BY TATIRA ZWINOIRA
THE United States Agency for International Development (USAid) food security arm says some wholesale and retail outlets are rationing scarce foodstuffs, as the Zimbabwe dollar continues to depreciate.
The Zimdollar has hit a new low of $500 to the United States dollar on the parallel market, which has caused basic commodity shortages as businesses are hoarding foodstuffs to sell on the informal market.
They are doing this hoping to benefit from the parallel exchange rate that is higher than the official exchange rate of $308,52.
Poor rainfall for the 2021/22 agricultural season has seen farmers producing lower grains and given the poor government prices they are allegedly holding on to their produce anticipating to sell on the informal market.
“In addition to inflationary pressures, shortages of some basic food commodities including cooking oil, maize meal, and sugar have been reported on the market, with some wholesale and retail outlets rationing items sold per customer, or selling exclusively in US dollars,” USAid’s food security arm, the Famine Early Warning Systems Network (FEWS NET), reported in its new May outlook yesterday.
“Some of these commodities are increasingly being sold in the informal sector at significantly higher than normal prices. The government has responded to shortages by lifting import bans and suspending duties on selected imported basic food and non-food commodities for six months starting May 17.”
According to FEWS NET, at the end of April, government announced a continuation of the policy that maize, wheat and soyabeans be controlled products to be sold solely to the Grain Marketing Board or contractors.
“In addition, the government acceded to farmer demands for payment in US dollars by announcing that 30% of payment for maize and small grains delivered to the GMB would be in US dollars, the rest to be paid in Zimdollar,” FEWS NET reported.
However, given the current situation, government grain stocks are reportedly fast declining, leading authorities to consider further raising producer prices to induce farmers to sell.
What has exacerbated these shortages was a ban on lending facilities early last month, which was only lifted nearly two weeks later.
This was because the ban on bank lending exposed the fact that a lot of farmers and companies depended on overdraft and loan facilities to raise capital for their operations owing to the inflation.
“In the face of continued devaluation, there is mounting pressure to dollarise the Zimbabwean economy. However, the government has reiterated that it will maintain the dual currency and has announced additional measures meant to promote the appeal and use of the Zimdollar and control depreciation and inflation,” FEWS NET said.
- Follow us on Twitter@NewsDayZimbabwe