Cartel Pricing

Zambian millers owe the people of this country an explanation.

Their decision to increase maize prices by up to 20 percent last month has raised the ire and consternation of most Zambians including the Zambia National Farmers Union, which has called the hike “totally unjustified”.

What is most intriguing is the manner in which the millers chose to impose a near-uniform price increase across the board regardless of the capacity of the mills involved.

This is called price fixing and anywhere else this would attract severe sanction including prosecution because it defeats the time tested operation of the market.

It is common knowledge that millers operate at different production levels using various levels of mechanization.  Therefore a blanket uniform increase does not make any sense if anything it begs the question and therefore demands an explanation.

We agree entirely with the ZNFU President Dr. Nguleka who has questioned the motivation for the increase, in view of the ample stocks of maize in the county.  There is no shortage of maize and market prices are applicable.  However, as usual most millers were content to wait for the Food Reserve Agency to collect all the maize then hopefully buy at discounted rates.

Sadly but perhaps  happily for the farmer, the demand for maize this year is quite high therefore prices have responded accordingly, putting the lazy millers in a bind.  This is exactly how a market should work.  It responds to demand and supply which the millers now want to subvert by threats and blackmail.

The price of maize meal can only rise if there is sufficient justification in terms of transportation, milling and handling costs that should have increased.  But we know that transport costs have remained relatively stable because the cost of fuel has remained constant.

Handling is a fairly fixed cost that does not change dramatically over the years.  This leaves the cost of milling which is being blamed for most of the increase.  But the justification is disingenuous.  On one hand some millers claim that down time due to load shedding has curtailed heir full production potential thereby imperiling their profitability.

Others have suggested that the increased cost of energy is responsible for the price hike.  Others are also suggesting that a shortage of stock has forced them to buy expensive maize grain.

None of these reasons excuses justifies the increase.

That is why the Consumer Competition Protection and Commission must undertake an investigation into price fixing because this is exactly what the millers have done and the necessary pieces of law must visit them to send a lesson in he market that price fixing and collusion to the detriment of the consumer will not be accepted.

It is very sad that it had to take the President and Government in general to intervene and demand an explanation for the maize meal price hike when such institutions as the CCPC are instituted and paid to perform this task.

This failure is monumental and those responsible must be held accountable because they are sleeping on the job while innocent people suffer.

Time has come for all arms of governance to rise to the challenge to perform their tasks and therefore promote the well-being of their country.




Categorized | Editorial

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