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(HERALD) Maize price deal sealed

Maize price deal sealed
Saturday, 06 August 2011 19:57
By Africa Moyo

THE Consumer Council of Zimbabwe (CCZ) has clinched an agreement with the Grain Millers’ Association of Zimbabwe (GMAZ) to ensure that the price of maize meal is not increased by profiteers in the wake of the reinstatement of duty on basic commodities.

Negotiations between the two parties commenced in earnest last Wednesday on the sidelines of the Buy Zimbabwe Campaign insignia launch in Harare.
A deal between the millers and the consumer watchdog, which has widely been criticised for being a toothless bulldog, was eventually sealed late last week.

In an email sent to CCZ executive director Ms Rosemary Siyachitema last week, GMAZ national chairman Mr Tafadzwa Musarara said his organisation would not seek to profiteer in the new dispensation brought about by the reintroduction of duty on imported basic goods.

“On behalf of the milling industry, we commit to you that, all things being equal, there will be no price increase of maize meal, as has been the case in the last two years,” said Mr Musarara.

The deal between the CCZ and GMAZ comes at a time when a fresh frenzy of “unjustified” price increases is sweeping across the country following the removal of duty on imported basic commodities such as cooking oil and maize meal.

Finance Minister Tendai Biti reinstated duty on some imported basic goods after relentless pressure from representatives of the manufacturing sector who wish to breathe life into the country’s literally comatose industry.

Industry had long clamoured for the reintroduction of duty on imported basic consumer goods with the hope that local products would be better positioned to compete with foreign goods that are produced at low prices and are consequently sold at relatively low prices.

Government waived duty on imported basic consumer goods early 2009 in a desperate bid to arrest acute food shortages that also resulted in spiralling prices where the goods were available.

However, while Government has been focusing on resuscitating local industry, which is grappling with a host of challenges including a liquidity crunch resulting in high borrowing costs, the Confederation of Zimbabwe Industries (CZI) started lobbying for the reinstatement of duty on imported foodstuffs so as to make local producers viable.

And faced with a catch-22 situation where it had to strike a balance between availing consumer goods at fair prices and reviving the local industry, Government opted to maintain the duty-free regime, at the same time sourcing cheaper credit lines for industry to increase capacity.

Minister Biti eventually succumbed to industry’s pressure to remove duty and announced the return of duty on imported foodstuffs such as maize meal and cooking oil late last month when he presented the Mid-Term Fiscal Policy Review statement.

Said Minister Biti: “The supply of most basic commodities by the local industry has significantly improved, hence I propose that the suspended duty in the remaining basic commodities be reinstated.

“The reinstatement of duties on maize meal and cooking oil will improve the value chain from the farmer to the industry through contract farming, increase capacity utilisation, stimulate local production of stockfeed and also enhance employment levels.”

Nonetheless, market watchers say while the manufacturing sector has welcomed the reintroduction of duty on food imports with glee, retailers have already increased prices of basic goods, raising fears that the ghost of inflation, although not in the proportions of 2008, will return to haunt the economy that was showing signs of recovery.

Ms Siyachitema has castigated the reintroduction of duty, saying it was ill-timed since local industry is struggling to boost capacity.

Some organisations have been pushing for the banning of imported foodstuffs to enhance local production, but GMAZ says while it supports the reinstatement of duty to help the local industry, “imports must be allowed to mitigate on deficit not to substitute local products”.

“GMAZ successfully managed to lobby for the reimposition of duty on maize meal in order to recreate market space for millers on the domestic market. The aim of duty imposition is to level the playground, discourage (and not ban) imports. Maize-meal imports, among other things, caused unprecedented job losses in the milling sector and negatively affected producer prices of maize.

“The 10 percent duty imposed by the Minister of Finance is consistent with the regional tariffs levied. In fact, the 10 percent duty on maize meal is the lowest in the region (if you are allowed to import).

“We, however, believe that imports must be allowed to mitigate on deficit not to substitute local products,” said Mr Musarara.-The Sunday Mail

Labels: IMPORT TAXES, MAIZE, NEOLIBERALISM, TAFADZWA MUSARARA

posted by MrK @ 7:14 PM