HARARE – Government has set new producer prices for commercial crops for the 2021/2022 marketing season, despite the local currency’s instability on both the official exchange market and the parallel market.
A circular by the Grain Marketing Board dated 13 April shows that the price of sugar beans has been set at ZWL90,000 per metric tonne (MT), groundnuts and sunflower ZWL40,000/MT, nyimo ZWL$40,000/MT, popcorn ZWL42,000/MT, cowpeas ZWL32,500/MT and Sesame seeds ZWL70,000/MT.
“The prices are to be implemented with immediate effect,” reads part of the statement.
The move is likely to hurt the market as the local currency has continued to depreciate while inflation is at over 200%.
Some analysts have been calling on government to pursue free market principles, but without much success as various policy decisions can show. Just recently, government gave GMB absolute autonomy to control the sale of soya beans as well as absolute rights in the export of the product to outside the country.
Such measures are likely to discourage farmers from venturing into the production of such crops, thus resulting in acute shortages. This scenario is akin to gold production where government through its agencies has stuck to certain retention thresholds, which in turn has been blamed for promoting side marketing.
While a regulated market has its advantages including promoting the health and safety of consumers as well as the environment, as government would argue, the challenges it poses are detrimental to economic growth and discourages investment.
The economy is currently characterised by a huge government bureaucracy, and bureaucracy by its very nature, stifles growth.
Free market economics is not perfect, but the amount of regulation government is undertaking – at a time the economy needs a quick start following decades of economic mismanagement seems to be mistimed.
The key is to strike a balance between free markets and the amount of government regulation needed to protect people and the environment. When this balance is reached, the public interest is protected and private business flourishes.
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