The GMAZ and Zimbabwe’s Oil Seed Traders’ Association filed a joint constitutional application in the country’s courts Aug. 15 challenging the government’s right to set minimum prices, Tafadzwa Musarara, GMAZ chairman told Bloomberg.
The minimum price, set on Aug. 8 and backdated to April, will render all contracts void and violates Zimbabwe’s constitution, the association said. The government set the price for corn at $390 a tonne and also regulates prices for wheat and millet. Corn prices were $290 a tonne to $350 a tonne before the change, Musarara said.
Musarara said if contract farming is disabled, corn production will be way below the national requirement, and there will be serious food shortages. Contract farming refers to output based on pre-season agreements between buyers and producers.
The law requires all companies and individuals buying grain to register with Zimbabwe’s Agricultural Marketing Authority for a $1,000 fee, he said.
“Zimbabweans who are in the informal business of rearing even 10 chickens, goats, pigs, beef or any other micro business will simply close down if forced to register,” Musarara told Bloomberg. The law will “over-regulate the day-to-day lives of millions of Zimbabweans who eke a living out of the grain value chain.”
Raising the price of corn will create inflationary pressure and raise the prices of milk, corn meal, eggs and other foodstuffs by over 20%, he said.
Corn prices in the southern African nation began falling after farmers planted 18% more of the crop before this year’s harvest, the Famine Early Warning Systems Network, partly funded by USAID, said May 12.
Zimbabwe is expected to produce about 1.3 million tonnes of corn in 2014-15, up from 800,000 tonnes in 2013-14, according to the U.S. Department of Agriculture.