg. The total number of observations is 133. All the price3

data were taken logarithm and deflated using CPI, after that, they have removed its seasonality on the
Web Decomp (http://ssnt.ism.ac.jp/inets/inets.html) which is provided by the Institute of Statistical
Mathematics, Japan.

Maize grain and meal prices (ZMW/kg)

4
3.5
3
2.5
2
1.5
1
0.5
0
Jan 2006

Jan 2008

Jan 2010

Jan 2012

Jan 2014

Jan 2016

Time (Month)
Maize grain price

Breakfast maize meal priceWhiteroller maize meal price

Figure1. Pattern change of maize and maize meal prices.

3. Methodologya) Unit root tests
Augmented Dickey-Fuller (ADF), Phillips and Perron (PP) and Zivot and Andrews (ZA) tests were
employed to test the stationarity property and to confirm the order of integration. The appropriate lag
length was determined by using Akaike Information Criteria (AIC) and Bayesian Information Criteria(BIC).
b) Threshold cointegration tests
In the Engle-Granger (1987) cointegration analysis, long-run equilibrium relationship is specified as:(1)
𝑃 = α + β𝑃 + 𝜇̂
Where 𝑃 and 𝑃 are the price of maize meals and maize grain, respectively; α is intercepted; βshows elasticity of price transmission; 𝜇̂ is disturbance term.
Following the Engle-Granger procedure, the residuals of the equation above are used to estimate:∆𝜇̂ = 𝜌 𝜇̂
+ 𝛾 ∆𝜇̂+ 𝜀（2）Enders and Granger (1998), Enders and Siklos (2001) provided Threshold Auto Regressive (TAR)
and Momentum Threshold autoregressive (M-TAR) model to capture the asymmetric cointegration
against symmetric Engle and Granger (1998) cointegration hypothesis. These tests are alternatively
employed to reassure the proper adjustment process towards positive and negative deviation from theequilibrium. The threshold autoregressive model is specified as the equation below;（3）∆𝜇̂ = 𝛼 + 𝐼 𝜌 𝜇̂

+ (1 − 𝐼 )𝜌 𝜇̂

+

𝛾 ∆𝜇̂

+𝜀

4

1
0

𝐼 =

if
if

𝜇̂
𝜇̂

(4)

≥𝜏
<𝜏

While the momentum threshold autoregressive model is specified as the equation below;∆𝜇̂ = 𝛼 + 𝑀 𝜌 𝜇̂𝑀=

+ (1 − 𝑀 )𝜌 𝜇̂

+

1

if

∆ 𝜇̂

≥𝜏

0

if

∆ 𝜇̂

<𝜏

𝛾 ∆𝜇̂

+𝜀

（5）
（6）

Where 𝐼 and 𝑀 are Heaviside indicator functions; 𝜌 and 𝜌 are long-run adjustment coefficients
towards positive and negative deviation from the equilibrium, respectively; 𝑇 is the lag length; 𝛾 isshort-run adjustment coefficient; 𝜀 is white noise disturbance, and 𝜏 is the threshold value. Chan
(1993)’s method was employed for estimating the threshold value 𝜏. First, arrange the 𝜇̂ which isestimated by OLS in equation (1) from small to large. Second, remove the 15% from minimum andmaximum and obtain remaining 70% middle of the series. Finally, apply the 70% of the series to theequation (3) and (5) and estimate the threshold value 𝜏 which minimize the RSS (Residual Sum of
Squares). The 𝜏 obtained by this method is called super-consistent estimate value. The model selectionof either TAR or M-TAR is determined by AIC and BIC.
c) Symmetric and Asymmetric error correction model
The dynamics of price transmission between maize grain and maize meals are estimated with Error
Correction Model (ECM). Depending on cointegration tests, I employed both symmetric andasymmetric ECM. The symmetric ECM is expressed below;∆𝑃= 𝜇 + 𝜌 𝑃 − 𝛽𝑃

𝜇

+

𝛿 ∆𝑃

+

𝜃 ∆𝑃

+𝑣

(7)

