Zimbabwe: Wheat and maize producer price increase

JOHANNESBURG, 27 March (IRIN) - From the start of the new marketing season on 1 April, Zimbabwe's farmers will benefit from a significant increase in the price of wheat and maize, Agriculture Minister Joseph Made announced on Wednesday.
The producer price of maize, sorghum and millet will rise to Zim $130,000 (US $157) per mt from Zim $28,000 (US $35) and the pre-planting price of wheat has been increased to Zim $150,000 (US $182) from Zim $70,000 (US $85).

"As this is a pre-planting price, it is a signal to farmers of the commitment government has of ensuring viability in wheat production. Farmers will therefore start the wheat production season with the assurance that this price will be reviewed," Made said.

He noted there would be no change in the price of the government-controlled Grain Marketing Board (GMB) selling price to millers and the maize price will remain at Zim $9,600 (US $12) per mt and wheat at Zim $29,500 (US $36).

"The government's intention is to contain the price of flour, maize meal and bread so that it is affordable to consumers," he added.

George Hutchison, general manager for commodities in the Commercial Grain Producers Association, said the move would encourage farmers to take their harvests to the GMB, the official buyer in the country and would give farmers enough to pay for their inputs and make a small profit.

"Because of food shortages, a lot of maize is being retained by [mainly communal] farmers who are keeping it for their own use," he told IRIN on Thursday.

"Commercial farmers' maize production is right down - they have produced maybe 100,000 mt this year," Hutchison said. "This year the majority of maize was produced by small-scale communal farmers. If the government hadn't increased the prices, very little would go to the GMB."

According to the latest Famine Early Warning Systems Network (FEWS NET) report, most of the current maize crop is performing badly due to poor rainfall and the lack of inputs. Crops are expected to be 20 percent less than last year.

FEWS NET estimated that Zimbabwe would have to import between 840,000 mt to 1.3 million mt of maize to fill the estimated pre-harvest deficit for the 2003/04 marketing season, while deliveries of existing stocks from the GMB throughout the country were erratic.

Hutchison cautioned that the pre-planting wheat price increase, though significant, might not be enough to spur an increase in May's plantings.

An increase in wheat production is important this year after last year's dismal crop and subsequent shortages.

"It is an expensive crop to grow. It's a winter crop and needs full irrigation. The increase should have been around Zim $200,000 (US $250) and the current price is still not enough of an incentive," Hutchison explained.

However, the optimism generated by the producer price increase was tempered with concerns over where the fiscus would find the money to subsidise the consumer price.

The Zimbabwe government is currently battling an economic crisis that has left it struggling to procure basic supplies like fuel due to serious foreign exchange shortages, and its debt arrears preclude further International Monetary Fund lending.

Economist John Robertson said that although the government's low consumer price appeared to be a relief for consumers, in reality only a few well-connected people would access the commodities at the lower price. Due to shortages the average consumer would have to "negotiate in the back streets and pay three times that price", he alleged.


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