Beef price monitoring may have negative effects

by Sunday News Online | Sunday, Nov 12, 2017 | 676 views


Mhlupheki Dube

LAST week the Government announced that it has placed 16 consumer products on a list for price monitoring.

The intention is to monitor and arrest the runaway prices which seem to be creeping back into our retail shops. Prices of basic commodities have been skyrocketing over the past few years, something that has brought back traumatic memories for most Zimbabweans who endured the hyperinflation period during the 2007-2008 period.

It is not lost to me that the intention to monitor the prices of basic commodities is to protect the consumers from unscrupulous traders who are making super profits. However, it does not escape my attention that the last attempt to monitor and control prices failed dismally with basic commodities disappearing completely from the shelves and surfacing in abundance on the informal markets.

It is this experience that motivates this article especially as it relates to the beef value chain. Beef is one of those commodities that have been placed on price monitoring. Already there is talk within the livestock sector specifically the beef production value chain that producer prices are likely to come tumbling down in the next few weeks if the price monitoring or control is effected.

Farmers will be reminded that this is the season of high prices for livestock producers and the prices will keep rising until they climax towards the end of December.

That is the traditional price trend within the beef production value chain. Actually this year’s prices rose much earlier than other years such that the current prices that are being offered would only be offered around December in other years. The commercial grade beef is already selling at $4,60/kg and with no changes in the market it is likely to rise to almost $5,40/kg at the peak December period.

The live weight price is hovering around $2,50/kg in well-attended auction sales. Needless to say this is good news for every farmer and it is the time to sell for farmers who want to sell. Now if the talk of beef producer prices dropping due to the introduction of price monitoring mechanism by the Government is true then this pen wishes to counsel powers that be to take a re-look as a thorough thought through process to avoid a well-intended intervention may turn out to be a nightmare for the farmers.

My experience within the beef sector has taught me that changes in the sector hardly affect the buyers or the market but it affects the producers who are the farmers.

It could be a levy charged to buyers, it is just passed down to farmers and this will be no different.

If there is a price ceiling on beef in the shelves in retail outlets you can be sure that abattoir operators who are also meat wholesalers will not be affected by the ceiling but the smallholder farmer who is down in the rural areas.

The buyers will simply drop the producer prices so that they maintain the margins they want regardless of the ceiling on the retail side. It means the price of commercial grade beef which currently selling at 4,60/kg may be dropped to about $2,40kg so that the abattoirs and meat wholesalers continue with the health margins which they are enjoying.

Therefore, while the price may appear stable on the retail shelves the smallholder farmer will be paying dearly due to severely depressed prices.

Unfortunately this comes at the prime time for beef farmers and they stand to have a dull Christmas if this comes to pass.

It is against this background that we appeal to the powers that be to carefully consider the negative effects of the beef price monitoring to the farmers and put in place measures to ensure that farmers do not suffer when buyers shift the burden of price ceiling to them. It should be noted that businesspeople have this ability to wriggle their way out of such situations, often sacrificing producers in the process and the noble intention of the intervention transforms into a nightmare for farmers overnight.

Uyabonga umntakaMaKhumalo.

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