On the 11th of February, the Ministry of Finance and Economic Development issued a press statement as follows: “In December 2019, Government introduced a roller meal subsidy pegged at ZWL$50 per 10kg bag in order to protect the vulnerable groups. However, the wide gap between the market and the subsidised price has created undesirable arbitrage opportunities for unscrupulous players, resulting in the market and supply distortions. In view of the above, I am pleased to announce that Government has reviewed upwards the subsidised price from ZWL$50 to ZWL$70 per 10kg bag of roller meal against the prevailing market price of the product. Implementation of the new subsidy price is with immediate effect. Government will announce a strengthened targeting system in due course such that deserving vulnerable citizens as intended by the subsidy policy benefit.”
The Supply Side Predicament
As much as that price of ZWL$70 is reasonable, the real issue is on the supply side. Is roller meal pegged at that price tag readily and easily available to the vast majority who are vulnerable? Obviously not! Roller meal is obviously more readily available on the black market. On that black market one has to part with way over twice the subsidised price. Thus at the end of the day the newly gazetted subsidized price does not bring any relief to the general populace. If the roller meal that is pegged at ZWL$70 is in abundant supply there would definitely be no need for the black market. This is an all too familiar story currently characterising the money supply side. Due to the limited money supply on the market, it becomes expensive to access it. This is basically what is happening to the roller meal.
Huge Discrepancy Between New Price And Parallel Market Price
Another consideration to make is that of the new price tag in comparison to the black market price tag. In Zimbabwe it is commonplace that when loopholes to profiteer present themselves people hop onto them. Since the black market offers much more alluring prices then roller meal meant for the official market will find its way onto the black market. Lately, especially in Harare, there have been scenes of long winding queues of people seeking to buy roller meal.
Several people have lamented how they have had to literally resort to rice due to the unavailability of roller meal. This might not necessary mean that roller meal really is not available (though of course to some degree it is unavailable). Rather it could be a result of roller meal now being sold unscrupulously through the backdoor to the black market or at black market prices. Overall, the lowness of the official subsidized price fuels black market activities even more due to the wide gap between the prices.
The Real Source Of The Problem
All these issues I have been discussing earlier are at best secondary or tertiary issues. The real issues emanate from the farming side before anything else. It boggles the mind that a nation endowed with large tracts of arable land heavily relies on maize imports. So dire is it to the point that government last year had to legalize private grain imports so as to complement its own efforts. Obviously grain imports solve some issues whilst creating several more. For instance, importation calls for the use of foreign currency which is quite scarce locally. Our agricultural sector needs to be redressed if we are to emerge out of these roller meal issues. The areas that need attention in that sector are various and some of them are quite contentious (but they must be addressed). How many people right now own idle pieces of land? Countless! How many people right now do not have adequate financial and material resources to grow grain? Countless! How many still heavily rely on natural rainfall to do their farming activities? Countless!
These are some of the areas that must be addressed. Especially now when we still have ample time before the next farming season, these issues must be resolved. It is no secret that climate change is real and that people cannot solely rely on natural rainfall at all. Irrigation, greenhouse farming, vertical farming and a whole range of advanced farming methods need to be used nowadays. The use of drought-resistant crop varieties access to financing and the like – all these must be addressed. Farm ownership must be audited and ensured that it is upon merit and proven capability to deliver. I mean, come to think of it, a press statement for the review of the price of mealie-meal is indicative of deep-seated economic challenges in a nation.
