Economic Association urges govt to keep maize prices high

Economic Association urges govt to keep maize prices high

The Economic Association (EAZ) says current high mealie meal prices should be allowed to get even higher as this encourages production.

Economic Association of Zambia President Lubinda Habazooka, a Russian trained economist writes on behalf of EAZ 👇

Kaunda’s National Economic Development plan was perfect. It supported both private and public businesses in a very successful mixed economy.

One big mistake was made! Mealie meal subsidies!!!!

Zambia unfortunately depends on maize as a staple food. This is very cumbersome for the country because government spends huge amounts of money on a single commodity by ensuring availability of fertilizer, seed and putting up reserves to buy maize for food security. The FISP program is one of the most expensive and deadly subsidy Zambia knows.

Unfortunately without FISP, our subsistence farmers won’t grow because they are over dependent on hand outs. Unfortunately they cannot graduate from FISP because it has become a drug. Abuse in the e-voucher system has made the whole FISP expensive. Some farmers sell the inputs they acquire through FISP!!! Some good farmers use it wisely.

Mealie Prices. While it’s advisable to subsidize the growth of maize to avoid hunger situations, it is tricky to artificially keep the price of mealie meal low. Mealie meal prices should grow at the same rate as the prices of other goods and services in the economy. If we brought down the price of mealie meal today to k60, we shall see mass shortages of the commodity because even those that grow their own maize will find no incentive to do so. And because our mealie meal will be very cheap, smuggling will be rampant as Zimbabwe, Malawi and Congo will find our mealie meal too cheap. Traders will find the arbitrage condition too good so they will buy cheaply in zambia and sell expensive abroad.

Maize is a political crop. But we should not make deadly decisions based on politics. The floor price for maize was increased by 100%!!! This is a welcome move. Farmers were abandoning maize growing because it had no profit. But after increasing the floor price of maize by 100%, we don’t expect mealie prices to remain the same. What incentive will the miller have to meal and sell you mealie meal and less than breakeven prices???

All participants in the value chain should be satisfied. Then again, prices of commodities never remain stable in any country. We are running an inflation of 8%, let prices grow organically also. We can’t distort the market!

We can’t allow subsidies of mealie meal as other people are calling for. That is being reckless. We shall sink the economy! Subsidies once brought our economy to a stand still in the period 1988-1991! Remember the coupons??? Someone had to pay for those coupons!!!

Mealie prices at the moment are following market factors. Let’s not politicize them. When we attach politics to mealie meal prices, we shall have no money for anything. Trust me!

The solution for household food security is to grow your own maize if you can’t afford shop prices. The other one is to diversify your household food. In the urban areas, that is being achieved.

Thanks

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