The economics of mealie meal price, by Naylor Kopakopa

With the depressed incomes coupled with rising mealie meal price, it is becoming increasingly difficult for families to afford to buy mealie meal.

While general inflation is rising world over, threatening economic growth, it appears in our case mealie meal inflation is rising faster than the general inflation.

In the past one year, mealie meal price has almost doubled while the total inflation is just under 13 percent. Food inflation world over has come about due ever rising production costs driven by high energy cost and Zambia is not an exception.

The situation in zambia is exarbated by the fact that neighboring countries were not spared from poor harvest of maize and we had to export to them.

The spirit of good neighboriness dictates that we consider our neighbours if we are better than they them. In his budget speech, the Honorable Minister of Finance confirmed that we had a good harvest except that we over exported. So what is driving mealie meal price apart from high production costs?

Assertions have been made that it is the increased maize floor price which is causing high mealie meal price, but then the price started increasing before the floor price was increased.

The other asersion is that our production is low, but how can the low production be the reason when we had produced enough only that we exported more than we should?.

To this effect proponents of low maize production as a cause of mealie meal crisis believe that with increased floor price, more people will be attracted to growing maize and the high production will reduce mealie meal price. But how can an increase in maize production reduce mealie meal price when the high price is not caused by low maize production?.

Yes it is always good to increase production but assertion that increased production alone will reduce our mealie meal price is an illusion. For high production to be effective in reducing mealie meal price, it must be so high to saturate the market in the neighboring countries where we export, but how big are those markets? How much capital is needed for that level of production,do we have that capital ? We do not have the capacity to saturate maize in the neighboring countries, so production, as good as it is, is not the answer to mealie meal price crisis.

The answer to the problem lies in export management. In as much we would like to be good neighbors and help our neighbors in need, it is not in our interest to over export, failing to leave enough for domestic consumption. Year in year out, the Zambian tax payers invest about eight percent of national budget towards maize production through FISP in exchange for affordable mealie meal.

However, the traders who export make the profit instead.The economy has not been growing fast enough, consequently businesses operating within the country can’t afford salary hikes for workers, without salary hikes in the midst of rising inflation, cost of living becomes unbearable and this is made worse if mealie meal inflation is at 100 percent when it is being subsidized by the tax payer.

Why have we continued subsiding the peasant farmers without investing in extension services so that the FISP becomes more productive?We can actually half the FISP budget and still get the same yield if we train our farmers. The other alternative is convert FISP into loans, then farmers will on their own invest in knowledge and take farming as a business.

Who is benefiting from FISP ? Remember, fertiliser and seed which are covered under FISP constitute more than 70 percent of maize production cost. After investing in maize production, a tax payer expects affordable and stable mealie meal price which is not happening, then what is the justification of pouring millions of dollars in the sector every year in the midst a financial distress the country is facing.?

The solution to high mealie meal price lies in export management,nothing else. It is a small investment we should take which is very beneficial to all of us except traders who are profiting from the chaos.

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