Following the announcement by Zimbabwe government that all grain subsidies will be ceased, mealie meal prices have more than doubled over the last 24 hours. An average 50kg bag of the staple commodity retailed at Z$235 a few days ago. However the retail price has gone up to as much as Z$517.
In the last 24 hours Zimbabweans flooded supermarkets buying mealie meal in bulk after news leaked that the staple commodity’s price would go up. Many formally employed individuals are earning an average of Z$500 to Z$2000. So an increase in the price of grain will significantly reduce their disposable income.
The decision to stop subsidies was mainly due to the fact that Zimbabwe is facing an El Niño induced drought. Additionally, government cannot continue subsidizing scrupulous grain millers who are smuggling grain out of Zimbabwe selling it at higher prices in neighboring countries. The government through the Grain Marketing Board is investigating claims that grain is being smuggled into Zambia and being sold at exorbitant prices. This is disadvantaging the local market.
The increase in the price of mealie meal is likely to affect prices of other commodities. It is also expected to negatively affect the exchange rate of the Zimbabwe dollar which has been trading at a stable Z$20/US1 for the past month.