Superior Milling Company managing director Peter Cottan says mealie meal prices will definitely be increased following a rise in fuel prices, but added that the adjustment will be insignificant.
In an interview with News Diggers! Cottan said transporters and millers would have to pass-on the increase in the cost of production, which included transportation of the commodity to consumers in a bid to maintain profits.
“In a basket, commodities that make up the CPI [Consumer Price Index], the food basket for inflation, there is very little dollar-denominated products in that basket, and even with mealie meal, the only contribution for inflation would be the transport cost. Yes, no doubt about it; we are calculating at the moment what the transporters will hike their price at. And that component, a small percentage [of] the cost of making mealie meal, will put up the price of mealie meal. But it isn’t a 100 per cent. You must not think that mealie meal will go up by the same percentage of fuel, no! It’s the percentage of transport in the cost of production, which will definitely be passed on to the consumer. But it’s a very small amount. When it comes to other factors like maize, if you buy from commercial farmers, you would argue that they have got dollar-based fertiliser, seed and I heard the other day they are asking [for] US $300 a tonne,” Cotton explained.
“But we don’t buy from commercial farmers. We buy from the small-scale farmers who produce 90 per cent of the maize in this country. The price is set by FRA, which is K70 per 50kg bag. Now because of less supply of maize this year, market forces, which dictate supply and demand that we are all fighting each other for the maize, and we have pushed the prices of maize up to K100 a bag and that’s what we are currently paying today. Great news for the farmers, but that is going to impact on mealie meal prices because that’s the main driver; I mean 15 per cent is brand, 85 per cent is your maize product. So, obviously, maize is the driver to inflation. Now, we have already engaged Food Reserve Agency, Ministry of Agriculture, as millers going forward. We have submitted our stock to the Stock Monitoring Committee so that we can see if there is enough maize to take us through to the end of the season.”
Cottan added that millers were satisfied with the current levels of maize on the local market and encouraged traders to release their commodity as opposed to holding it back in a bid to offload at higher prices.
“There is over 800,000 tonnes of maize in Stock Monitoring Committee books, and there is some maize that is not even registered from the informal sector. You know, there is a lot of small-scale traders and they can even hold the maize back as they have been doing recently waiting for a better price because they know the market is in an upward swing and then they sell it to us. We are finding now that, since it got to K2 [per] Kg, they are now offloading more maize. The risk is if they hold maize, please if you are a trader listen to me carefully, if you hold your maize and wait for a higher price, if FRA come onto the market and to intervene into the market as they usually do to stabilise prices, then you stand on losing money, you see. And that’s happened in the past with traders. But there is enough maize out there for us not to need government’s intervention, we think. So, let’s mop up the maize; it will increase the mealie meal prices slightly, but it won’t be too much,” said Cottan.
Retail prices of mealie meal in Lusaka currently remain stable hovering between K75 and K84 in some outlets per 25Kg breakfast bag.
But the national average prices of the staple commodity has steadily increased to a one-year high, with a 25Kg breakfast bag now costing an average K80.45, according to Central Statistical Office (CSO) data.
Superior’s Milling’s popular ‘Superfine Breakfast’ currently sits at K74.99 per 25Kg breakfast bag in some outlets.