Where ∆𝑃 is the first difference of logarithms of maize meal prices, 𝜇 is the constant term, 𝜌 iserror correction term representing the speed of adjustment, 𝛽 is the elasticity of price transmission, 𝛿and 𝜃 short-run adjustment coefficient, 𝑣 is error term.
While the asymmetric ECM is estimated as follows;
∆𝑃

=𝜌 𝐼𝜇

+ 𝜌 (1 − 𝐼 )𝜇

+

𝛿 ∆𝑃

+

𝜃 ∆𝑃

+𝑣

(8)

Where ∆𝑃 is the first difference of logarithm of maize meal prices, 𝜌 and 𝜌 are the error
correction term from threshold cointegration regression representing adjustments to positive andnegative shocks to the marketing margins, 𝛿 and 𝜃 short-run adjustment coefficient, 𝑣 is error term.

4. Research Findings
Following the method of Abdulai (2000, 2002), I visualized the adjustment to positive and negative
deviations in Figure 2 and 3. As shown in the figures, both breakfast and white roller maize meals
adjust quickly to a unit reduction in maize grain price, while adjusted slowly to a unit increase in maizegrain price during the regime1. Comparing the regime 1 (above) and regime 2 (below), the response
to a unit reduction in maize grain price became slower in the regime 2.

5

Source: Author’s calculations
Figure 2: Breakfast maize meal asymmetric response (above) and symmetric response (below) to unit shock in maize grain.
Notes: The figure above shows the response of Breakfast maize meal in regime 1, while below shows the response in regime
2.

6

Source: Author’s calculations
Figure 3: White roller maize meal asymmetric response (above) and symmetric response (below) to unit shock in maize grain.
Notes: The figure above shows the response of White roller maize meal in regime 1, while below shows the response inregime 2.

5. Discussion and Conclusion
Despite the bumper production of maize grain, maize meal prices kept increasing. To account for thesituation, the FRA heavily subsidized the maize grain price to selected commercial maize millers. It is
obvious that the maize millers who did not receive the heavily subsidized maize grain from the FRA
incurred the price disadvantage, and the market power of the selected millers maybe became stronger.
Figure1 and 2 show maize meal price response to a unit reduction in maize grain became slower in
regime 2 compared to regime 1 which respectively correspond with before and after the FRA’s market
intervention. The high price of maize meal is a serious problem in the country in which it is the staple
food, especially for the poor population. Government’s strong participation in the market resulted in
the inefficient market situation.
This study revealed that maize meal prices adjusted quickly to the reduction in maize grain price inregime 1 before the FRA’s strong presence in the market, while adjusted slowly in regime 2 after the
FRA’s intervention to the market. The FRA’s maize grain purchasing activity had an effect ofincreasing its mean price in the market (Nkonde et al., 2011; Manson and Myers, 2012). Even thoughmaize meal prices might have increased along with the maize grain price, this could be one reason for7high maize meal prices. Another possible explanation is the strong market power of maize millers,
keeping their marketing margin. To reduce the negative effect on the market, the FRA should allow
access to their maize grain for all maze millers who needs then act on measurement to mitigate theprice change of maize grain with the policies which encourage market competition in maize milling
sector.
Acknowledgement

