28 December 2011

Zimbabwe: Move to Protect Grain Producers Hailed

THE Government has continued to make strides in ensuring that grain producers improve on their capacities. Local flour milling companies have potential to meet demand, subject to the availability of wheat.

The duty-free importation of flour, which was the prevailing regime, however, had the consequence of discouraging local production of wheat and by-products of the milling industry, resulting in higher costs of importation of stock-feeds.

Finance Minister Tendai Biti in his 2012 National Budget announcement, proposed to introduce customs duty on wheat flour to support local wheat producers.

"In order to enhance the viability of the milling industry, as well as encourage local production of wheat, I propose to introduce customs duty on wheat flour at a modest rate of 5 percent, with effect from January 1, 2012.

"The marginal increase of duty on flour should not translate to a higher price of bread as millers are expected to import wheat duty free.

"Government will, therefore, continue to monitor the price of bread to ensure that there is no abuse," said Minister Biti.

Since the last quarter of 2008, the Government liberalised importation of basic foods, in particular maize meal and wheat flour. This move was meant to rescue the dire situation that obtained then.

Zimbabwe, from 2009, has been experiencing incremental growth in maize output and the local millers have been dutifully supplying the local market with staple food despite facing unfair and steep competition from cheap imports.

The demand of wheat flour, mainly baker's flour, has gone down in the last three years due to availability of other alternative starch products on the market.

Currently, estimated national monthly demand for flour is 17 000 tonnes (from over 32 000 tonnes in 2007) against an installed current capacity of 42 000 tonnes.

Flour imports are mainly coming from Turkey and Mozambique and the country's import regime system is painfully weak in enforcing pre-shipment inspections and import permit management.

Imports, by their nature, must serve to augment local production not to substitute it.

From 2008, the milling industry has seen closures of more than 240 millers, mainly black-owned small to medium-scale millers. In 2007, the Zimbabwe milling industry had the highest miller per capita in Africa, which is essential in attaining food security and also in firmly placing the staple food production in the hands of the indigenous.

Grain Millers' Association of Zimbabwe chairman Mr Tafadzwa Musarara applauded the move by Government to introduce customs duty and warned of greater ramifications had the prevailing situation been allowed to continue.

"Continued uncontrolled imports of wheat flour are not only going to hurt millers but the revival of the national livestock because the by-products of wheat milling will be too low to meet national stockfeed requirements," he said.

Prior to the proposal by Minister Biti, Zimbabwe was probably one of the very few countries in Africa that did not have duty tariff on wheat flour and is also heavily reliant on foreign supplies of its staple food.

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