Tuesday, April 02, 2013

Mealie-meal price hike will improve maize availability - IMF

COMMENT - Increasing availability, by reducing demand. More 'good advice' from the IMF. Have they paid compensation to the thousands of Malawians who died after the government 'monetized' food reserves? After all, if they ran out of maize, they could alwayw borrow and import. Much more cost efficient than just storing maize, wasn't it?

IMF, MEALIE-MEAL, ROBERT SICHINGA,

Mealie-meal price hike will improve maize availability - IMF
By Ernest Chanda
Tue 02 Apr. 2013, 14:01 CAT

THE IMF says government's recent increase of mealie-meal prices to cushion transport costs incurred by millers will help improve the availability of maize across the country.

Last Tuesday, agriculture minister Robert Sichinga announced that the millers would now sell a 25-kilogramme bag of mealie-meal at KR55 while the same quantity of roller meal would cost between KR35 and KR37.
Responding to a press query, International Monetary Fund country representative, Tobias Rasmussen, however said to fully capture the available potential, it would be important for the country to let market forces work.

"In the present situation, mandated pricing and limits on exports have kept Zambian maize prices well below those in neighbouring countries. This has led to smuggling and is discouraging production. Fixed pricing has also impeded incentives to distribute maize to remote areas where transport costs are high," Rasmussen said.

"In this context, the recent upward adjustment to the retail price was a necessary step that should help improve the availability of maize across the country. Maize marketing has long been a source of practical difficulties and frequently very large costs to the Zambian government."

He however cautioned that high maize prices could be a burden to consumers.

Rasmussen said as a net exporter of maize, Zambia as a whole stood to benefit from high maize prices.

"Allowing farmers to take advantage of high prices abroad will increase their income and promote investment, stimulating rural development and creating much-needed jobs. The challenge, of course, is that higher prices of maize are a burden on consumers, especially the poor," said Rasmussen.

"These problems could, however, be overcome by targeted intervention to help vulnerable groups, e.g. in the form of direct cash transfers. Encouraging production and consumption of other foodstuffs would also help. But to fully capture the available potential, it will be important to let market forces work. While allowing the market to operate freely would lead to a step up in prices, the impact on inflation would only be temporary and the country's total income (GDP) would increase."

Last December, President Michael Sata directed millers to sell a 25-kilogramme bag of mealie-meal at not more than KR50.

But following widespread shortages of mealie-meal, the government through agriculture minister Robert Sichinga said the millers would now sell a 25-kilogramme bag of mealie-meal at KR55 while the same quantity of roller meal would cost between KR35 and KR37.

And Millers Association of Zambia president Allan Sakala said the country could have avoided the mealie-meal shortages if the government had listened to the millers during the first negotiations.

The Copperbelt and most parts of rural Zambia have been experiencing mealie-meal shortages, a situation the millers blamed on transport costs.

Meanwhile, Sichinga disclosed that a harvest of more than two million metric tones was expected from the 2012-2013 farming season.

He said out of that, about 363,000 metric tonnes would be sold to neighbouring countries and the World Food Programme.

"Zimbabwe has approached the country to sell to them 150,000 metric tonnes. It is not yet concluded but we are in the process of doing that. Tanzania has asked for two lots; the first lot was 29,000 metric tonnes. They've come back and asked for another 60,000 metric tonnes. So in total we are talking about 89,000 metric tonnes," he said.

"Malawi had requested for a 100,000 metric tonnes, they are in the process of agreeing on 35,000 metric tonnes as the first batch and they may revert back if they should need any additional ones depending on their circumstances as they go towards harvest. The World Food Programme has asked for two lots, 4,000 metric tonnes to deal with challenges in Congo DR and they've also asked for another 20,000 metric tonnes."

Sichinga, however, assured that the sale of maize would not negatively affect the local food security.



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