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What Drives Input Subsidy Policy Reform? the Case of Zambia, 2002–2016

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What Drives Input Subsidy Policy Reform? the Case of Zambia, 2002–2016 IFPRI Discussion Paper 01572 November 2016 What Drives Input Subsidy Policy Reform? The Case of Zambia, 2002–2016 Danielle Resnick Nicole M. Mason Development Strategy and Governance Division INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE The International Food Policy Research Institute (IFPRI), established in 1975, provides evidence-based policy solutions to sustainably end hunger and malnutrition, and reduce poverty. The institute conducts research, communicates results, optimizes partnerships, and builds capacity to ensure sustainable food production, promote healthy food systems, improve markets and trade, transform agriculture, build resilience, and strengthen institutions and governance. Gender is considered in all of the institute’s work. IFPRI collaborates with partners around the world, including development implementers, public institutions, the private sector, and farmers’ organizations, to ensure that local, national, regional, and global food policies are based on evidence. AUTHORS Danielle Resnick ([email protected]) is a senior research fellow in the Development Strategy and Governance Division of the International Food Policy Research Institute, Washington, DC. Nicole M. Mason ([email protected]) is an assistant professor in the Department of Agriultural, Food, and Resource Economics at Michigan State Univeristy, East Lansing, MI, US. Notices 1. IFPRI Discussion Papers contain preliminary material and research results and are circulated in order to stimulate discussion and critical comment. They have not been subject to a formal external review via IFPRI’s Publications Review Committee. Any opinions stated herein are those of the author(s) and are not necessarily representative of or endorsed by the International Food Policy Research Institute. 2. The boundaries and names shown and the designations used on the map(s) herein do not imply official endorsement or acceptance by the International Food Policy Research Institute (IFPRI) or its partners and contributors. 3. This publication is available under the Creative Commons Attribution 4.0 International License (CC BY 4.0), https://creativecommons.org/licenses/by/4.0/. Copyright 2016 International Food Policy Research Institute. All rights reserved. Sections of this material may be reproduced for personal and not-for-profit use without the express written permission of but with acknowledgment to IFPRI. To reproduce the material contained herein for profit or commercial use requires express written permission. To obtain permission, contact [email protected]. Contents Abstract v Acknowledgments vi Acronyms vii 1. Introduction 1 2. Overview of the Political Context and Policy Process in Zambia 3 3. Overview of Agriculture in Zambia and FSP/FISP 8 4. Explaining the Emergence of the Fertilizer Support Program in 2002 12 5. FISP and E-Vouchers in Zambia: A Rocky Road to Reform 24 6. Conclusions 35 Appendix: Supplementary Table 41 References 42 iii Tables 3.1 Quantities of inputs subsidized, numbers of beneficiaries, subsidy rates, and estimated program expenditures, 2002/2003–2014/2015 9 3.2 Individual farmer selection criteria for FISP, 2002/2003–2014/2015 11 4.1 Policy chronology of FSP/FISP by year (month) 13 5.1 Kaleidoscope model hypothesis testing 36 5.2 Abbreviated hypothesis testing 39 A.1 Table of interviewees 41 Figures 1.1 The kaleidoscope model of policy change 2 2.1 Ministerial volatility, selected African countries (2001–2015) 4 2.2 Schematic map of agricultural policy process and FISP implementation, 2014/2015 7 5.1 FISP e-voucher Reform, changing circles of influence 30 5.2 Schematic map of policy process and implementation of FISP e-voucher, 2015/2016 32 iv ABSTRACT When and why do suboptimal agricultural policies persist despite technical evidence highlighting alternatives? And what explains episodes of reform after prolonged periods of policy inertia? This paper addresses these questions by applying the Kaleidoscope Model for agricultural and food security policy change to the specific case of agricultural input policy in Zambia. Since 2002, the Farmer Input Support Program (formerly the Fertilizer Support Program) has been a cornerstone of Zambia’s agricultural policy. Over the years, however, many researchers have highlighted weaknesses in the program and proposed other options. Based on semistructured interviews with key stakeholders and intensive process tracing using media, donor, parliamentary, and research reports, this paper examines how the program initially began in 2002 and during subsequent periods of reform in 2009 and 2015. Based on the findings here, periods of reform for input support programs are most likely when