GREEED, SPECULATION AND ROTTEN POTATOES

Ruthless price hikes by Maputo wholesalers just before Xmas backfired when consumers simply refused to buy their goods – and tonnes of potatoes and tomatoes simply rotted in the Zimpeto wholesale market on the outskirts of the capital.In early December, a sack of ten kilos of potatoes cost between 180 and 210 meticais (about 6.4 US dollars, at today’s exchange rates). Last week, as Xmas approached, the price soared to between 250 and 280 meticais.Yet potatoes imported from South Africa should have become cheaper, since the metical has made significant gains against the rand in the past couple of weeks. Furthermore, potatoes are among the products on which the customs service charges duties, not according to the real price, but on a much lower “reference price”.The chairperson of the Mozambican Association of Micro-Importers (AMMI), Fernando Matusse, knew who to blame for his members’ potatoes rotting in the late December sun. It was all the fault of the consumers for refusing to pay the prices demanded by his members.”We regret the situation, because we had installed a supply capacity to avoid speculation, but the buyers did not respond and so we made losses”, said Matusse – although many shoppers would certainly regard a price hike of 33 per cent in the space of less than a month as a prime example of speculation.The potatoes rotted, he complained, because there were so few buyers on Friday and Saturday, when the Zimpeto market seemed virtually abandoned. It seemed not to occur to him that, if the vendors had cut the prices significantly, that news would have traveled fast, and the market would quickly have filled up again.AMMI members have yet to learn a fairly basic rule of market capitalism – that high prices do not lead to profits if nobody buys at those prices. It was the same Fernando Matusse who, in early December, promised that the price of a sack of potatoes would not exceed 220 meticais in the festive season – a promise that proved to be worthless. At 220 meticais, the vendors stood a good chance of selling all their potatoes – if the 5,000 sacks which rotted had been sold, that would have earned them 1.1 million meticais. They threw that away in the vain hope of making an extra 50 or 60 meticais per sackMuch the same thing happened to 1,500 boxes of overpriced tomatoes. Some importers complained that the high temperatures on 24 December contributed to the tomatoes going rotten. But such temperatures are normal at this time of year, and anyone who listened to the weather forecast knew that Friday was going to be a particularly hot day.The reality was that buyers refused to pay 400 meticais for a box of tomatoes. The sellers appear to have recognised this – when the independent television channel STV visited the Zimpeto market on Tuesday, it found that the price of a box of tomatoes had slumped to 100 meticais.