Minimum corn price could cause major shortages

August 18, 2014 05:49 AM

Zimbabwe’s Grain Millers’ Association is challenging the government’s initiative, made earlier this month to set minimum prices, because it’s problematic and will lead to food shortages, the group said.

The GMAZ and Zimbabwe’s Oil Seed Traders’ Association filed a joint constitutional application in the country’s courts Aug. 15 challenging government’s right to set minimum prices, Tafadzwa Musarara, GMAZ chairman, said by telephone in the capital Harare today.

The minimum price, set on Aug. 8 and backdated to April, will render all contracts void and violates Zimbabwe’s constitution, the association said. The government initiative set the price for corn at $390 a metric ton and also regulates prices for wheat, rapoko and millet. Corn (CBOT:ZCU14) prices were between $290 a ton and $350 a ton before the change, Musarara said. Corn has fallen 10% this year on the benchmark Chicago Board of Trade.

“If contract farming is disenabled, as is the case now, corn production will be way below national requirement and serious food shortages for the staple crop will occur, which will lead to serious starvation and malnutrition,” Musarara said. Contract farming refers to output based on agreements between buyers and producers.

The new law requires all companies and individuals buying grain to register with Zimbabwe’s Agricultural Marketing Authority for a $1,000 fee, he said.

“Zimbabweans who are in the informal business of rearing even 10 chickens, goats, pigs, beef or any other micro business will simply close down if forced to register,” Musarara said. The law will “over-regulate the day-to-day lives of millions of Zimbabweans who eke a living out of the grain value chain.”


Raising the price of corn will create inflationary pressure and raise the prices of milk, corn meal, eggs and other foodstuffs by over 20%, he said.

Corn prices in the southern African nation began falling after farmers planted 18% more of the crop before this year’s harvest, the Famine Early Warning Systems Network, partly funded by USAID, said May 12.

Zimbabwe is expected to produce about 1.3 million tons of corn in 2014-15, up from 800,000 tons in 2013-14, according to the U.S. Department of Agriculture.

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