THE Millers Association of Zambia says current mealie-meal prices are justified because there was a sharp maize price shift.
Association president Andrew Chintala explained what caused the escalation in the price of maize, consequently translating into high prices of mealie-meal and other maize products.
“[There] was speculation in the market which may have led to some kind of panic buying for both the traders, millers and stock feed producers. There was some article alleging that the maize that was available on the market was only about 770 something thousand metric tonnes,” Chintala said on Frank Talk programme on Hot FM radio yesterday.
“[But] the country requires 1.9 million tonnes and if somebody tells you to say there is only 700, that would force you to go out there and be able to secure enough for you to be able to continue operating.”
He said what pushed “the situation to where we are today is the high price at which millers have been procuring the maize grain from the open market.”
“The biggest component in the production cost of mealie-meal is maize – which is a raw material, in this case. Other factors could be labour, human capital, the cost of packaging. You may recall that when we started the maize marketing season this year, we started at K2,200 per metric tonne. That’s what millers were paying the farmers, which translates to about K110 per 50 kg bag [of maize],” Chintala explained.
“Now, just about a month after the start of the marketing season, the prices of maize started escalating almost on a daily basis until we got to a place we were paying K185 per bag of a 50 kg of maize. You can see the price shift in terms of the raw material! So, this has actually pushed the price of the other by-products of maize – that is mealie-meal, chicken feed and other[s]…. So, in terms of justification, the prices that are obtaining on the market are justified because there has been what I could call an industry reaction.”
He added that it was not only mealie-meal prices which went up but “also chicken, pig feed and anything that has got a component of maize on it.”
“So, the prices are justified but obviously the concern for the industry was the rate at which these prices were increasing,” he said.
Meanwhile, Chintala clarified that the Food Reserve Agency (FRA) does not, “during this period” offload maize on the open market.
“When we start procuring, they are also buying because the mandate that FRA is given is that of procuring maize for strategic reserves. They are required to store about 500,000 metric tonnes of grain every year,” he explained.
“You may need to appreciate that before the start of the season, FRA had been offloading maize to some selected millers as well as school feeding programmes and other engagements that they’ve got. [That] means they were drawing from the stocks that they procured from the previous season.”
Chintala stressed that now that the maize marketing season was on, the FRA equally had to buy so that it could meet its strategic reserve requirement.
“So this is why currently millers are buying from the open market,” noted Chintala.