IMPENDING MAIZE PRICE HIKES

On 25 April this year, Premier Milling Company announced a 19% increase in the price of maize
meal which is to take effect on 1 May 1995.

The price increases take place at a time when the single channel marketing system is being
abolished. This will mean that the price is no longer set by the Maize Board and the Minister of
Agriculture, but is set through direct negotiations between buyers and sellers.

While the changes to the marketing system are to be welcomed they do occur in a situation of a
severe drought and rising international prices. The ANC, SACP and COSATU Alliance is in favour
of reduced controls in agricultural commodity marketing which have tended to favour large scale
producers at the expense of especially poorer consumers.

In the long term we believe that de-regulation will lead to a more stable and affordable price.
However, in the short term, especially in the context of maize shortages due to the present
drought, the transition could cause sever instability. Therefore there is a need for interim
measures.

The very low summer maize crop as a result of this drought could result in raw maize prices
increasing by up to 30% and the price of maize meal could accordingly rise by up to 25%. Not all
of these prices can be expected to occur immediately, because some maize stock has been
carried over from 1994 based on the 1994 price from the Maize Board.

The Tripartite Alliance wishes to express its grave concern about the impending price increase
particularly since this affects the poor most severely and accordingly calls on the government to
do whatever possible to lessen the impact on poor consumers.

In particular the tripartite alliance calls for:

• The Minister of Agriculture to review the use of surplus funds carried from levies on
the 1994 crop, and to make levies available to stabilize the price of maize for human
consumption in the coming season, rather than paying levies to commercial farmers
as an "agterskot" as has been suggested in a press statement by NAMPO;
• Consideration to be given to the removal of the tariff to be imposed on the
importation of maize in this year of shortage. These measures will sustain
consumption of an affordable product and will minimise job losses in the industry. In
a situation of shortage and de-regulation the possibility of speculation and
profiteering exists. We are not convinced that the announced increase is warranted
and therefore the Alliance further calls for:
• Millers and farmers to do everything necessary to ensure the increase in maize meal
price is kept to the absolute minimum. This should include thorough investigation of
the possibility of investigating blending white and yellow maize as a way of lowering
maize meal prices.

Finally, the Alliance calls for a Maize Forum consisting of producers, processors, consumers and
government to be formed as soon as possible so that this vital basic food stuff can be produced,
processed and sold in an effective manner so that price increase and the impact on the poor can
be minimised.

Issued by the Department of Information and Publicity

PO Box 61884
Marshalltown
2107

2 May 1995