Impending Maize Price Hikes

IMPENDING MAIZE PRICE HIKES On 25 April this year, Premier Milling Company announced a 19% increase in the price of maize meal which is to take effect on 1 May 1995. The price increases take place at a time when the single channel marketing system is being abolished. This will mean that the price is no longer set by the Maize Board and the Minister of Agriculture, but is set through direct negotiations between buyers and sellers. While the changes to the marketing system are to be welcomed they do occur in a situation of a severe drought and rising international prices. The ANC, SACP and COSATU Alliance is in favour of reduced controls in agricultural commodity marketing which have tended to favour large scale producers at the expense of especially poorer consumers. In the long term we believe that de-regulation will lead to a more stable and affordable price. However, in the short term, especially in the context of maize shortages due to the present drought, the transition could cause sever instability. Therefore there is a need for interim measures. The very low summer maize crop as a result of this drought could result in raw maize prices increasing by up to 30% and the price of maize meal could accordingly rise by up to 25%. Not all of these prices can be expected to occur immediately, because some maize stock has been carried over from 1994 based on the 1994 price from the Maize Board. The Tripartite Alliance wishes to express its grave concern about the impending price increase particularly since this affects the poor most severely and accordingly calls on the government to do whatever possible to lessen the impact on poor consumers. In particular the tripartite alliance calls for: •

•

•

The Minister of Agriculture to review the use of surplus funds carried from levies on the 1994 crop, and to make levies available to stabilize the price of maize for human consumption in the coming season, rather than paying levies to commercial farmers as an "agterskot" as has been suggested in a press statement by NAMPO; Consideration to be given to the removal of the tariff to be imposed on the importation of maize in this year of shortage. These measures will sustain consumption of an affordable product and will minimise job losses in the industry. In a situation of shortage and de-regulation the possibility of speculation and profiteering exists. We are not convinced that the announced increase is warranted and therefore the Alliance further calls for: Millers and farmers to do everything necessary to ensure the increase in maize meal price is kept to the absolute minimum. This should include thorough investigation of the possibility of investigating blending white and yellow maize as a way of lowering maize meal prices.

Finally, the Alliance calls for a Maize Forum consisting of producers, processors, consumers and government to be formed as soon as possible so that this vital basic food stuff can be produced, processed and sold in an effective manner so that price increase and the impact on the poor can be minimised. Issued by the Department of Information and Publicity PO Box 61884

Marshalltown 2107 2 May 1995