Running Head: EFFECT OF AGRICULTURE ON THE ECONOMY 1

Mutinta Siamuyoba

Effect of Agriculture on the Economy: A Case study of Zambia

GSB5011/Scientific Writing and Critical Thinking

September, 2020

Dr. Abubaker Qutieshat

8th November, 2020

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ABSTRUCT

The overdependence of a country’s economy on one sector could prove unreliable in the

future. Such, is true for the Zambian economy that has relied heavily on the mining sector for

several years, which has recorded huge fluctuations in its commodity prices due to it being

influenced by several external factors beyond its control. The 21st century has inevitably

enhanced the need to diversify economic development with agriculture, manufacturing and

services sectors. The research will focus on the impact agriculture has on the economy of Zambia

and how it’s economic contribution can increase the country’s Gross Domestic Product(GDP).

Phiri, J., Malec, K., Majune, S.K., Appiah-Kubi, S.N.K., Gebeltova`, Z., Maitah, K.,

Abdullah, K.T., (2020). Accentuates the relevance of the agriculture as a sector as well as its

capability to sustain the economy, improve the quality of life of the people of Zambia and

contribute to the GDP of the country. Agricultural is a vital element required for domestic

investments and economic improvements that generate significant revenue.

Gardner (2005, p. 29), in his article, highlighted that agriculture’s impact on the economy of

such as Zambia is not apparent as it should be. The overdependence of other industries for

economic development has diluted its importance and position as a huge contributor to economic

development. Several studies have shown that the effect of agriculture can be analyzed both

qualitatively and quantitative depending on the prevailing situation.

This research paper will seek to analyze agriculture’s effect on the Zambian economy based

on both primary collected and secondary data available which seeks to place agriculture as the

dominant contributor to economic growth of a country

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EFFECTS OF AGRICULTURE ON THE GROWTH OF THE ECONOMY

Agriculture plays a vital part in the growth of the economy in most emerging countries. Its

role in economic growth of a country is crucial as majority of the population of developing

countries highly depend on it for their livelihood.

In its report (Food and Agriculture Organization (FAO)., 2018), FAO, WHO, IFAD,

UNICEF and WFP jointly launched the state of food security and nutrition in the world which

marked the beginning of a new phase in monitoring the progress made towards achieving a

hunger free world with fewer to no cases of malnutrition which is within the framework of the

sustainable development goals 2030(SDGSs).

Among the greatest economic development challenges of the 21st century; eradicating

poverty, slowing down undernourishment, and improving quality of life of the ordinary people

living in the Sub-Saharan African (SSA) area. The SDGs incorporates primarily plans of ending

poverty. However, the past years recorded at least 153 million people above the age of 25years

which constituted over 26 percent of the population in the region (Phiri, J., Malec, K., Majune,

S.K., Appiah-Kubi, S.N.K., Gebeltova`, Z., Maitah, K., Abdullah, K.T., 2020).

…….Food and Agriculture Organization (FAO). (2018). accentuates the requisite to achieve the

sustainable development goals of ending poverty: ending global hunger: safeguarding good

health: guaranteeing decent employment and economic growth. The report also suggests that

improving the agriculture sector should safeguard food availability and contribute towards the

growth of the economy of the country, which is an essential policy goal in supporting the SDGs.

Several studies indicate that food production has the potential to be a facilitator for fast-tracking

economic growth. According to World Bank, (2020), Zambia is described as a growing middle-

income economy with an estimated real gross domestic product in 2018 recorded at US$ 1322.
EFFECT OF AGRICULTURE ON THE ECONOMY 4

In an article from Hilchey, Cornell University, Gillespie Jr., Kay, and Smith (2008, p. 1), it

is suggested that agriculture’s positive impacts on the rural economy is increasing. The economic

indicators which help staff, planners and economic developers actively promote agricultural

economic development are the income and employment multipliers. However, agriculture

benefits the local communities at a non-economic level through recreational access, and

aesthetically-pleasing countryside. Increased awareness of these benefits may help local leaders

to more fully understand the importance of local agriculture and its role in successfully

implementing policies and strategies for sustaining agriculture in communities.

