The Government may have no choice but revisit its intention to subsidize maize consumption as it may have to support purchase of relief maize for drought stricken areas of the country.
Early maize yield forecasts paint a very gloomy picture. The erratic rainfall which has characterized this rain season has wrought serious damage to maize in many parts of the country.
Although no official statement has been issued by the Government it is certain that the bumper harvest of 3,350,000 metric tonnes of maize in 2014, resulting in a surplus of 1,152,505 metric tonnes will not be attained this year.
If anything the country will suffer a shortfall that will be severe in many parts of the country especially in Southern Province where the rain has failed totally.
It may indeed be true, as the Minister of Agriculture and Livestock, Mr. Given Lubinda may have stated in Parliament that the country still has sufficient stocks to meet domestic consumption requirements with a significant surplus for export.
The official national strategic reserve for Zambia is supposed to be 500,000 metric tonnes but we doubt whether this takes account of our extended markets that are beyond the borders of this country.
The Minister stated that the Food Reserve Agency (FRA) had 1.281 million metric tonnes of maize stocks and that the private sector also had over 156,000 metric tonnes of maize therefore providing sufficient stocks for export. We have some reason for doubt.
The Minister was discussing the issue in the context of stabilizing maize meal prices, which he said, were not as a result of insufficient stocks of maize in the country, but rather as a result of other production related factors, including purchase price of maize, the cost of milling, transportation, logistical and financing costs and demand and supply forces in Zambia’s neighboring countries.
In this regard and in view of the fact that the majority of Zambians depended on Nshima as a staple food, n the Government intended to stabilize mealie meal prices by ensuring that the Food Reserve Agency (FRA) made maize available to the private sector at K76 per 50kg bag and has called on millers to maintain the wholesale price of Roller Meal at no more than K44 per 25kg bag and Breakfast Meal at not more than K61 per 25kg bag along the line of rail.
This action means that the Government is intervening in the market by making the FRA an active player in the maize and food politics of the country, with the attendant demand for subsidy to keep the prices stable.
The intention is definitely noble, but the impact may be less than salutary.
By forcing a price on FRA the Government is basically eliminating the participation of private buyers who may not be able to buy and transport the maize less than K76. They would then rather buy from the FRA which, as a parastatal, has the advantage of Government support.
The Minister himself admitted that K61 per 25kg bag of Breakfast Meal and K44 per 25kg of Roller Meal were not uniform prices “but, rather, the maximum prices”.
There is no way, short of intruding, penal sanction in price control circumstances that the Government will compel retailers or indeed millers to sell at any given price. Therefore any attempts to do so will harm the market even more by introducing parallel “black market” pricing.
The best the Government can do as he did in Parliament is to appeal to retailers across the country to “stick to the recommended retail margin of K3 per 25kg bag of either Roller or Breakfast Meal so that they pass the benefit of the price reductions on to the consumer.”
This appeal to goodwill does not work, the market does.
Therefore there is need for the Government to re-examine the subsidy policy in line with the developing situation which clearly shows that a deficit will arise and those most affected will need to be supported with relief maize for which they will be unable to pay the going price.
Rather than later, it is better that a policy decision is made after an examination and assessment of the current and expected stock positions.