Deregulation of the Maize Marketing System of Swaziland and Implications for Food Security

Recent shortfalls in the supply of maize in the Kingdom of Swaziland have exacerbated the country's growing food insecurity and led to fresh calls for full deregulation of the maize marketing system. The proponents of deregulation believe that it eliminates inefficient production and service units by transferring resources to their best alternative uses. While the theoretical foundations for that position are not questionable, no studies have to date explicitly investigated the effects of the current arrangements and the potential effects of full deregulation. This paper reports on a study that examined the welfare effects of the regulation of the country's maize industry and considered the likely impacts of full deregulation of the industry. Using a partial equilibrium model, the study established that the current market arrangements for the maize industry are distortionary and make the maize marketing system of Swaziland highly uncompetitive. The results show that high efficiency losses result from the misallocation of productive resources and that these have been rising over the years. Consumption deadweight losses were also shown to be equally serious and put at risk the attainment of food security for the generality of the Swazi population. The paper sees deregulation as an important practical step to improve the competitiveness of the maize industry and enhance food security through creating the basis for more effective management of the internal maize distribution channel in Swaziland.