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Monday, 18 August 2008

Food traders vs the people ?

Malawi's traders are apparently betting that maize prices will rise later in the year and are holding on to stocks, artificially pushing up the price at the tills for Malawian consumers. The government is not happy, and has promised to "clamp down on private traders hoarding maize at a time when people were in need of it, [and] would come up with a fixed price for maize to help poor households." Read more here.

6 comments:

  1. Government has been buying maize on the local market, initially paying K45 per kg ($0.31/kg), but is now spending K65 per kg ($0.45/kg) to fend off the private traders it is accusing of hoarding Malawi's staple grain.

    So wait. The government had to raise its purchase prices because the traders are paying more ?

    The traders are paying more but are accused of hoarding and causing a price rise ?

    This doesn't make sense.

    If the story was: "traders bought at low prices and refused to sell" you'd have a hoarding and artificial price hike story. But they're paying more.

    In any case, even if there is hoarding and speculation and if the supply is really much bigger than predicted, with maize being perishable, huge quantities will have to be dumped on the market at some point. And that will lower prices.


    I'm afraid the Malawi government is going through the motions.

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  2. This is where the Government should be more effective. EU style mountains of grain and lakes of wine could go some where in stabilising prices and ensuring that the people of Malawi and else where in the continent where food shortages are problem don't have to live through food shortages. Interestingly from the piece it appears farmers are colluding which is one way of achieving economies of scale and the benefits that come with them.

    ReplyDelete
  3. Anonymous,

    EU style mountains of grain and lakes of wine could go some where in stabilising prices and ensuring that the people of Malawi and else where in the continent where food shortages are problem don't have to live through food shortages.

    It would be a great start in truly developing African economies. The resulting food security will be a great effect on social stability. The surpluses can even help kick off the manufacturing industry.

    For instance, surplus maize can be turned into bourbon, sugar, starch and all kinds of end products.

    ReplyDelete
  4. Random,

    The man said:

    "We are suffering because of a liberalised economy, but we won't sit back and watch traders dictating prices to us. We are working on drastic measures that will make maize a protected produce and a property of the Malawi government,"

    I just don't see how they can make maize a "a property of the Malawi government". They may as well nationalise thing.

    ReplyDelete
  5. "Interestingly from the piece it appears farmers are colluding which is one way of achieving economies of scale and the benefits that come with them."

    Except that is anti-competitive...

    ReplyDelete
  6. I just don't see how they can make maize a "a property of the Malawi government". They may as well nationalise thing.

    If they nationalize, the farmers would be on their payroll. So they rather make the harvest "propriety of Malawi" so they can rob the farmers blind... to guarantee cheap food in the cities.

    They're going through the motions though.. I can't remember the last time a government admited there was a weak harvest without accusing someone of hoarding first.

    And like I said, if the traders buy at a higher price than usual, it's not hoarding.

    ReplyDelete

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