Editor's Comment

Millers should emulate African Milling

ZAMBIA has in the recent past witnessed the skyrocketing of mealie meal prices with some retailers pegging the commodity as high as K170 for a 25kg bag. This is way too high for a common Zambian, given that over 60 percent of the population lives below the poverty datum line.
President Edgar Lungu is concerned about the high prices of mealie meal and has presided over Government to work on modalities to reduce the price of the staple food with several interventions being undertaken by various stakeholders in the milling industry.
To lower the maize meal prices, Government has gone out of its way to supply subsidised maize to millers through the Food Reserve Agency.
This is despite the fact that it is not the role of FRA to subsidise millers but to maintain food reserves for food security.
It was therefore expected that millers would respond accordingly and reduce the prices of maize meal.
It is saddening that the prices of the staple food have continued to rise to levels threatening food security despite efforts by Government.
President Lungu is on record to have raised alarm in March, saying it was unacceptable that mealie meal prices were high despite Government offloading cheap maize to some millers.
This also led to Minister of Agriculture Michael Katambo warning millers in possession of subsidised maize from FRA but reluctant to reduce the prices that they would be blacklisted from buying the commodity from the agency.
Mr Katambo said millers whose operations are supported by Government are expected to reduce the prices of the commodity so that consumers can benefit from the incentive.
From the way millers have been conducting themselves in as far as maize meal pricing is concerned, it has been suspected that there is a cartel holding Zambians to ransom.
While some millers have not reduced the prices of the staple food despite accessing cheap maize from FRA, it is consoling and heart-warming that African Milling Limited has chosen to meet the expectations of the consumers.
African Milling Limited has reduced the price of a 25 kilogramme bag of breakfast mealie meal from K150 to K130.
The milling company has recommended a retail price of K136 for a 25kg bag of breakfast mealie meal.
The company with a milling capacity of 506 metric tonnes of maize per day will no doubt cushion the current situation of high mealie meal prices.
The gesture by African Milling Company will help in providing the needed competition to other millers who have pegged their commodity too high.
Needless to say, the company has set a good precedent which must be followed by other millers.
After signing a tripartite agreement with FRA and grain traders, the company has not held back but gone ahead to reduce the price as expected.
Indeed businesses need to show that in as much as their prime objective is to make profits, they should have a human face, too.
African Milling Company has just proved that and it deserves to be commended.
While reducing the prices of mealie meal seems like a disadvantage, in actual fact it is a good market penetration strategy especially for a fairly new company like African Milling.
For those established in the market, it can be a good strategy to hold on to the market share.
We will not be shocked if African Milling overtakes companies that have been in the industry longer. At a time when many Zambians are constrained economically, who cares about a brand?
Many people would rather go for a fair price than a brand.
It is however worth noting that when such a good thing happens, spoilers are lurking to see how they can reverse the gains.
It is therefore important to put in place measures that will prevent some traders from buying in bulk and stocking, thereby creating an artificial shortage.
Actually the best strategy is for millers to have retail outlets to prevent unscrupulous traders from hiking the price of the commodity unreasonably in the name of transport and other costs.
It is a known fact that retailers can be the major business bottlenecks standing against fair pricing.
Now that African Milling Company has shown the way, let other millers follow suit and be counted among companies with a human face.
We are not asking millers to reduce the price to a point where they exit themselves out of business. No! What we are saying is that they can reduce on their profit margins by cutting down the prices and still maintain viable businesses.

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