(NEWZIMBABWE) Wheat, flour imports hurting millers

Wheat, flour imports hurting millers
12/11/2011 00:00:00
by Tafadzwa Musarara

THE primary duty of any government in the democratic world is to afford its citizenry capacity for the acquisition of goods and services that meet their basic needs. Staple food tops the list.

Since last quarter of 2008, the government of Zimbabwe liberalised importation of basic foods, in particular maize meal and wheat flour. This move was meant to rescue the dire situation that obtained then. It must be recorded that, since introduction of multiple currency, local millers have not increased prices of maize meal and flour as confirmed by the NIPC and the Central Statistics Office.

The nation, from 2009, has been experiencing incremental growth in maize output and the local millers have been dutifully supplying the local market with staple food despite facing unfair and steep competition from cheap imports. The demand of wheat flour, mainly baker’s flour, has gone down in the last three years due to availability of other alternative starch products on the market.

Currently estimated national monthly demand for flour is 17,000mt (from +32,000mt in 2007) against an installed current capacity of 42,000mt. Flour imports are mainly coming from Turkey and Mozambique and our country import regime system is painfully weak in enforcing pre-shipment inspections and import permit management. Imports, by their nature, must serve to augment local production not to substitute it.

From 2008, the milling industry has seen closures of more than 240 millers, mainly black-owned small to medium scale millers. In 2007, the Zimbabwe milling industry had the highest miller per capita in Africa, which is essential in attaining food security and also in firmly placing the staple food production in the hands of the indigenes.

Continued uncontrolled imports of wheat flour are not only going to hurt millers but the revival of the national livestock because the by-products of wheat milling will be too low to meet national stock feed requirement. Surely, we cannot import wheat offals from Zambia for our livestock farmers. The sustained growth in the local millers has an economic multiplier effect to packaging, transport, confectionary and livestock industries.

Zimbabwe is probably the only country in Africa that does not have duty tariff on wheat flour and it is also heavily reliant on foreign supplies of staple food more than other countries which are at war. Staple food is not just any other commodity but of national security concern. It is a must for every country to build and protect its own food industry.

It is uncontested that the economic situation has improved since 2008, when the importation dispensation was granted. There is no need whatsoever for the country to continue importing pre-packed salt and rice when our own packers are shut. The country continues to experience disappearance of its once popular local brands to the extent that our retail shops shelves have become a true replica of South African retail chain stores.

There is need to discourage the importation of pre-packed rice and salt and only allow bulk imports for onward packing by local millers or packers. This will also boost our packaging industry that will provide more than US$8 million per month worth of packaging. In God‘s name, we can’t have rice grown in Vietnam, packaged and branded in South Africa and then consumed in Zimbabwe. These are low hanging opportunities that can be tapped by our own SMEs and create employment and business opportunities. We need to restart such low skill value additions activities.

The milling industry has demonstrable capacity to import adequate wheat into the country (up to 300,000mt per annum) and mill it. Secondly, should our wheat and maize milling output increase, prices of flour and maize will definitely stabilise if not go down. The milling industry is not calling for a total ban of wheat flour and pre-packed salt and rice but a re-imposition of a duty on imports in order to nurture the local industry so that by the time the SADC zero duty era comes, local industry will be strong enough to competitively supply local and export markets.

The evil of these imports is that they are landing in Zimbabwe cheaper than they sell in their country of origin. For example, 50kg of bakers flour in Mozambique costs US$38 to their local bakers, but is sold for US$32 to Zimbabwean bakeries. However, if output decreases (for whatever reason) in these foreign source markets, they immediately stop exports to Zimbabwe in order to ensure that their own requirements are met. Consequently, this will immediately create a supply gap – and that’s very dangerous.

Most importantly, there is need to re-create a viable and secure market for locally-grown wheat and maize. The milling industry must be allowed to be viable enough to carry out long term contract farming arrangements with all our able farmers. This will immediately impact positively to the seed and fertiliser industries.

To achieve this, the milling industry is calling for a 20% duty on baker’s flour, 40% duty on pre-packed flour and 30% duty on pre-packed rice and salt in the 2012 budget due to be announced shortly.

Tafadzwa Musarara is the chairman of the Grain Millers Association. You can contact him on e-mail: musarara@yahoo.com