Zambia: Reduced Fuel Cost Should Trickle Down

AFTER the long-awaited reduction of petroleum prices by the Energy Regulation Board (ERB) last month, market players have begun to react by reducing the cost of essential goods and services.

This week, I will focus on the latest reduction in the wholesale price of mealie-meal, a topic which has always been an issue of national interest to Zambians.

I will later touch on another issue which I feel needs to be addressed in light of the K2 reduction in petroleum prices.

A fortnight ago, Agriculture and Livestock Minister Given Lubinda announced that the wholesale price of a 25 kilogramme bag of breakfast mealie-meal had reduced by K4.

The decision was arrived at in consultation with the millers who are one of the major players in the maize milling and mealie meal marketing business in Zambia.

The reduction in the wholesale price of the mealie meal directly translates into the reduction of the commodity on retail basis and this, selected retailers have already implemented.

Others have however stuck to the old price contending that there are several market forces that cannot immediately forester a reduction in the cost of the commodity.

Among these is the fact that transporters have opted to keep fares high and millers are paying colossal amounts of moving grain to the milling plants and the finished product onto the market.

The Millers Association of Zambia (MAZ) has since engaged transporters to reduce the rate at which the commodity is ferried from manufacturer to the market as the benefit accrued will be passed on to the consumer through further reduced mealie meal prices.

It is good that the government and the millers have reached a level playing field over the price of the commodity at a time when all the economic prospects are favourable.

As a long-term measure to stabilise mealie meal prices, Government could increase the subsidy on maize so that grain procured through the Food Reserve Agency (FRA) is more affordable to the miller.

Due to the high cost of mealie-meal production necessitated by the increase in electricity tariffs, for instance, Government could increase the subsidy on maize so that the grain is procured at a lesser cost.

If this could be done, millers could also further reduce the price of the commodity.

Government could also join the milling business through organisations such as the soon to be established Industrial Development Commission (IDC).

The Zambia Prisons Service, an institution of the Government, is a fully fledged maize grower and if Government could invest in value addition to the grain, it would offer some competition to the private millers.

It is also gratifying to note government’s assurance that the country is food secure following the unprecedented maize bumper harvest recorded last year.

Zambia produced more than 3 million tonnes of maize in the 2013-2014 farming season and even after subtracting exports, there is a bulk left for the country to consume.

It is therefore important that the Government continues to fund the Farmer Input Support Programme (FISP) to sustain the high levels of maize productivity.

About one million small scale farmers benefitted for the initiative in the 2014/2015 farming season and it can only be hoped that these numbers will increase in the 2015/2016 segment of the exercise.

As I indicated in the third paragraph, the reduction in bus and taxi fares seems to be dragging on despite the reduction in petroleum prices.

Bus operators have publicly announced that bus fares on local routes may reduce by 40Ngwee owing to the reduction in fuel prices, which was K2.

This has been received with mixed feelings and major stakeholders including government have rejected the 40Ngwee reduction describing it as a mockery.

Indeed the 40 Ngwee adjustment is just too small when compared to the adjustment in fuel prices and bus operators can still work out the possibility of effecting a much reasonable decrease in fares.

Transport minister Yamfwa Mukanga has indicated his desire to meet public transporters of the matter with the view that they bring the cost of their service down.

Road transport is the most widely mode of movement from one point to another and stakeholders need to expedite address the cost of bus and taxi fares.

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