Zambia's Grain Stockpile Poses Fiscal Risk as Sales Lag Behind Record Purchases

Zambia's Food Reserve Agency is sitting on 3.1 million tons of maize—the largest grain stockpile in the country's history—and the numbers are beginning to look like a problem.

The agency set a modest target in May: buy at least 500,000 tons of maize from farmers to replenish the national reserve. By late August, it had already purchased more than twice that amount and kept buying through October. The total haul this season came to roughly 1.7 million tons, added to the 1.4 million tons left over from the previous year. At the prices FRA guaranteed farmers this year—K347 per 50-kilogram bag, or K6,940 per ton—the entire stockpile represents an estimated acquisition cost of about K21.3 billion, or roughly $1.1 billion. That figure does not yet include storage, fumigation, transport, or the cost of financing the purchase. For context, the International Monetary Fund had projected Zambia would spend K11.3 billion on agricultural subsidies for the entire year across all programs. FRA alone has now committed more than twice that amount to grain it must somehow sell.

The fiscal arithmetic is unforgiving. If FRA were forced to sell the entire stock at just 10 percent below what it paid for the maize, the loss would total K2.1 billion—exactly equal to the agency's entire annual budget before any of those additional costs are factored in. That shortfall would have to come from somewhere else in the government's finances, likely requiring additional budget transfers or further domestic borrowing at a time when Zambia is already managing significant debt obligations.

This is not the first time the agency has found itself in this position. In 2025, FRA again purchased far more grain than its budget allowed. The agency ran short of cash and borrowed K5 billion from a local bank, using the maize itself as collateral. The IMF, which was monitoring Zambia's economic program at the time, flagged the grain stock as a direct risk to public finances and asked the government to formally register it as a fiscal vulnerability. That IMF program ended in January 2026, removing the formal oversight that had been in place. The 2026 budget allocated FRA just K2.1 billion—enough to purchase roughly 300,000 tons at this year's prices. In May, Parliament approved an additional K26.3 billion in supplementary spending, including K7.4 billion for the Agriculture Ministry, partly to cover arrears from previous seasons and to finance continued grain purchases. That supplementary budget also authorized K5.75 billion in additional domestic borrowing.

The challenge now is moving the grain. The largest export deal announced so far involves Kenya's Baita Trading Company, which has agreed to purchase 540,000 tons—about 17 percent of the total stock. The price has not been disclosed and will apparently be negotiated tranche by tranche as the grain is delivered. Meanwhile, maize prices in Zambia have been falling as the new harvest reaches the market. Between July and August, prices dropped 12.7 percent, according to AGRA's Food Security Monitor, even as FRA continued buying at its guaranteed price to farmers. The gap between what FRA paid and what it can sell for is narrowing.

There are legitimate reasons for maintaining a larger grain reserve. Zambia experienced a severe drought in 2024 that forced the country to import maize. Weather forecasters have warned that strong El Niño conditions could bring below-average rainfall to parts of the country during the 2026-27 growing season, making a substantial buffer prudent. The government's concern is not merely about having enough grain; it is about the fiscal consequences of how that grain is acquired and financed.

A new 15,000-ton storage facility being constructed by the Zambia Air Force in Chinsali is scheduled for completion at the end of October, just weeks before the rainy season typically begins. How much of the stockpile FRA manages to sell before then, and at what price, will determine whether this record harvest remains primarily a food security asset or becomes another drain on the Treasury. The agency has until the end of the year to demonstrate that the grain can be moved and sold at prices close enough to cost recovery to avoid the fiscal consequences that nearly derailed the budget in 2025.