Tanzania Government rules out intervention as food prices soar

Dar es Salaam. The headline inflation rate rose by 0.2 percentage points in September due to rising maize flour prices, but the government yesterday ruled out intervention to push prices down.

Maize and maize flour prices have been going up since Tanzania opened its borders for cereal exports.

Agriculture deputy minister Hussein Bashe told Parliament that market forces would be left to determine how much consumers would pay for the commodities.

He said the government would limit itself to buying maize for the National Food Reserve Agency (NFRA) so that it can supply areas with shortages.

“When maize prices were low, MPs blamed the government for banning exports at the expense of farmers. This time we have opened up and we will not intervene so that farmers can also benefit from the price increase,” said Mr Bashe when answering questions in the House.

In a supplementary question, Dr Raphael Chegeni (Busega-CCM) asked the government to explain what it was doing in response to increasing food prices – especially maize – which increased the cost of living for Tanzanians who consume it as a staple.

Maize flour prices have increased from around Sh1,000 per kilogramme in August this year to Sh1,600 currently.

“First of all we need to understand that the concept of price increase or decrease is always relative. At what point do we say the price is low or high? The government will not control prices but will promote more production, reduce production costs and create an enabling environment for competition which will regulate the prices,” said Mr Bashe.

The National Bureau of Statistics (NBS) said yesterday that the inflation rate rose marginally from 3.4 per cent in September to 3.6 per cent in October.

Food items were the main drivers of inflation with maize flour prices increasing by 20.5 per cent in October 2019 compared to October 2018, according to the NBS.

Inflation of food and non-alcoholic beverages which account for 38.5 per cent weight in the basket – the largest of all – increased to 5.1 per cent for October, 2019 from 4.0 per cent recorded in September, 2019.

In September 2019, wholesale prices of maize, rice, beans, and sorghum were higher than in the corresponding month of 2018, according to the Bank of Tanzania.

Maize recorded the highest price growth rate of about 79 per cent by comparing the prices of the two corresponding months.

Wholesale maize prices increased from Sh39,691.8 per 100-kg in September 2018 to Sh71,046.4 this September.

According to the BoT, the price of maize has been moderately edging up since May 2018 because of high demand from Arusha, Kilimanjaro and Tanga regions, coupled with demand from neighbouring countries.

NFRA had a food stock of 459,561 tonnes in January 2015 but has since been slowing to below 100,000 tonnes a year later. The stock then fluctuated between 95,000 tonnes and 49,000 tonnes.

The trend followed change of government policy after noticing “satisfactory supply in most parts of the country.”

In September 2019, the food reserve was 61,710.8 tonnes, the central bank indicates.