Zambia Forecasts Record Corn Harvest and Slowing Inflation
Zambia is expecting a record corn harvest, which, according to government statements, could significantly impact the containment of rising consumer prices and create conditions for lowering interest rates.
This is reported by AgroReview
Recovery from Drought and Its Economic Impact
It is estimated that farmers in the country have harvested 3.66 million tons of corn this season — more than double last year’s harvest of only 1.5 million tons. This was announced by acting Chief Government Statistician Sheila Mudenda during a speech in Lusaka. The rapid growth in production was made possible by increased rainfall, which allowed the southern African country to recover from the devastating drought caused by the El Niño effect — one of the strongest in the last century.
Last year’s drought caused significant damage: more than half of the cultivated areas were affected, and food prices soared, leading to expensive imports to stabilize the domestic market.
Price Dynamics and Impact on Inflation
According to estimates, in April, the price of cornmeal, from which Zambia produces “nshima” — a popular thick porridge that is a staple food during most meals — increased by 10.2% year-on-year. Food and non-alcoholic beverages account for over 50% of the country’s inflation basket, so price fluctuations directly affect the inflation rate. At the same time, since March, there has been a slowdown in the rate of increase in food prices — the first time in the last year.
“The government forecasts that by the end of the year, inflation will return to the central bank’s target range of 6 to 8% for the first time since May 2019.”
Lobbying organizations for farmers have urged the authorities to promptly liberalize the regulated export of corn to prevent a potential collapse of prices in the domestic market due to an oversupply of products.
Despite positive trends in agriculture, Zambia’s energy sector continues to suffer from last year’s drought. Water levels in hydroelectric dam reservoirs remain critically low, and the largest of them — Kariba — will require several more years of abundant rainfall to recover. It is worth noting that over 80% of electricity in Zambia is generated by hydroelectric power stations.