Wednesday, October 20, 2021

Rains fail to tame escalating prices of staple food

Local consumers should not expect reduced food prices soon even as many parts of the country received adequate rains as per the weatherman’s predictions.

Costs of consumer goods such as maize meal are expected to rise as much as 30 percent between December 2017 and February 2018 according to the Botswana Maize and Wheat Millers Association.

This means that if today a consumer buys 12.5kg bag of Bokomo maize meal at P35.95 they should prepare to pay about P12 more for the same product between this month and February next year. The upward movement puts the new price of Bokomo maize meal at about P52.   

The Botswana Maize and Wheat Millers Association Chairman, Nkosi Mwaba explains that regional prices on maize continue to drop as the South African Futures Exchange (SAFEX) pricing structure factors in various market forces such as the bumper harvests experienced as a result of good rains and favourable weather conditions. The maize crop pricing structure by local farmers in that regard seems to contrast that of SAFEX

“This caution comes about as a result of local millers being forced to take up local maize crop at a price higher than the current landed maize prices derived from SAFEX,” said Mwaba.

According to Botswana Agricultural Marketing Board (BAMB), SAFEX is used as a benchmark for prices of crops in the region. “Producer Prices are such that they have to be at par with the prevailing market prices for crops in the region since local produce competes with imports at the market place,” cites BAMB.

Bokomo Botswana, a local company which began its operations in 2003, produces maize meal, flour and sugar from raw materials sourced both locally and regionally.  Given that Bokomo Botswana sources its raw materials from local farmers to produce maize meal consumers can as a result anticipate the price at which they buy this product to hurt their pockets into the New Year.

The price differential suggests that local millers, such as Bokomo Botswana, could prefer sourcing maize meal raw materials from countries such as South Africa and Zambia over local farmers. Mwaba however guaranteed that local millers will continue to procure all the maize produced by local farmers, either directly or through the Botswana Agricultural Marketing Board (BAMB) provided that they sell their maize crop at a price as close as possible to SAFEX prices among other conditions. Millers produce between 100,000 and 120,000 metric tons of maize meal (including samp) per annum and consume up to 150,000 tons of white maize annually.  This production level is sufficient to supply maize meal in excess of local market demand, indicated Mwaba.

“If the rules of commerce are applied and an open, free and competitive market system is allowed to prevail, millers are confident that farmers will be enabled and capacitated to grow to a point of self-reliance within the local supply chain.  The farmer will be guaranteed a stable market by the millers and the consumers will be guaranteed a quality finished product at competitive prices.  This is a critical step toward attaining food security within the economy of Botswana,” said Mwaba. The Association expressed that it stands against the imposition of dictated non-market related pricing structures that are imposed by Government and State Owned Enterprises without balancing this act with subsidies and/or other instruments to normalise and allow market forces to prevail freely.

Earlier in the year Mwaba had reported an expected relief in food prices, in particular of maize meal. He had expressed a positive outlook for 2017 because of the insistent rains that were observed which as a result suggested a surplus of maize crop as was also projected by South Africa.  “In the event of a surplus, we may see excess white maize being shifted to animal feed. Botswana will receive its full supply of maize from South Africa in this scenario. Botswana consumes just over 100 000 tons of maize per annum,” Mwaba had said. With 2017 coming to an end a contrary outlook can be expected into 2018.

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