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Mealie meal price politics exposed

06 May 2020 at 15:39hrs | Views
The government of the Republic of Zimbabwe sat and instituted a price agreement with manufacturers of 6 basic commodities. This agreement was meant to ensure that the price of 6 basic commodities remains affordable and within the reach of the general populace who were under lockdown.

Mealie meal formed an integral part of the 6 basic commodities. Mealie meal is manufactured by Grain Millers who source maize from GMB.

GMB ignored the price agreement and raised the price of maize by 77.2%. Maize was 6 958 zwl and the new price is 12 330 zwl.

Millers are bound by a price agreement they entered into with the government. Unfortunately with their stocks depleting, the Millers will need to replenish their stocks and buy maize at the new price. The replacement costs will leave the Millers exposed to a 77% loss which is unsustainable.

The government needs to review the maize subsidy in line with the price movement effected by GMB. The price movement indicates a lack of communication and coordination within government. GMB raised grain prices without figuring out the effects of this move on the retail price of mealie meal.

GMB did not give the Ministry of Finance fair warning so that the ministry works out a new subsidy price and communicate this with the Millers.

The ministry of Industry is now exposed as the ministry brokered a major celebrated price moratorium. The Minister of Industry will now be left with egg on their face as the retail price of mealie meal has to be adjusted to meet the new replacement costs.

Small to Medium Millers will be the most affected by this price movement. Small Millers do not have adequate stocks and rely mostly on GMB supplies. The new GMB price will put small Millers out of business if the subsidy is not reviewed upwards.

The small Millers have remained quiet on the issue which affects their products and clients.

The Grain Millers Association have begun internal communication processes, though they have not issued a formal statement on the price adjustment by GMB.

Government controls the price of grain through GMB, government controls the price of maize meal through the grain subsidy and government should speak with one voice and move in one direction. Presidential Advisor Mr Shingi Munyeza recently stated that the biggest challenge in the new dispensation was policy inconsistency. The inconsistency seems to be playing itself out in the price moratorium saga.

How will retailers honor the price moratorium if government raises prices of the raw materials used in the production of the same goods whose prices you seek to control? The price agreement was negotiated in good faith. It seems government was merely laying an ambush for industry

Source - Nicholas Ncube
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