Welfare and incentive effects of possible changes in the regulatory environment of the maize market in Swaziland - Institutional Constraints to Small Farmer Development in Southern Africa - page 129

NAMBOARD Maize

imports

Rural surplus
producers

NMC regional silos

Rural
de � cit
producers

NMC's Matsapha
(main) silo

Rural
millers

Maize
millers

Rural retailers

Urban
retailers

Rural
consumers

Dalcrue Holdings
- commercial
maize farm & mill

Urban
consumers

Figure 7.2. The maize marketing chain in Swaziland.

prices, these are based on the SAFEX (South African Futures Exchange) trading prices.
The rationale for using SAFEX prices in determining domestic market prices in Swaziland
is that the import parity prices used in the country are a\lso derived from SAFEX prices.
The implication is that the NMC-imposed SAFEX-based prices places domestic prices
at levels higher than import parity prices in order to protect domestic producers against
foreign competition.

7.3.5 Marketing reforms

Prior to 1985, commercial maize milling in Swaziland was a monopoly of the private
milling company, Swaziland Milling Company (SMC) owned by the SWAKI group. In
1985, because of cheap imports from South Africa, SWAKI threatened to terminate its
agreement and close the mill, and this resulted to the establishment of NMC as a parastatal
that was responsible for buying and milling local maize plus co-ordinating maize imports
as required by the country. However, in 1987 NMC leased the milling monopoly to SMC
and the government through NMC bared the risk of purchasing at or above the gazetted
prices for locally produced maize which was higher than SA prices, and SMC continued it
milling duties as before (Magagula and Faki, 1999).

The government began to reform the maize industry from 1995 under the Maize Marketing
Improvement Project (MMIP) which was launched to address concerns over the lack of
competition in the maize market and the resulting high prices of maize and maize meal paid