12 September 2017

Zimbabwe: GMB Threatens Private Millers With Unfair Costing

The Grain Marketing Board's commercial milling division is threatening the viability of private millers amid revelations the parastatal is not paying for grain drawn from the strategic reserves. In a financial advisory note to the Government, the Grain Millers Association of Zimbabwe said access to grain at no cost by the national granary has resulted in GMB charging sub-economic prices for their products, hurting operations of private millers.

This corroborates what Finance and Economic Development Minister Patrick Chinamasa said in the 2017 National Budget that the commercial milling by the GMB had created an uneven playing field in the milling industry as the parastatal was not making payments to Treasury for maize drawn from the strategic reserve.

The GMAZ said if this continued, private millers would go out of business.

"The fact that GMB runs toll milling and access the maize at no cost gives it an unfair advantage over private millers," said GMAZ.

"While Government pays for maize delivered to GMB by farmers, GMB does not make any corresponding payment to the Treasury.

"It is our argument that the current commercial activities model has given GMB an unfair advantage over private millers as it has unfettered access to the strategic grain reserve.

"This has given GMB an edge over other millers as they can afford to set uneconomic prices for their products. Furthermore, GMB can afford to comfortably operate at a loss to the disadvantage of the private milling sector due to lack of controls on GMB's access to maize from the strategic grain reserve."

No comment could be obtained from the Grain Marketing Board by the time of going to print yesterday.

According to GMAZ, the GMB has managed to raise its market share to 37 percent and may continue growing it, and in the process, eliminating several private maize millers.

In the 2014 /15 season, the Government paid $26,5 million for 68 000 tonnes delivered while $83 million was paid last year. Minister Chinamasa said while the Government was paying for the grain, GMB was utilising part of the maize for commercial milling without paying the Treasury.

"This practice has created an uneven playing field in the milling industry from the perspective of millers who now bemoan that they are being driven out of the business," said Minister Chinamasa.

"This unfair competition hurts more where some millers would have gone into contract farming in the value chain. Government will require GMB to fully pay for the grain drawn from the strategic grain reserve for its commercial activities," he added.

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