eBusiness Weekly
Business Writer
Stock feed industry experts have questioned Government’s decision to exclude importers of maize from accessing foreign currency from the official auction system for imports saying the move will put pressure on the exchange rate which has pass-through effects on inflation.
This week Cabinet resolved to lift the maize import ban to facilitate imports by private players to meet excess demand from millers and stockfeed manufacturers.
The decision to lift the import ban came after maize deliveries to the Grain Market Board (GMB) of 987 367 tonnes of maize came short of expected deliveries of 1,8 million tonnes resulting in supply gaps in the domestic market.
The milling industry and stock feed manufacturers are allocated 45 000 metric tonnes and 30 000 metric tonnes of maize monthly, respectively, but the allocations seem to have come short of meeting requirements amid increased demand.
“In light of increased demand for maize, Cabinet resolved to lift the maize import ban to facilitate imports by private players with free funds,” Information, Publicity and Broadcast Services Minister Monica Mutsvangwa announced during a post-cabinet media briefing on Tuesday.
While the move to allow imports is welcome and is a tacit admission that the country does not have adequate maize supplies, it is the decision to only allow imports from “free funds” that have been questioned.
Agricultural Economist Dr Reneth Mano questioned why maize which he described as an essential raw material for manufacturing stock feed “should be banished from the RBZ-managed auction”.
Dr Mano said the livestock sector is presently sustaining 100 percent self-sufficiency in meat and table eggs and potentially set to progressively cut dairy imports by 75 percent over the next 18 months just by getting the feeding diets of dairy herds right on small/medium-sized dairy farms.
Any challenges in accessing feedstock, will either threaten supplies of meat, table eggs and dairy products or result in price increases for the same.
Dr Mano would rather authorities prioritise allotting foreign currency from the auction system to essential raw materials such as maize. “Why would the policymakers overseeing the auction system prioritize imports of biscuits and sweets, onions, and baked beans from South Africa for auction allocation of cheaply priced forex over imports of maize for the stock feed and livestock industry?” Dr Mano queried.
While the RBZ has since affirmed its position that economic players can legally transact in both the US dollar and local currency, importers are not yet in a position to generate adequate foreign currency to meet all import requirements.
To cover the forex gap, importers rely on the foreign currency auction system or the expensive parallel market.
Leaving exporters to fend for themselves will push up prices, according to Dr Mano.
“What will happen to the parallel market rate and blended exchange rate companies use to price locally produced consumer goods with high import content should stock feed traders and dealers go hunting for US$13 million free funds this month to import 45 000t of maize from Zambia?”
Trigrams Investments economic analyst Walter Mandeya concurred with Dr Mano and said the move to lift the import ban on maize without a corresponding mechanism to accommodate these imports through the auction system is a recipe for chaos.
“Whilst the hope is millers and stock feed manufacturers will exhaust local privately held maize stocks before resorting to importation, the truth is the supply gap will require the country to import a large number of grains before the current season’s harvests and the costs of doing this outside the formal system could have unintended inflationary consequences as increased costs get pushed through the supply chain to consumers.”
He however called for better coordination between government and stakeholders.
“If the country produced 2,8 million as estimated and only 987 367 tonnes of maize was delivered, government should allow these groups to freely trade before resorting to importation.
“I think farmers should be allowed to put their excess grain through the commodity exchange as long as their obligations to the state through land taxes are cleared and the farmer has no outstanding obligations to GMB or on registered contracts,” Mandeya suggested.
He said increased productivity in the livestock sector, evidenced by the high demand for stock feeds is actually an encouraging sign that the authorities need to work hard to promote.
Agreeing with government which encouraged the milling industry and stock feed manufacturers to enter into contract farming for uninterrupted supply of their grain requirements, Mandeya said the Government should match grain farmers requiring financial support with livestock farmers “through contracts administered under the Agricultural Marketing Authority (AMA) through which local grain output can be boosted saving the country the much-needed forex”.
Some industry players however feel such a move will put a strain on companies’ balance sheets. Moreover, there is risk in partnering farmers without land title making it difficult to recover investments if the farmer is disposed of.
