Maize price volatility is significantly higher in countries that actively intervene in their maize markets than it is in countries that make little or no effort to manage prices says a 2013 report on Trade Restrictions.
The report has singled out countries like Malawi, Zambia, and Zimbabwe whose ad hoc bans on import and export bans on maize puts a strain on the prices and only fuels trade informally.
Malawi this year has banned export of maize.
“Prices in Malawi, Zambia and Zimbabwe which have large state owned trading enterprises that buy and sell maize, experience food price movements that are more than 50 percent more volatile than in countries that do not have entities engaged in maize trade. On the other hand, when maize prices spike above import parity consumers are being unnecessarily taxed by an inefficient market,” reads the report.
The report was presented on Tuesday, in Lusaka, during the on-going parliamentary policy seminar on reviewing the import and export bans on food security within the Common Market for Eastern and Southern Africa (Comesa) region.
“When borders are shut, the intended effect on consumer prices will not take effect because prices will continue to go up, as maize will keep going out of the country through the informal trade, and consumers will not benefit.
On the other hand if it’s a surplus that has been confirmed through the forecasts governments must begin to figure out their plans on export, otherwise if they delay, farmers will be hit hard and by the time governments might want to export, others will have produced. The best is to simply plan ahead but not shut down borders, or if there are plans to shut, communicate well in advance,” reads the report.
Executive director of Grain Traders Association, Grace Mhango said ad hoc bans affect investments and does not protect the producers.
She said that some producers in Malawi are currently failing to service loans due to ad hoc bans.
“Why should they close borders in that manner? What happens to all the maize that producers buy? Closing borders should be something that must be planned ahead because the way it is, it puts pressure, in the end other countries look at Malawi as unreliable trade partner,” Mhango said.