In Mandevu, PF cadres are going shop to shop forcing store owners to sell mealie meal at K137 and K130. They are using force to do this.
In economics, we call this phenomenon ‘price controls’, though it’s being done in the most primitive manner.
Studies have shown that these kind of tactics don’t work, they actually create more problems.
A store owner arrives at a price for their goods based on the below factors ;
1: Cost of buying the product from the wholesaler.
2: Demand for the product on the market.
3: Overhead operational costs
4: Profit margin
The three factors that are making these retailers to sell at over K137 is the increased demand due to supply shortage, high operational costs such as fuel and electricity and the need to make a profit.
Once price controls are instituded by force like what we’re seeing, it will no longer become profitable for these shops to sell mealie meal.
So what will they do?
These shops will just boycott the selling of mealie meal on their shelves because it doesn’t make a profit.
And once they do that, it will lead to further shortages of mealie meal in Mandevu and the price will increase further as supplies reduce and demand increases.
These are proven economics principles.
Price controls have never worked anywhere in the world.
The PF should go and ask the elders in UNIP, they tried this too and it backfired badly, the price of mealie meal quadrupled when UNIP tried this. In the end they were forced to nationalize all milling companies.
The PF needs to understand that the only way to get rid of this problem is to increase the supply of maize and mealie meal on the market.
If they don’t have enough maize at FRA they should start importing maize from South Africa. – NDC