Government can’t control mealie meal prices – Haabazoka

Government can’t control mealie meal prices – Haabazoka

By Malawo Malawo

DR LUBINDA Habazoka says the best way government can reduce mealie meal prices across the country is to ensure that there is a stable macro-economic environment.

And Dr Habazoka says solar-powered hammer mills on their own cannot help to lower mealie meal prices.

A 25 kilogramme bag of breakfast mealie meal is currently being sold at between K82 and K120 across the country.

Dr Habazoka, a senior business lecturer at the Copperbelt University, explained that commodity prices in a market economy like Zambia could not be controlled by the government.

“The issue of mealie meal prices is quite contentious in Zambia and unfortunately, Zambia is a market economy and so, when you look at millers, they go and buy maize from the open market – they buy from farmers and they also buy from the FRA. So, if a milling company basically is buying maize from the FRA at a reduced price, it means that government is subsiding. Given the fact that the price for farm inputs like maize seed, labour for growing the maize and fertilizer has gone up, you expect the farmer to also adjust upwards the price of maize for them to remain in business,” Dr Habazoka said in an interview.

He noted that when milling companies buy maize directly from the farmers, they do so at market reflective conditions.

“The miller is then going to sell mealie meal at prices that are reflecting market conditions. But since mealie meal is a very vital product for Zambia, the government does not want to see the price of mealie meal going up because it (mealie meal) is tied to votes,” Dr Haabazoka observed.

“But when you look at the prices of our goods and services, they have gone up by over 100 per cent and so, why should the price of mealie meal stay the same when it’s also a good sold in the shops and also confined to the laws of supply and demand?”

He added that the government, as a mechanism to lower mealie meal prices, should either subsidise the farmer or the consumer by offloading cheaper maize to the millers.

“Toll fees have been increased from K10 to K20 for a small vehicle and so, why shouldn’t mealie meal prices go up? By increasing the toll fee to K20, maybe the government is looking at [the fact that] the K10 has no worth for them. So, why shouldn’t millers sell mealie meal at a price that is reflecting market conditions? Actually, the correct market price for mealie meal should be around K150 because that’s basically what [current] market conditions are saying,” Dr Habazoka explained, adding that the main reason maize and mealie meal smuggling was still rampant in Zambia was lack of a cost-reflective local market.

“If you go to external markets, you’ll make some profits. So, the best way of keeping the prices of mealie meal lower is to keep the macro-economic fundamentals stable; reduce taxes, increase the value of the kwacha by reducing government borrowing and also bring in macro-economic stability [because] businesses are supposed to plan.”

And Dr Habazoka argued that solar-powered hammer mills could not reduce prices of mealie meal.

“The problem with solar-powered mills is that they are not the farmers. Solar-powered mills do not grow maize, they do not buy fertilises. Solar powered-mills, basically, depend on the supply from the farmers. So, as a farmer, if a KG of maize is going to remain stagnant for the next 10 years when I’m being asked to pay more Pay As You Earn, I’m being asked to pay more for fuel, I’m being asked to pay more for sugar, shoes and vehicles, I won’t grow maize but I will jump to soya beans, like most farmers have done in this farming season. We are talking about a market economy where people are supposed to make a profit to give them an incentive, otherwise millers are going to close down. Why operate a milling plant when you cannot make a profit from it?” wondered Dr Habazoka.