This research was supported by Global Leadership Training Program (GLTP) which is provided by
the United Nations University Institute for the Advanced Study of Sustainability (UNU-IAS). I express
my gratitude and thankfulness to Dr. Natsuko IMAI, Ms. Aiko HORI and Ms. Rieko SATO of the
UNU-IAS for their full support.
I am genuinely thankful to Dr. Jewette MASINJA and Ms. Kabwe MUSONDA of GLTP coordinatorat the University of Zambia. They helped me to complete field survey and also took care of myaccommodation and visa issues so that I could concentrate on my study.
Lastly, I am extremely grateful to my supervisor Professor Gelson TEMBO of School of Agricultural
Science, University of Zambia. Throughout the discussions with him and his reviews and comments,
I could gain new inspects every time.
References
Abdulai, A. (2000). Spatial price transmission and asymmetry in the Ghanaian maize market. J.Dev. Econ. Ž 63,
327–349.
Abdulai, A. (2002). Using threshold cointegration to estimate asymmetric price transmission in the Swiss pork
market. Appl. Econ. 34, 679–687.
Antony, C, Olipa, Z, Barak, D, Chance, K, Nicholas, S, Auckland, K and Ballard, Z. (2015). The Politics ofMaize in Zambia: Who holds the Keys to Change the Status Quo? Work. Pap. working pa, 33.
Chapoto, A. (2012). The Political Economy of Food Price Policy: The Case of Zambia. UNU-WIDER Work. Pap.
No. 2012/100.
Chisanga, B., Mofya-Mukuka, R. and Chapoto, A. (2015) The Paradox of High Mealie Meal Prices amidst
Abundance: Maize Grain to Mealie Meal Price Transmission in Zambia.
Enders, W. and Granger, C. W. J. (1998). Unit-root tests and asymmetric adjustment with an example using theterm structure of interest rates. J. Bus. Econ. Stat. 16, 304–311.
Enders, W. and Siklos, P. L. (2001). Cointegration and Threshold Adjustment. J. Bus. Econ. Stat. 19, 166–176.
Engle, R.F. and Granger, C. W. J. (1987) Co-integration and error correction: representation, estimation, andtesting, Econometrica, 55, 251–76.
Kuteya, A. N., Jayne, T. S. (2012). Is the Government of Zambia’ s Subsidy to Maize Millers Benefiting
Consumers ? by Indaba Agricultural Policy Research Institute ( IAPRI ). Work. Pap..
Kuteya, A. N., Sitko, N. J. (2015). CREATING SCARCITY FROM ABUNDANCE: BUMPER HARVESTS,
HIGH PRICES, AND THE ROLE OF STATE INTERVENTIONS IN ZAMBIAN MAIZE MARKETS. African
J. Food, Agric. Nutr. Dev. 10272–10289.
Mason, N. M., Jayne, T. S. and Mofya-Mukuka, R. (2013). Zambia’s input subsidy programs. Agric. Econ.
(United Kingdom) 44, 613–628.
Mason, N. M., Jayne, T. S. and Myers, R. J. (2015). Smallholder Supply Response to Marketing Board Activities
in a Dual Channel Marketing System: The Case of Zambia. J. Agric. Econ. 66, 36–65.
Mason, N. M. and Myers, R. J. (2013). The effects of the Food Reserve Agency on maize market prices inZambia. Agric. Econ. 44, 203–216.
Meyer, J. and Von Cramon-Taubadel, S. (2002). Asymmetric Price Transmission: A Survey Paper preparedfor presentation at the 10th EAAE Congress ’Exploring Diversity in the European Agri -Food System
Asymmetric Price Transmission: A Survey. Zaragoza (Spain) 28–31.
Nkonde, C., Mason, N. M., Sitko, N. J. and Jayne, T. S. (2011). Who Gained and Who Lost from
Zambia’s 2010 Maize Marketing Policies? FOOD Secur. Res. Proj. Work. Pap.
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III.

Reflection to the GLTP in Africa

1. My motivation to participate in the GLTP
I applied for the GLTP for three reasons. First, I wanted to collect data on commodity prices in Zambia since I
was writing my master’s thesis on the topic of food and agricultural policies of the country. Second, GLTP’s
grant seemed to be a great financial support to conduct my fieldwork. With this financial support, I could
experience many things in the field. At last, I thought I need the support of a Zambian supervisor to complete
my master’s research because my supervisor in Japan had no strong expertise in Zambian agriculture. Actually,
it was the best thing that I was supervised by Prof. Tembo at the University of Zambia. He gave me many
guidance and interesting insights on my analysis. He also connected me to the people in the Ministry ofAgriculture, Food Reserve Agency (FRA) and Indaba Agricultural Research Policy Institute (IAPRI) for datacollection.

2. Field experiences
The data I needed for this study was maize grain and maize meal prices. I visited the Central Statistical Office(CSO) and the Ministry of Agriculture for the data. I was also conducting other two more studies at the sametime so I visited some rice farmers in Luapla and Northern provinces as well.
Table1: The locations where I visited during the field survey.