there is a confluence of multiple factors. These include the emergence of a window of opportunity in the form of either a focusing event (for example, a food crisis) or an institutional shift (for example, a new president or new ruling party) that coincides with broad stakeholder support for empirically grounded alternatives, available material resources, and sustained commitment from politically important policy makers. Keywords: agricultural policy, e-vouchers, input subsidies, policy reform, political economy, Zambia v ACKNOWLEDGMENTS This research is undertaken as part of the Feed the Future Innovation Lab for Food Security Policy implemented by a consortium that includes Michigan State University, IFPRI, and the University of Pretoria. The authors gratefully acknowledge support for this research from the United States Agency for International Development (USAID) Bureau of Food Security, and the CGIAR Research Program on Policies, Institutions, and Markets (PIM), which is led by IFPRI and funded by CGIAR Fund Donors. The authors also thank the range of stakeholders in Zambia who graciously shared their perspectives and engagement in the FSP/FISP and agricultural policy process as well as Steven Haggblade and Nick Sitko for feedback on previous drafts and presentations. This paper has not gone through IFPRI’s standard peer- review process. The opinions expressed here belong to the authors, and do not necessarily reflect those of PIM, IFPRI, or CGIAR The paper has also been posted as Food Security Policy Project Paper No. 28 at http://fsg.afre.msu.edu/fsp/. vi ACRONYMS ACF Agricultural Consultative Forum ASIP Agricultural Sector Investment Program CAADP Comprehensive African Agricultural Development Program CACs camp agricultural committees CASU Conservation Agriculture Scaling Up CFU Conservation Farming Unit CPs cooperating partners CSO Central Statistical Office CSPR Civil Society for Poverty Reduction DACs district agricultural committees DACOs District Agricultural Coordinator Offices DfID UK Department for International Development EAZ Economics Association of Zambia EFSP extended food security pack EU European Union FAO Food and Agriculture Organization of the United Nations FDD Forum for Democracy and Development FISP Farmer Input Support Program FNDP Fifth National Development Plan FRA Food Reserve Agency FSP Fertilizer Support Program FSRP Food Security Research Project GRZ Government of the Republic of Zambia HIPC heavily indebted poor country IAPRI Indaba Agricultural Policy Research Institute IMF International Monetary Fund JASZ Joint Assistance Strategy for Zambia JCTR Jesuit Center for Theological Reflection KM Kaleidoscope Model MACO Ministry of Agriculture and Cooperatives MAL Ministry of Agriculture and Livestock MMD Movement for Multiparty Democracy MoF Ministry of Finance MoFNP Ministry of Finance and National Planning MPs Members of Parliament NAIP National Agricultural Investment Plan NAZ National Assembly of Zambia NCZ Nitrogen Chemicals of Zambia NUSSFZ National Union of Small Scale Farmers of Zambia vii PACOs Provincial Agriculture Coordinator Offices PF Patriotic Front PRBS Poverty Reduction Budget Support PRSP Poverty Reduction Strategy Paper R-SNDP Revised Sixth National Development Plan SIDA Swedish International Development Cooperation Agency SNDP Sixth National Development Plan UNIP United National Independence Party UPND United Party for National Development USAID United States Agency for International Development ZFA Zambia Fertilizers’ Association ZMW Zambian Kwacha ZNFU Zambia National Farmers’ Union viii 1. INTRODUCTION Since 2002, the Farmer Input Support Program (FISP) (formerly the Fertilizer Support Program, FSP) has been a major cornerstone of Zambia’s agricultural policy. In the intervening years, a large body of evidence has repeatedly pointed to concerns over the program, including its inability to achieve its stated objectives, the crowding out of other important agricultural investments, few opportunities for strengthening the private sector, a lack of transparency in the tendering process, and repeated late delivery of inputs (for example, Mason, Jayne, and Mofya-Mukuka [2013]; Mofya-Mukuka et al. [2013]; World Bank [2011; Xu et al. [2009]). Many of the weaknesses of the program have been repeated in the government’s own national development plans and agricultural strategies, including the National Agriculture Investment Plan (see MAL 2013). Nevertheless, successive Zambian governments have remained committed to continuing the FISP, even though it was originally intended to be only a temporary measure to last for three years. Therefore, this paper seeks to explain two main puzzles: Why has the FISP evolved from a temporary to an institutionalized component of the country’s agricultural policy, despite evidence of significant shortcomings? And when and why have major
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