Zambia’s economy has long depended on the mining sector for its growth. However, with

plummeting copper prices from its all-time high of US$8,985 per metric ton in July 2008 to

US$2,811 per metric ton in December 2008 (African farming and food processing, 2010). It is

clear that the overdependence of the mines has inhibited the growth of the agriculture and that of

the economy.

Several economic development experts have disputed the relative importance of various

divisions as the key source of economic growth over the years. Studies have explored the

contributing aspect of agriculture to the economy and the improvement that recommends it as an

instrument of economic growth influence whereas some economists have stressed the importance

of agriculture in the growth of the economy (Khan, W and Ansari, S.A, 2018, P.1029).
EFFECT OF AGRICULTURE ON THE ECONOMY 5

LITERATURE REVIEW

Research has highlighted agriculture as a facilitator for speeding up the rate at which the

economy develops. Rostow, W.W., (1960) proposes that development of a country’s economy is

shown through the five progressive stages of development:

 Traditional stage: This is the first stage of economic development where, the economy

is reliant on agriculture for its growth. This stage can be referred to as the agriculture

stage as the majority of the development of the country at this stage is achieved through

exports of a country’s produce to other countries and government policies are focused on

developing agriculture.

 Preconditions for take-off stage: This stage of economic development includes the

organization of production factors which include: raw materials, employment, investment

and advances in technology.

 Take off stage: The economic take off stage is mainly characterized by short spaces of

radical changes in industrial organization, technical and infrastructure facilities. There is

a 10 percent increase to the investment of national income as the economy becomes more

vibrant due to changes in technology and the political areas

 Drive to maturity: Modern methods or skills are adopted and used in several sectors of

the economy. At this stage it is very crucial as to utilize modern methods and

technologies to help improve the longstanding notion and smoothen transition into the

innovative concepts. Rostow, W.W., (1960), highlights that this stage is defined a period

where society adopts the modern skills effectively.

 High mass consumption: The final stage of economic growth depicts a fully established

and self-sustained economy. All goods, services, necessities, securities and luxury are
EFFECT OF AGRICULTURE ON THE ECONOMY 6

produced within the economy itself. It is this stage that the economy is fully reliant; high

national income is recognized; advances in research development; innovations and skills

is realized; optimal utilization of resources; best quality of products and services

developed in the country; and high per capita income is achieved.

Phiri et al. (2020, p. 3) emphasize the importance of the agricultural sector and its ability to

sustain the Zambian economy and improving the quality of life of its people. It is apparent that

agriculture poses as a vital attribute for achieving local national savings and improving the

economy as it generates significant revenue.

Irrespective of its apparent benefit to the economy, in the event of employment migration

from agriculture to more productive non-agricultural areas, agriculture development would be

negatively affected by such an occurrence (Gardner, 2005, p. 23).

Phiri et al., (2020), analyzed the economy of Zambia which previously depended heavily on

their mining division, which became influenced negatively by the lack of proper direction of one

of the largest export material, copper whose prices saw a decline in the mid-1970s. This

highlighted the importance of exploring other contributing aspects of the economy, and the

agriculture sector being a likely alternative to other contributors to the gross domestic product

(GDP) growth (Phiri et al., 2020).

Besides over dependence on the mining for economic development, Zambia’s economy is

faced with the challenges of the degeneration of the industrialized sector, limitation in property

rights of citizens, amplified levels of corruption, and insufficient infrastructure development.

However, despite playing a significant role in the economy, the agriculture sector is not

exploited fully. Farmers in the developing countries are still poor despite making a relatively

huge contribution in the economy.

EFFECT OF AGRICULTURE ON THE ECONOMY 7

Estimating the significance of an industry is important and useful for many reasons.

