Govt increases maize producer price pushed by rising exchange rates

Harare – Government has increased the maize producer prices by 93 percent to $1 400 per tonne from $726 which will be payable based on the interbank market rate of US$1:$5.5.

Addressing journalists during a post-Cabinet briefing on Tuesday, Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa said the price increase came forth as Cabinet considered and approved that the GMB maize producer price of US$242 per metric tonne be payable to farmers in RTGS dollars based on the prevailing interbank market rate.

She, however, cautioned retailers against increasing the price of mealie-meal as the government maintained the unpopular price subsidy to millers which effectively is a form of price control.

“Cabinet is appealing to business people not to increase prices as the GMB buying price has no impact on the selling price of mealie-meal,” said Minister Mutsvangwa.

Government has been interfering with market forces so as to cushion the public from the ongoing price carnage amid threats of a major protest against the worsening economic environment.

In April 2019, government increased the price of grains and maintained the miller’s subsidy. Maize producer price was increased by 86 percent from $390 to $726 while wheat price was revised from $630 to $1089.69, which is an increase of 72 percent.

Soya bean and cotton producer prices were likewise adjusted from $610 and $455.9 to $918 and $1950 which are respective gains of 50% and 328% on the prior set prices.

The determination of the exchange rate however, seems unsustainable going forward as the RTGS$ continue to lose value on both the interbank and parallel market.

According to latest reports, the local currency is now trading at an exchange rate of US$1:$6 on the official interbank market.

The increase in food prices comes amid a dim outlook for maize production in the current year.

According to the latest crop assessment report commissioned by the Ministry of Agriculture, the 2019 harvest at around 750,000 tonnes will be 60 percent below an average of 1,900,000 tonnes achieved over the last 2 years.

According to Equity Axis research, this is expected to worsen the budget deficit by at least RTGS$700 million as the government needs to resort to imports to cover for the deficit in maize demand.

Equity Axis News

Raynold M

Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment.

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