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Price controls devastating rural economy
IRIN News
July 24, 2007

http://www.irinnews.org/report.aspx?ReportID=73391

Price controls are having a ruinous effect on Zimbabwe's rural economy, according to small-scale farmers and civil society.

Since government launched "Operation Reduce Prices", compelling businesses to slash prices by fifty percent in a bid combat the rampant inflation of over 4,000 percent - and imprisoning businesspeople who did not comply - basic commodities have been fast disappearing from shop shelves and wholesale suppliers.

The Cold Storage Commission (CSC), the almost dormant parastatal wholesale beef supplier and meat processing company, is being resuscitated and given the sole mandate to slaughter cattle and distribute meat directly to butchers. When the price control operation commenced, abattoirs argued that it would be unprofitable to sell meat at the government's new prices.

Price-control monitors are forcing farmers to sell meat products to the CSC at low prices; in a similar scenario, maize farmers are being forced to sell their harvests to the Grain Marketing Board (GMB) at well below prevailing market prices.

A kilogram of beef is now supposed to sell at Z$87,000 (US$0.58 at the parallel market rate of US$1 to Z$140,000), a sharp decrease from the Z$500,000 (US$3.57) retail price before President Robert Mugabe's government announced the price controls. Before the new prices were announced, cattle sold for about Z$40 million (US$285) per head, but are now selling for Z$8 million (US$57).

Since the ZANU-PF government launched its fast-track land-reform programme in 2000, resulting in the compulsory acquisition of more than 4,000 white-owned commercial farms for redistribution to landless blacks, diseases and culling have drastically reduced the national herd from around 1.4 million head of cattle to about 250,000 at present.

In 2001 the European Union (EU) cancelled its 9,100 metric tonne (mt) beef quota, worth an annual US$38 million, or about four percent of foreign currency earnings, because of Zimbabwe's failure to control livestock diseases: for the past seven years the recurrence of foot-and-mouth disease has become an almost annual event.

Small scale farmers being bankrupted

Cattle are valued as a symbol of wealth in rural communities, and are also used as draught power for tilling the land to grow crops.

Samuel Shereni, a small-scale farmer in the Beatrice area of Mashonaland East Province, about 70km southwest of Harare, the capital, said he had lost more than Z$159 million (US$1,140) after having to sell cattle to the CSC instead of putting them on auction.

"I was taking five cattle to an auction when a group of people, comprising police officers, some youths and men from the ministry of industry, stopped my truck and told me that I could only sell to a government abattoir, since private auctions had been outlawed," Shereni told IRIN.

"When they said that, I thought they were just joking, but when they took down my name and vehicle registration number, and told me to sell the cattle at Z$8 million (US$57) within four days, I could tell they meant business. I made a loss of Z$32 million (US$228) on each animal," he said.

Shereni, who rears cattle and grows maize on a farm inherited from his father ten years ago, had intended to use the profit to buy dipping chemicals for his other livestock.

"Rearing cattle is an expensive business, considering that stock-feed is scarce and I have to buy it from a person who imports it, using foreign currency obtained on the black market. Besides, it beats me why someone can just tell me how and when to sell my products," said Shereni, who is struggling to recover from the drought that slashed his crop yields last year.

His fear is that with meat becoming increasingly scarce in butcheries, the price-monitoring team will compel him to sell his cattle to the CSC, "but that would certainly mean throwing me out of business".

In nearby Mhondoro, in Mashonaland West Province, Mairosi Madenga, 57, is in a quandary as to what he would do if he were ordered to sell his cattle. The cattle actually belong to his son, who is teaching in Namibia, and any sale would require his consent.

The communal dip-tank supervisor maintains records of the number of cattle each villager owns. He recently called a meeting, at which he told the gathering that government officials had ordered him perform an audit of the herd in the village.

"He [dip-tank supervisor] told us that government officials would be visiting the villages to buy cattle, and he hinted that those that owned more than seven animals would be forced to sell the excess," Madenga told IRIN.

He felt that ZANU-PF, which came to power in 1980 after the country gained independence from Britain, was using the price-control policy as an electioneering strategy ahead of parliamentary and presidential elections, scheduled for next year.

Election strategy of price controls

Villagers were being herded to evening meetings, where they were told that "we should vote for ZANU-PF because it has shown that it cares for the people by reducing prices", Madenga claimed, but he and others had yet to benefit from the price-control blitz, because they had no money to buy the commodities, even at the reduced prices.

"In any case, since the price teams started their operation, it is those in urban areas who have benefited from whatever could be found in rural shops because they are in the habit of following the monitoring officials and buying commodities in bulk," he commented.

Pedzisai Ruhanya, of the Crisis in Zimbabwe Coalition, a grouping of civil society organisations, told IRIN that "the operation [Reduce Prices] itself was ill-advised - considering the ramifications it has had on commerce and industry - but that the government is failing to give a semblance of sanity calls for wholesome condemnation."

The country is in the throes of a hyperinflation environment, with unemployment levels of above 80 percent and constant shortages of power, fuel and other basic commodities.

Shops in urban as well as rural areas have been left virtually empty by the operation, and most businesses have been adversely affected. In one village shop belonging to a local businessman, who preferred to remain anonymous, only packets of salt, bags of tea, sweets and cigarettes were left.

"Ruling party youths and three policemen visited me and ordered me to sell to them, but said they would pay me later. They said without that [paying later] they would make sure that I never operated again, and I complied out of fear," he said.

"What pained me even more was that the youths, who said they were part of the price-monitoring team, went and sold those commodities at even higher prices to those who were willing to buy, mostly local teachers, and I am yet to receive my money from them," the shop owner told IRIN.

A number of government officials, among them police officers and an employee of the information ministry, have been arrested for abusing their powers during the nationwide operation.

IRIN was unable to reach a government spokesperson for comment.

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