Agriculture Reference
In-Depth Information
to bypass the government's price control measures and was an opportunity for farmers to
bargain for better returns. It is possible that the emergence of barter trading was another
reason the supply of local grains to the GMB fell drastically during this time (Table 11.1).
The government of Zimbabwe responded predictably to these developments. For the
2008/09 cropping season, the Zimbabwean government set maize floor price at US$265/
ton whilst private buyers pegged their price at US$400/ton (Figure 11.1). As is well known,
agricultural commodity pricing has always been at the centre of most debates in developing
countries. In order to motivate farmers to produce, governments in developing countries
artificially maintain prices above equilibrium as incentives to producers to deliver increased
output. However, this contradicts the broader development goal to promote food security
part of which is achieved by making foods affordable to the populace. The ultimate effect of
this floor price policy is a powerful lesson on how not to intervene in commodity markets
when a government is confronted with a situation similar to what prevailed in Zimbabwe
in the post FTLRP era.
Having gazetted the producer price at US$265/ton, it became obvious that the government
could not pay this price, given its circumstances, to domestic producers to deliver maize
Price
US$/ton
400
265
125
Q
1
Q
3
Q
2
Quantity
GMB Price = US$265/ton
Private buyer's starting price = US$400/ton
Final private price = US$125/ton
Figure 11.1. Maize price structure in Zimbabwe for 2008/09 season (Survey data, July 2009).
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