Maravi

Private sector, market will decide appropriate price for maize – Tembo

COMMENT - I say, pass a law to make all maize traded through ZAMACE, which would maximize 'price discovery'.

Private sector, market will decide appropriate price for maize – Tembo
Written by Chiwoyu Sinyangwe in Chisamba
Monday, May 25, 2009 3:11:08 PM

ZAMBIA Agriculture Commodities Exchange (ZAMACE) has wondered why there is so much controversy surrounding the announced FRA maize floor price of K65,000 per 50 kilogramme bag when the market is flooded with many players.

And Ministry of Agriculture chief agricultural economist Hargreaves Sikwibele has said frequent change of ministers has delayed the implementation of the agriculture marketing Act.

ZAMACE executive director Brian Tembo said it was not justifiable that the Food Reserve Agency (FRA) floor price could be used as a yardstick for national maize price because there were many other players in the country that could buy the staple crop at even higher prices.

Tembo told delegates last weekend during the ZAMACE capacity building workshop sponsored by Common Market for Eastern and Southern Africa (COMESA) in Chisamba that FRA was a small player that could not influence the national price.

“We have close to two million tonnes of maize for this marketing season and FRA is only buying 110,000 tonnes which is just about 10 per cent of our total output and they are buying outside the line of rail. So I don’t see how that can be the national price,” Tembo said. “Who is going to buy the remaining 90 per cent along the line of rail and at what price? It is the private sector and the market will definitely decide its appropriate price.”

Tembo also defended ZAMACE’s use of the United States dollar in daily trading contrary to the regulations of the Bank of Zambia (BoZ).

“ZAMACE does not only conduct its business locally. For instance, we recently closed a deal for maize for a Zimbabwean firm and the commodity came from South Africa...so our use of dollars is to ensure we use the most convertible currency internationally. And besides, for local transactions, we can easily convert,” he said.

Tembo also said ZAMACE, which has been in existence for about two years and is one of the pioneer agriculture commodity exchange markets in the Southern Africa region, was looking at enhancing integrity and transparency in the manner commodities were trading both involving commercial farmers as well small holder farmers.

And Sikwibele said the agriculture marketing Act that would streamline the marketing of agriculture commodities in the country was currently being drafted into a bill at Ministry of Justice and was expected to be tabled during the next sitting of the National Assembly.

“This Act has been delayed for about four years now because each time there is a change of minister means that we have to re-present the document for him to approve...but sometimes, before he could finish, he is removed and so the process stalls,” said Sikwibele.

Labels: BRIAN TEMBO, HARGREAVES SIKWIBELE, MAIZE, ZAMACE

posted by MrK @ 2:14 PM