Source: United Nations (http://www.un.org/Depts/Cartographic/map/profile/zambia.pdf)

9

With maize farmer

University of Zambia

At a rice field

With my supervisor

Nshima with fish

With my friend’s family

10The accommodation in the campus of the University of Zambia
During the time being in Lusaka, I stayed at a youth hostel inside the campus of the University of Zambia. It
was very hot to sleep for the first two weeks after I arrived at Zambia. After the summer time, the temperature
was low in the morning and evening. There two disadvantages on the hostel. At first, many mosquitoes comeinside the room from somewhere. To bring mosquito repellant is recommended. Second, wifi is not available in
the room but available at a common space, sometimes not available though. It’s expensive to use the internet inZambia. If you still buy internet bundle, you can buy the cheapest and big bundle from Zamtel. However, thehostel was great for the price, 200K per day. I never experienced water stop or hot water stop which I experienced
many times in Luapla and Northern province. It’s one of the great choices in Lusaka.
The transportation from Lusaka to Luapla and Northern province was the bus. It is cheap but seats are verysmall for the people with the big body. My shoulder touched the person next to me all the time of almost 10
hours trip. It was a hard trip but also left in my memories.
I ate the nshima shown in the picture above on the daily basis. However, at the beginning of arrival in Zambia,
I did not fit the local food and had diarrhea. So I often went to the East Park shopping mall next to the university
campus. I could buy most stuff including medicine, internet bundle, food and cloth. As long as staying in Lusaka,
I could access to the food around the world. For the information, one of my friends moved to anotheraccommodation with kitchen inside the campus and cheaper price. I don’t know if it’s available for short staying
people but if I cooked by myself I could control my health more.
For the transportation, I mostly used taxi and bus. The bus is cheap but they don’t start until all seats are fullthen it takes time. It is better to use the taxi driver introduced by your friend for your safety.
I had an opportunity to visit a friend’s house and enjoyed their handmade local food. It was a great experienceand appreciated my friend. I strongly hope to keep the friendship with him forever.
Fortunately, I did not have a big health problem and enjoyed the life in Zambia. As long as you keep rules suchas not go to the dangerous places or not to walk at night, Zambia is the great country to visit.

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3.Challenges
Writing a proposal, requesting budget, contacting new people and conducting fieldwork were all challenges forme. Thanks to many people’s support, I’ve completed the programme.
I repeated the process of submission and modification of my proposal seven times. I learned how a research
proposal should be and the way of writing a proposal in English.
When I arrived at the airport in Zambia, an immigration officer gave me a business visa which expires in amonth instead of regular entry visa. I needed to extend my visa but the business visa was not able to be extended.
I visited an immigration office many times and prepared for few photos, health check certificate, and many otherdocuments. I spent much time and money to deal with the issue. If I did get a normal entry visa, I could savemuch time and money to concentrate on my study.
About data collection, it was difficult for me to reach the officer who was taking care of the data which I needed.
I thought if I go to the reception of the ministry, they would introduce me the relevant department or officers but
actually, they did not. I prepared a letter addressed to the title of Director General but a specific name of theperson or the department was required which I could not know at the time. I had to visit several departments
without collecting any data. I asked my supervisor for the help and he kindly called the director general andasked him to share the data with us. I finally obtained the data and learned the importance of personal networkand connection to be trusted. As I was a foreigner in Zambia, they maybe hesitated to provide the data to a
stranger.

4. How to make use of this experience to your future career development
I learned the skill of project management through this programme. From writing a research proposal to reporting,
I experienced each step required in any project. I am going to work for a private company from this year and myjob in the company might not have direct geographical or sectoral connection to Africa either agriculture. WhatI learned from the GLTP, however, is the management skill that can be applied to any kind of research or work.

5. Encouragement to other students
I’d like to say that any students who participate in the GLTP can experience every step of a project management
under supervisions of many professional people. Writing a proposal, requesting budget, reporting andcoordinating fieldwork schedule are very important practices. For the students who want to be a researcher or towork as a consultant in developing countries, the programme provides a very effective training opportunity. You
can learn the process step by step with the supports of many professional people. Even for the people who intend
not to work in academia either development, the GLTP is still very useful training programme because what you
can strengthen is your own competence that is required in any kind of job.
After participating in this programme, I strongly agree with the idea that we can experience and achieve manythings by ourselves in the field overcoming difficulties and enjoying happiness that we can only feel on the
ground of Africa.

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