Paramount among them is that it allows decision-makers to better understand the effects of their

decisions on an industry as well as on industry linkages. People derive their income and some

sense of worth from their employment. They pay taxes and make purchases with a portion of

their income. These activities affect still more people whose livelihoods depend upon this

spending of income. (Lamie, D.R. n,d)

Food Agriculture and Natural Resources Policy Analysis Network (FANRPAN) and

Mucavele (2009) Highlighted agriculture as a key source of inputs for other manufacturing

activities. As a result the intermediate demand for farming products absorbs 70% of major

agriculture production. That is, almost three quarters of agro-farm production is utilized as input

for other businesses/segments. This compares to 45% of the output of other industries that is

used in the form of inputs. This agrees with the assumption that agriculture’s links with the other

sectors of the economy are vital but still remain under-utilized.

Indaba Agricultural Policy Research Institute (IAPRI), Chapoto, Chisanga, and Kabisa

(2017), identifies agriculture as a key sector in unlocking economic growth and it offers the most

support for Zambia’s rural economy.

The report shows that almost 48.9% of the population in Zambia depends heavily on agriculture,

mostly through smallholder production in order to earn a living, employment and the sector is

estimated to contribute 4.8 percent to the gross domestic product(GDP) in 2017 (Indaba

Agricultural Policy Research Institute (IAPRI) et al., 2017).

In their report, Indaba Agricultural Policy Research Institute (IAPRI) et al., (2017)

emphasized that agriculture be recognized as a priority area in the improvement of the economy,

a factor in achieving sustainable growth of the economy of Zambia, and as a way of reducing
EFFECT OF AGRICULTURE ON THE ECONOMY 8

poverty, which is outlined in the Second National Agricultural Policy (SNAP) and the Seventh

National Development Plan (7NDP). The growth of agriculture Zambia is astounding as the

country is uniquely gifted with resources that positively influence agriculture development,

which if harnessed fully, would empower the country to become a major food manufacturer in

the Eastern and Southern African regions.

The World development report 2008, highlights two major regional challenges: In much of

Sub-Saharan Africa, agriculture is a strong option for stimulating growth, overcoming poverty,

and enhancing food security. Agricultural productivity growth is vital for stimulating growth in

other parts of the economy. But accelerated growth requires a sharp productivity increase in

smallholder farming combined with more effective support to the millions coping as subsistence

farmers, many of them in remote areas. Recent improved performance holds promise, and this.

HYPOTHESIS

The research seeks to explore how agriculture affects the economy and to what extent does it

influence the growth of the economy. The research will focus on the exploring agriculture as a

sector and the link that exists between agriculture and the subsequent growth of an economy or

the lack thereof. What contributory factors of agriculture influences the economy and to what

extent will be reviewed in the research. The significance of agriculture policies and their ability

to ensure food availability, increase growth of resources and the reaffirmation of Zambia as the

major food source in the Southern African region and African will be highlighted in the research.

The null and alternative hypothesis will be tested throughout the research:

Hypothesis (H0): Agriculture has no significant impact on the advancement of the Zambian

economy.
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Hypothesis (HA): Agriculture has a significant impact on the advancement of the Zambian

economy.

RESEARCH METHODOLOGY

Research methodology is the systematic knowledge of the best way of setting or carrying out

research on a preferred topic or interest. Methodology plays a vital role in any research, as it

seeks to show the greatest possible outcome.

The effect of agriculture on the economy of a country such as Zambia is not apparent as it

should be. The overdependence of other industries for economic development has diluted its

importance and position as a huge contributor to economic development. Several studies have

shown that the impact of agriculture can be analyzed both qualitatively and quantitative

depending on the prevailing situation.

This research paper will seek to analyze the contributions food production has made to the

Zambian economy quantitatively based on secondary data available and seek to place agriculture

as the dominant contributor of growth in the economy of the country

Food Agriculture and Natural Resources Policy Analysis Network (FANRPAN) and

Mucavele (2009) in its report it suggests that agriculture as a contributor to economic growth has

been undervalued in both performance and contributory power due to the use of invaluable data

such as the number of harvest in a year, sale of raw materials which are mainly crops and

livestock, to measure its contribution to the economic market share. The value addition generated

by agriculture as a serious contributor throughout the economy is not reflected in the basic

statistics pertaining to agriculture in most countries. The techniques traditionally utilized to

ascertain the contribution agriculture makes also ignores its role in to measure agriculture’s
EFFECT OF AGRICULTURE ON THE ECONOMY 10

contribution also overlook its role in meeting the increasing demand for eco-friendly goods and

services from urban centers.

