EDITORIAL COMMENT : Mealie meal market manipulation must end

The artificial shortages of basic food, especially mealie meal, in the formal sector cannot just be wished away or explained away with throwaway lines.

And from what is in front of consumers, it appears that there is a lot of organisation to have these items for sale in the informal sector, on streets and on pavements for foreign currency, but not readily available in the shops.

As millers admit, there is no shortage of raw maize in Zimbabwe with the holdings of the Grain Marketing Board already very large before most of the present harvest has been delivered and paid for.

At the same time, the combined capacity of the millers is well in excess of what Zimbabwe needs to maintain adequate supplies in shops.

Surveys by reporters have found that supplies of all brands are on sale in the informal sector for foreign currency. Prices on the streets vary between US$5 and US$6 for a 10kg bag.

There do not appear to be any shortages and consumers can buy as much as they like.

The situation is different in the major supermarkets where supplies have been intermittent for some time. The major brands, and the top four brands are produced by the two biggest companies, have been extremely scarce in the formal sector.

What supplies do reach the shelves tend to come from the smaller millers, who cannot be expected to shoulder the entire load of all consumer demand.

Obviously the major producers should be having the major sales but if their product is not on the shelves that cannot happen.

Other products made by the top millers are, interestingly, available in supermarkets including recently-launched new products. It is just their mealie meal which is scarce. Otherwise the delivery trucks are still running with their dozens of other products.

The previous example of what we might be seeing, when there was subsidised roller meal a few years ago, can provide some pointers over what is happening, but not given an explanation.

Then there was a shortage, or at least limited suppliers of subsidised meal. This allowed dealers in the black market to establish a corner, corrupting some shop keepers, using agents to queue up and buy as much as they could for resale to the dealers, and perhaps even corrupting some of the dispatch services at millers.

But this time there was no shortage to start with.

Supplies should have been plentiful and basically it should have been impossible to have a shortage.

One clue has been given by a spokesperson for millers who has suggested that deliveries might be reduced if supermarkets and shops were not willing to given instant payment on delivery, or possibly even on order.

That could create the necessary shortage for the business to move to the informal sector and pure foreign currency purchases.

It is highly unlikely that major manufacturers, or even minor ones, are deliberately feeding individual street traders and small tuckshops. But it is quite possible that a lot of the business has gone to agents and distributors, the sort of people who had their bank accounts blocked last weekend, who are willing to pay foreign currency at the factory gate and then move the goods down the value and distribution chains.

There is certainly some measure of organisation involved, and it does not really matter if the manufacturers have engineered shortages, or whether they are simply going with the flow. The end result is the same.

Maize meal is a special product when it comes to manipulating markets. Demand is very stable and cannot vary by more than a tiny percentage each month.

It is a product with a modest shelf life, so it cannot be easily hoarded, and yet it is a product that everyone buys. There is some competition between brands, but most consumers will take what is available on their shopping day.

Other products where shortages can be created do not offer the same scope. For almost anything else, if there is a shortage people will buy less, use less and make what they can buy last longer. In other words demand can fall.

For mealie meal this is not the case. Demand is constant day in a day out so it opens a lot of doors to those in the informal sector and the black markets to flourish if they can benefit from a shortage, or even create a shortage.

It seems that some investigation now needs to be done on the supply and value chains to see where the critical points are located.

This does not mean that criminal prosecutions are possible, since people are allowed to sell as much or as little of what they make, but we can certainly find out who is generating the shortages, who is trying to corner the markets and who are the main organisers and beneficiaries.

This would be a good start, and sometimes bad publicity can be damaging to consumer-orientated businesses.

In any case our reformers need to know what sort of measures those who utterly oppose reform are prepared to use, and how far they are prepared to go to create or maintain the sort of profit margins they feel are appropriate, regardless of who is suffering and where.

And consumers need to use their muscle, rather than just acquiesce in the sort of black markets we are now seeing.

This can be difficult, but for a start they can switch to the producers who have tried to distribute their modest supplies fairly, and help them create larger markets.