Subsidy on mealie meal benefits millers only-EAZ

Mon, 20 Feb 2017 13:21:57 +0000

 By BENNIE MUNDANDO

 Government decision to subsidize the price of maize sold to millers is no guarantee that consumers will benefit from such a move, the Economics Association of Zambia (EAZ) has said.

And the Zambia National Farmers Union (ZNFU) has described contracts which Government has signed with the Food Reserve Agency (FRA) and Grain Traders Association of Zambia (GTAZ) to reduce price of mealie meal as an ‘‘economic scandal which some individuals are using to defraud State coffers’’.

EAZ president Chrispin Mphuka said short-term interventions to bring down the price of mealie-meal were only exacerbating the problem as there was no guarantee that giving millers subsidy would automatically trickle down to the consumers.Dr. Mphuka said either milers will maintain the prices and make huge profits or retailers will continue to exploit the consumers by maintaining the retail prices as there was no proper monitoring mechanism in place.

“We are taken aback that while we have very little fiscal space, we have decided to subsidise consumption. The danger is that while Government thinks that it is addressing the problem of high prices for the commodities, it is creating even a bigger problem because there is no guarantee that the end-users will benefit from such a measure due to lack of monitoring,

“These short-term solutions are creating more problems in the sector. The only way out of this problem is by planning well so that farmers produce at a reduced cost and increase their productivity because by so doing, we are assured of reduced prices of mealie meal,” Dr. Mphuka said.

And ZNFU president Jervis Zimba charged that the subsidy contract between millers and grain traders was a scandal in which Government was misled.

“When we said there was need to cancel this agreement people never took us seriously. We now have a situation where Government is incurring a US $45 cost per tonne to enable millers to make exorbitant profits yet the intended beneficiaries remain exploited. This is not a mistake; it is a deliberate plot by some people to allow certain individuals make a fortune out of Government,

“If Zambians are dreaming of buying a 25 kilogramme bag of maize at K85 after believing lies from some people that it was attainable, then let them forget it because it will never happen,” he said

He said the cartels among milling companies were real and were helped by some people in senior positions who have continued to hold Government to ransom every year.

According to the contract terms, selected millers are offered maize at a reduced rate of US $220 per tonne from the market price of US $265, thereby getting a cushion of US $45 per tonne

A check in most selling points in Lusaka found that some milling companies have reduced prices by K5 only. A 25 kg bag of breakfast mealie meal from National Milling in Shoprite outlets in Lusaka is selling at K96.49 while Pembe and Superior Milling are selling at K91.69 and K 91.99 respectively.

In other outlets, mealie meal prices for a 25 kg bag of breakfast are ranging between K97 and K103 and this is contrary to Agriculture Minister Dora Siliya’s assurance last week that mealie meal prices would reduce to K85.