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Sunday, 22 June 2014

Maize Market

This chart (click for clarity) provides a great summary of how the maize market is organised in Zambia at the moment. It is easy to see from where market power lies. The interesting question of course is how the situation is likely to evolve this year given the government's intention to by only 500,000 tonnes. 

1 comment:

  1. Hi cho, the plan by the government to buy maize to the tune of 500,000 T is a good one as this will ensure that the fiscal deficit is not widened. This will leave us with about 2.9 MT which the private sector could buy and later sell to both the domestic and export markets. Domestically we shall require about 2MT i.e 1.5MT human consumption and 500,000T animal feed and beverages. Care must be exercised with the quantum for exports and as we can see from the above statistics this should not exceed 900,000T as doing so would plunge the country into a food crisis.

    On the issue of mealie meal prices obviously with the increase in floor price from K65 to K70 we expect an increase of about 8%.This means a 25KG of mealie meal which was fetching K65 will now cost about K70 as millers would pass on the additional cost of K5 (K70-K65) to the consumers. It is interesting to note that most small scale farmers (93% bumper harvest production) may not benefit from an increase in the floor price even when it is pegged at K90 per 50Kg because they are net buyers i.e they sell less quantity of maize than what they buy for consumption.The ultimate winners for a higher floor price are the 7% producers(commercial farmers) .


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