Govt upbeat farmers will gain from low inflation

Minister of Finance, Economic Planning and Development Goodall Gondwe has described inflation as more of an enemy for the rural masses following mixed reactions from different stakeholders who have argued that it is being attained at the expense of rural farmers.

The minister was speaking on Monday on the sidelines of a stakeholder’s conference on the Extended Credit Facility (ECF) in Lilongwe.

Said Gondwe: “Inflation is an enemy of the rural masses because if they were producing maize at a cost of K170 per kilogramme [kg] and an individual was producing at a  total of K300 000, but the prices were high,  it means that he is poorer with low inflation than with high inflation.”

“But if what the government has been doing to reduce inflation works for the next year or two, we should see the rate of poverty reducing”.

Inflation has been on a downward spiral since November 2016 owing to reduced maize prices. The country is onto to a path to achieve a single digit inflation for the first time since December 2011 which brings hope of attaining some level of macro-economic stability.

However, other stakeholders have argued that the country should not celebrate the easing inflation which is being driven by the price fall of the country’s major commodity—maize.

Recently, the Centre for Social Concern (CFSC) described the easing inflation as nothing the country should smile about as farmers are crying foul to current maize prices on the market.

In their paper “The Current Maize Prices: A Robbery to Farmers and hence to the Economy” the centre said the trend in maize prices defeats the whole purpose of the right to food as the gate price offered to farmers is way below the breakeven price.

Commenting on how to balance between the macro-economic stability that the country is registering and the welfare of famers who constitute the majority of the population, Catholic University head of economics department Gilbert Kachamba said it is unfortunate that low inflation is being registered at the expense of farmers, but there are always costs attached to attaining economic stability.

“Food has a big weightage in [the Consumer Price Index] CPI and when we are talking about inflation going down, we are mostly talking about prices of food items and little of non-food items”

“It is, therefore, unfortunate that the low inflation is being achieved at the expense of the farmer. But this is due to excess supply of maize on the local market,” he said. n