Last week the Zimbabwean cabinet approved new producer prices for maize and other grains. The government also added a 30% incentive on top of these new producer prices in a bid to entice farmers to make deliveries to the Grain Marketing Board. In times past the government has often been accused of offering below market prices and delayed payments both of which have resulted in fewer people delivering to the GMB with most opting for the black market.
On July 21 2020, Cabinet approved reviewing of floor producer prices for maize and traditional grains from $12 329 per tonne and $12 865 per tonne to $16 153 and $16 856 per tonne respectively for the 2020/21 marketing season.
Cabinet further approved an incentive of 30 percent on top of the reviewed producer prices. The new prices are as follows; maize $21 000 and traditional grains $21 913 per tonne.GMB and Silo Food Industries, Lands, Agriculture, Water, Climate and Rural Resettlement Secretary Dr John Basera
This effectively means the new producer prices for grains are as follows after factoring in the incentive:
- $21 000 ZWL per tonne for maize
- $21 913 per tonne for traditional grains such as sorghum, millet and rapoko
The black market is still ahead
Just like it’s foreign currency counterpart, the maize black market is a well-oiled machine. While technically these prices translate to $291 USD using the current official rate of $72.15 ZWL per 1 USD thus putting the price on par with the $5 per bucket that the black market is offering the reality is much more different. Using black market rates of about $100 ZWL per 1 USD, the government is paying only $291 USD per tonne.
That is half the story. Money from the government is likely to come in the form of loathed and unstable Zimbabwean dollars. The black market happily pays $5 USD in cash per bucket and about $300 USD per tonne. The payment is prompt one doesn’t have to jump through hoops to see it. Also even though transport costs to GMB are not very high as the organisation has a depot in almost every district, the black market offers transport.
The black market is financed by the country’s thriving poultry market, small time millers and even urban homes buying for own consumption.