Price asymmetry between producer and retail prices a cause for concern

by Sunday News Online | Sunday, Oct 21, 2018 | 720 views

Smallholder livestock

Mhlupheki Dube

THE fluctuations of the rates on the money markets have not only brought a headache in the general economy but it has also brought to the fore challenges in most value chains, including the beef production.

One interesting phenomenon that has been escalated by the problems of the exchange rate is the scramble for livestock, especially the breeding stock.

There has been a spike in the demand for heifers and cows as most people seek to hold their value in a more secure investment.

This rise in heifer demands has also brought in an interesting dimension where the currencies are trying to find an equilibrium among themselves as evidenced by the noticeable pushing out of other forms of payment and being replaced by the hard currency regime.

Almost every farmer who has heifers and young cows which are of good quality is demanding to be paid either in the American dollar or the South African rand.

This means the livestock market is beginning to effectively dollarise itself, just to borrow Professor Mthuli Ncube’s word.

While the livestock market is gravitating towards a hard currency trade what is sad to note is the upward spiralling of the retail price of beef which is not matched by similar increases for the producers.

Admittedly the livestock producer prices are on a good plane but the beef retail prices are in the stratospheric zone.

It is this traditionally existing asymmetry of prices between producers and retailers that is also a frustration for farmers as retailers seem to always runaway with a lion’s share of the price.

Honestly, how does a retail price of around $19/kg of meat relate to the producer price of around $5/kg?

It is such profiteering which causes friction between producers and retailers as the latter feels the former is reaping them off.

While the pricing of beef out of reach of consumers will be self-regulated by the resistance of the market, it is my view that the price asymmetry between what the farmer gets and what the retailer gets can also be addressed by a vibrant livestock producers union.

It is such a union which is expected to use its muscle to lobby for fair trading and if possible having farmers getting the bigger slice!

Farmers’ unions are a pressure group with a huge constituency of farmers of all kinds of capability and lack of it. They simply must rise and smell the coffee or disband to serve farmers from the agony of a pseudo representation.

On a separate but related note the challenges being faced by the agro-based value chain indicate to one thing that we need to take seriously as a nation if we are to progress.

We must as a nation go back to heavy agricultural production and that calls for farmers to treat farming as a national duty that needs to be done with due diligence.

How can we suddenly have shelves with no single bottle of cooking oil? Are we failing as a country with all this arable land at our disposal both in dry land farming and irrigated farming?

We must ask each other difficult but necessary questions if we are to move forward.

Why are we not producing enough soya bean to meet the national demand for expressing cooking oil? It is about time that authorities realise that whoever is sitting on productive land and is not utilising it, is actually straining the nation.

What are the people in farms as well as communal lands doing if they are not producing to satisfy the nation? What do we need to do for people to produce?

Government will need to activate its mechanism so that it is able to stimulate farmers to produce.

Whether it’s a carrot or stick that is used to have farmers produce to meet the demand of the nation, is neither here nor there.

Land is by definition a productive resource and it is unacceptable that it can be just left to lie idle while Government does nothing about it.

Let the farmers produce and all the other sectors of the economy will begin to tick. There is simply no short cut to economic growth but via production.

The sooner we inculcate that in the minds of our people especially the youth the better.

Uyabonga umntakaMaKhumalo
Feedback mazikelana@gmail.com or  cell 0772851275.

>
Like it? Share it!