To correctly measure agricultural performance and contribution in the economy, it is

imperative that we take into account its effects on the distribution of income generation among

rural and urban families, employees and employers. In order to carefully, examine the

relationship between food production and poverty alleviation strategies, it is imperative to access

whether there is a disparity in the distribution of income generated by rural occupants.

Social Accounting Matrices

Food Agriculture and Natural Resources Policy Analysis Network (FANRPAN) and

Mucavele (2009). Suggests using Social Accounting Matrices (SAMs) to obtain an estimate of

the Real Value of agriculture in the economy. SAMs proposes an accounting framework which

can analyze the different structural links between food production, its consumption and the

distribution of income generated.

The Social Accounting Matrices (SAM) approach is necessary to take advantage of the

backward and forward linkages that are key elements in the realization of the real value of

agriculture.

Evolutionary Method

According to the paper (GORLOV, KRIVOROTOVA, DOTDUEVA,

SYROMYATNIKOV, & LITVIN, 2018, p. 17) which stresses the use of scientific cognition

method of research which depicts the structuring of epistemological process. There are several

methods to identifying organizational structure and levels of demonstration. GORLOV et al.,

(2018, p. 17) expressed that, the most accommodating with the current state of economic
EFFECT OF AGRICULTURE ON THE ECONOMY 11

principles is the evolutionary method, which acts as a general scientific tool for theoretical

research.

Based on their study (GORLOV et al., 2018, p. 17), they distinguished four levels of

demonstration of the evolutionary method:

 First level – based on the understanding of the phenomena of the surrounding world,

relating to the subject of the study by the people;

 Second level –it includes concepts, which without studying would make it impossible to

ensure the development of a particular scientific route;

 Third level – this forms the representations necessary for various areas of scientific

research;

 Fourth level – a method is developed for handling the development of the scope in

question that is, the agricultural sector and its interconnection with the external

environment

Data Group

Required data will be collected from primary and secondary sources. In order to study the

agriculture’s contribution to economic development, the research sample population will be

Lusaka province, Central provinces and Southern provinces.

Primary Data: This data will be collected through schedule interview and discussion. The

questionnaire or schedule will be used to collect information.

Secondary Data: This data will be collected from government offices, co-operative marketing

organization, research institution and reputed rich libraries and web sites on internet
EFFECT OF AGRICULTURE ON THE ECONOMY 12

SUMMARY

Food Agriculture and Natural Resources Policy Analysis Network (FANRPAN) and Mucavele

(2009) Emphasized that agriculture is an important source of inputs for other production

activities. In fact intermediate demand for agricultural products absorbs 70% of primary

agricultural production. That is, almost three quarters of agricultural production is used as an

input for other industries/sectors. This compares to 45% of the output of other industries that is

used in the form of inputs. The link between agriculture and the economy though relevant, is

mostly underestimated.

Agriculture is crucial in unlocking the economic growth potential of Zambia and providing

major support to its rural economy. Zambia’s agricultural growth potential is astounding but

requires very tough decisions to be made for it to fully harness its potential.

Zambia Agriculture status report 2017, emphasizes the Improvements of rural livelihoods as

crucial to realizing broad-based reductions in poverty and improved eco-friendly results in

Zambia. Enhancing smallholder agricultural productivity; expanding agricultural markets and

trade; improving natural resource management; and expanding the resilience of vulnerable

households to external shocks are all relevant in improving rural livelihoods.

EFFECT OF AGRICULTURE ON THE ECONOMY 13

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African farming and food processing. (2010, February 11). Zambia’s challenges. Agragex.

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