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Zimbabwe: GMB Must Charge Fair Price for Maize
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 Published by the government of Zimbabwe |
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The Herald (Harare)
EDITORIAL
20 May 2008
Posted to the web 20 May 2008
Harare
IN times of high inflation, prices and incomes need to be frequently adjusted to maintain real value of both.
The Grain Marketing Board, with the Reserve Bank of Zimbabwe, has now declared that it accepts this position and has promised to review producer prices of delivered grain regularly.
This will ensure that farmers continually receive a fair price, at the moment $22 billion a tonne for maize.
GMB has also promised to pay cash for the first five tonnes delivered and will process the cheque or electronic transfer for the rest within five days.
All these moves should restore confidence in GMB among farmers and restore this critical parastatal to its statutory role as the overall manager of Zimbabwe's grain stocks.
In time, as farmers find grain production profitable and start growing more, it should be possible to look at more contract farming, with millers and other major consumers of grain contracting farmers to grow their requirements.
But even then the contracts will need to be approved and registered by the GMB and prices will have to follow GMB prices at the very least. The contracts will simply spread the load for inputs and cut back on transport costs.
But before that can happen we need to restore order to our marketing by getting the GMB back into the centre.
Zimbabwean farmers should be paid roughly world unsubsidised prices for their crops. We see no reason why a Zimbabwean farmer should be short-changed.
The country benefits since local production is not only more secure than imports, but will cost less in the end since the transport charges will be far, far less.
The next stage will be to erode and then remove the consumer subsidies. At the moment, GMB sells its maize at a huge discount to millers and this cannot be sustained.
The basic idea is laudable, to make maize-meal available to the lowest paid. But that suggests that Zimbabwe's minimum salaries are far too low.
It would make more sense to find the true cost of food and then ensure that workers can afford to buy the basics, even on the minimum wage.
It seems wrong to give the same massive subsidies to a cleaning woman and to the owner of the factory where she works.
Why should a man earning $1 trillion a month have subsidised food?
But this is what consumer subsidies do.
They make it possible for rich men to pay workers very little with the State, that is the taxpayers, picking up the tab for most of the costs of these workers.
In effect rich men have a double subsidy, one for themselves and one for their business.
If basic foods were sold at the production costs plus a modest mark-up, and if minimum wages were set so that the cleaning lady could buy enough of that food for her children, then both subsidies would vanish, to the immense benefit of the exchequer.
Also vanishing would be the black market. No one would try and corner a market in basic food if it was correctly priced and readily available.
A large chunk of our shortages are the result of people buying cheap subsidised food and then selling it across the border.
Subsidies at the moment are so large that good profits can be made even with the high costs of smuggling.
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GMB obviously cannot change the whole economy, but it can work out what would be a fair wholesale price for maize and maize-meal and feed this information to those who set minimum wages and organise wage negotiations so that these can, as soon as possible, start matching the cost of so basic a food.
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