Zimbabwe: Consumer watchdog warns against maize price increase

BULAWAYO, 2 May 2007 (IRIN) - The Zimbabwean government has raised the price of scarce maizemeal by almost 600 percent to stimulate production, but a consumer watchdog is warning that it will make the staple food unaffordable.

Agricultural minister Rugare Gumbo announced this week that the retail price for maizemeal would go up by 570 percent to support a 680 percent increase awarded to maize farmers.

The official Herald newspaper quoted Gumbo as saying that the state monopoly, the Grain Marketing Board, would now pay maize producers Z$3 million (US$120 at the parallel market exchange rate) per metric tonne (mt), up from Z$52,000 (about US$2) per mt, and sell grain to millers at Z$3.1 million (US$124) per mt to "stimulate maize production to levels of national sufficiency in terms of food security".

As a result, the official retail price of a 5kg bag of maizemeal soared from Z$3,200 (US$0.12) to Zim$21,874 (US$0.87), an increase of 583 percent. This is in line with maize prices on the parallel market, where the commodity is readily available.

"For the price of maizemeal to go up by such a high percentage is unheard of," said Comfort Muchekeza, a spokesman for the Consumer Council of Zimbabwe (CCZ).

"It spells doom for consumers, who are already battling with inflation of 2,200 percent and a [monthly] consumer basket of about a Zim$1 million (US$40). It's actually a blow that will send many consumers tumbling, especially considering that wages are low and prices of other consumables continue to soar almost on a daily basis."

Most families with six members consume a 20kg bag of maizemeal every month, which will now cost Z$78,988.57 (US$3.15) instead of Z$11,800 (US$0.47), while average salaries range between Z$200,000 (US$8) and Z$500,000 (US$20) a month.

"The increases will definitely push up the required amount of money a family needs to spend on basic foodstuffs per month. We realise that many families are living in abject poverty and could barely even afford the previous prices," Muchekeza added.

Gumbo defended the increases, saying they were meant to cushion farmers and cover a deficit that has sent alarm bells ringing in the southern African country.

"We know the bearing it has on consumers, but there is absolutely nothing we can do about it. We realised, after increasing the producer price for maize grain, that there was need to balance the scale by increasing the price of maizemeal," Gumbo told IRIN.

"We hope farmers will take advantage of this lump-sum offer to venture into maize grain production to feed the country. We are currently facing a deficit, and for the perennial shortages to go away we need to empower our farmers."

Consumers told IRIN the increase in the price of their staple food was a slap in the face. "I earn less than Z$200,000 (US$8) and have a family of five. The current food basket stands at about Z$1 million (US$40) and already I have difficulties providing for my family. Now that maizemeal costs this much, I really don't know how we will survive; now we need the grace of God," said Nonsikelelo Dube, in Bulawayo, Zimbabwe's second city.

Economic analyst John Robertson concurred with the CCZ and consumers, pointing out that while the increases were a windfall for farmers, they were a nightmare for consumers.

"Obviously farmers are happy, but what is most apparent is that consumers are the most affected. The increases in both grain and maizemeal will help push inflationary pressures that will lead to more suffering for the masses," he told IRIN.

The government has already declared 2007 a drought year and the United Nations Food and Agriculture Organisation and the World Food Programme are undertaking an assessment of the country's agricultural system and food aid requirements.

This year's maize harvest is expected to be less than 600,000mt, only about a quarter of the country's annual national requirement of 2.4 million mt.