Millers gives packaging manufacturers ultimatum

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Harare – Local packaging companies are demanding payment in foreign currency and the  Grain Millers Association of Zimbabwe (GMAZ) has given them an ultimatum to reduce prices otherwise they will source the product from outside the country.

The two parties met on Wednesday but reached a deadlock with only two companies agreeing to the millers’ demand.

GMAZ  chairman Tafadzwa Musarara said recent price increases in packaging were unjustified as costs of production were handled in Real Time Gross Settlement (RTGS).

Musarara said GMAZ had come to an agreement with two packaging companies on fair pricing  and he expected them to start implementing by Friday.

“We have noted two or three packaging companies are doing very well they are being fair but the rest could not fully explain to our satisfaction why we have to pay them 90% in foreign currency whilst their electricity bills, labour and other costs are RTGS payments,” he said.

He castigated packaging companies for unilaterally increasing prices with “no consultations” saying members of GMAZ already had orders and therefore had to transfer their higher costs burden on consumers.

Musarara said his association had “a heated debate” in their meeting and blamed the packaging companies for causing a heavy burden on the consumer.

“We had an argument on the issues relating to costing of packaging and we have had instances where a bag of 10 kg roller meal which used to cost 40 cents thereabouts is now costing\(sic) a dollar and not only is it affecting mealie meal and flour we also have other products to whom [this] is related to which is bread.

“One supplier moved his price from three cents for plastic to 21 cents so you can notice that the price of bread that went up by 30 cents and largely influenced by packaging amongst other factors,” Musarara said.

He added that  his association was looking at other options including sourcing packaging material from South Africa.

He said the South African packaging companies were already on “standby” and it may be an option in the interim whilst the rest of the local packaging manufacturer “put their house in order.”

Musarara dispelled speculative media reports that maize would at some point be charged in  foreign currency.

“I know the media may have intimated that maize will be sold in foreign currency, that is not going to happen, government is investing more than $200 million in subsidies on maize meal every year, for the reason that the product be affordable and available,” he said.

Musarara said GMAZ would also approach the Reserve Bank of Zimbabwe (RBZ) to discuss on  how foreign currency allocated to packaging companies was being used.

He said the government has to begin tracking how packaging raw materials were being used and allocation should be prioritized, giving the example of packaging for sweets and biscuits being manufactured at the expense of staple foods such as maize meal and rice.

“The allocations that are being given to packaging  companies have no follow ups. We are not saying they are externalising definitely, they are not, they are bringing in the raw material but what are they making? There is no system to check that,” he said.

Musarara said GMAZ would be “pleading” with the RBZ to ensure allocations must be must be channelled towards the production of packaging for maize meal, flour, rice, salt and other basic commodities.

The Deputy Minister of Lands, Agriculture, Water and Rural Resettlement, Vangelis Haritatos was adamant that government was not instigating any price controls and urged packaging companies to be “reasonable.”

“As government we have no intention of setting any price controls whatsoever our position is very clear we want you as a sector to engage with each other and come out with the best position possible but the best position possible must be practical position something that is affordable by the consumers that are out there you have to understand what we are dealing with is food and food is very critical it is the number one component in our lives,” he said.