THIS is generally a good innovation on the part of Government in trying to stabilise the mealie meal prices as well as creation of employment to the citizens.
Market to the farmers is guaranteed and the rule of demand and supply will essentially apply, which will perhaps force the prices to decrease and impact the consumer positively.
As earlier stated, the current annual national consumption levels of mealie meal are estimated at 1,532,194 metric tonnes.
An empirical aspect to consider is that the capacity assumptions from the new mills will range from two to five metric tonnes per hour varying from mill to mill and according to geographical positions with a lean on the population size in each particular location and surrounding areas.
Therefore, anticipated production levels of these mills could be projected in the range of 1,500,000 to 1,700,000 metric tonnes per annum as compared to the existing 1,532,194 metric tonnes.
The market is already over-saturated and the issue is how these mills will sustain the operations in terms of market penetration.
It is at this stage that critical thinking is required to arrive at a true-to-life undertaking of cost/benefit analysis of these entities, which must be done religiously and evaluated stringently as these are colossal amounts of money that shall be applied to this major investment.
The credit facilities provided for by financial institutions will have to be paid back with interest over a period of time from proceeds of the same operations.
The whole process must be monitored carefully with a lot of wide professional consultation in order for these firms to grow exponentially to stand the test of time, which in turn should benefit future generations.
The comprehensive marketing strategies with its proponents should never be ignored as this is the determinant or centre stage for the viability of this venture at play.
As stated earlier, the grounds for price stabilisation of maize meal can involve quite a number of features from a broad spectrum other than just raw material and other related costs like transportation of maize and finished products to the markets.
Other avenues would be the government to consider waiving certain taxes, particularly in the milling industry, of which benefits would be passed on to the end consumer, a common Zambian.
Most of the spares used in the industry are imported and attract a lot of taxes. It is prudent to mention that materials used to produce the packaging material are all imported and attract all these taxes.
Besides, the foreign exchange rates have always been fluctuating, and these changes are invariably upwards, hence they tend to impact negatively on the pricing mechanism.
Every concerned citizen should remain alive to the fact that the private sector is the potential driver of the economy and should not be demonised as maize and maize meal have been highly politicised.
A farmer, a grain trader and a miller are traders who have to remain in business like any other industry and, as such, Government should leave room for this sector to be competitive.
Generally, the scope of maize meal pricing varies from season to season due to several factors obtaining on the market stage, which can be termed as peak or sloppy periods.
The trend has been that April to September of each year is regarded as a slack period and October to March is referred to as peak period. It is during these months when the prices are at the summit, raising concerns and outcry from the consumers mainly in the cosmopolitan localities.
There are several traditional pricing systems, which could apply in this industry in relation to quality and many more factors largely attributable to the following:
1. Peak prices
2. Penetration prices
3. Psychological prices
4. Prestige prices
5. Magic prices
6. Differentiated prices
The business model under normal circumstances will have leverage over various aspects to arrive at the realistic value of the commodity.
The author is a practising professional miller and a member of Millers Association of Zambia, National Association for Professional Millers and International Association of Operative Millers.