Nothing will stop the price of mealie meal going up

Right now the price of mealie meal is a political football being kicked here and there for political gain and for scoring points. In my view its all a waste of time.

Why? Well for most people mealie is far from anyone’s largest expense!!! Most families consume at most 3 bags a month or K300 maximum on mealie meal. So let us be honest here, why is it being turned into a political football?

Well mealie meal has a political history. It is viewed to have been KK’s downfall. The skyrocketing price of mealie meal undermined the first President’s regime more thoroughly than anything else and was always a score point. So thoroughly has this message sunk in that Zambia’s agricultural policy has been cheap mealie meal at all costs. At one stage maize related subsidies were close to 7% of the National budget and ate up more of the budget than say Health!!!!

This tumour, this parasite, this cancer on Agricultural policy has turned our ministry of Agriculture in the Ministry of Maize and Mealie Meal.

However does anyone know the price of mealie meal in Malawi? MK10,500 or 150 Zambian Kwacha. Meaning one can buy a bag at K80 at Shoprite in Chipata and drive 120 kilometers to Lilongwe and sell it at 85% markup!!!

In Zimbabwe a 20kg bag of mealie meal is $10 or K115. So a 25kg Zambian bag can fetch $12 or K132. Once again the margin over the K80 bag at Shoprite is enough for getting a truckload into ZImbabwe is around 60-70% is enough incentive to get maize into Zimbabwe.

In DRC traders will give you US$14 for a bag of mealie meal Or $560 per tonne. So single load of mealie meal on a truck will earn you (assuming a 10 tonne load) $5,600 for mealie meal that cost $2,800 to buy.

This is pure business. No amount of political posturing or administrative measures will change economic facts on the ground.

The EL Nino climate effect has predictably struck and the resulting drought has inevitably caused a maize shortage in Southern Africa and as a consequence prices of maize have gone up and the price of mealie meal has followed. Whatever the pronouncements by HH and UPND, whatever Presidential directives by Edgar Lungu or edicts by Minister Given Lubinda the law of supply and demand will prevail. Welcome to the K100 bag of mealie meal Zambia.

The last time this happened in the late 1980s the border between Zambia and DRC became a war zone with the army and police hunting for mealie and maize smugglers. In a desperate attempt to stem the flow of mealie meal KK nationalised milling plants and shops owned by the biggest businessmen involved in the trade. It was to no avail. A new entrepreneur steeped, the branch manager of your local ZCBC or NIEC or Mwaiseni. He or in certain cases she simply sold every bag they got to the traders and banked the money faithfully. They got a cut from the smugglers who promptly shipped the maize to DRC. The mealie meal itself was escorted by the very Army and Police deployed to stop the flow of maize into DRC. So bad was the corruption that some people date the crumbling of the integrity of the police force to this same period. So the shops had no mealie meal because it had all gone to DRC or to the black market. You see you cant fight market forces. No one has yet found a mean of subverting them. You can only react to the signals. I am sure the economic advisers to both our opposition lleaders and the government must be aware that no matter what you do when the law of supply and demand comes into play, a market clearing price will set itself. Whether that price is set in an illegal market (a la Zambia in the 1980s) or by higher prices (Zambia 2016), the market signals are clear.

So as I eat my lunch of nshima and chicken, I laugh and wonder at the Zambian politicians and the public don’t they ever read history? Don’t they understand basic economics?

Guys just adjust your budget the price of mealie meal is on its way up and there is nothing really anyone can do about it.