The consumer advocacy group Consumer Unity and Trust Society (CUTS) has welcomed government’s decision to leave maize prices to market forces.
The group also asked for a policy instrument in the form of a price band to avoid market distortions when government went beyond buying strategic grain reserves.
“The decision by government to allow a liberal pricing approach will provide more certainty in the maize market,” CUTS said in a statement.
Government on Monday ended weeks of speculation when it announced that it won’t set the floor price for maize during this year’s marketing season. Instead, it will buy maize through the Food Reserve Agency (FRA), while grain traders are also free to make direct offers to producers.
Currently, private grain buyers are buying at K50/50kg, much to the anger of farmers. They say it’s a drop from last year’s government designated price of K85/50kg. CUTS said the fluctuation is the result of a price dilemma for government.
“Government wants to raise the price of maize for farmers and at the same time keep it low for consumers. Their interventions have not been effective in achieving intended welfare policy goals,” CUTS said.
The group said using price banding will allow the private sector to make strategic decisions regarding maize marketing when government intervened beyond the role of just securing food reserves.