Lesotho Flour Mills increases maize price again 

RETHABILE MOHONO

MASERU – Lesotho Flour Mills has recently announced a further 15% increase in the price of maize, stirring to even higher food prices in Lesotho. This comes after a previous surge in raw white maize prices, which rose by 39% within two months due to the adverse effects of drought and unusually hot weather during the past season. The prices went up from M3 800 per metric ton as of January 31, 2024 to M5 300 as of March 31, 2024.

“We were hopeful at the time that raw white maize prices would stabilise during April following rainfall late in the season. Unfortunately, the rainfall came too late to impact the crop yields and prices surged further up to levels of R5 500 per metric ton during the past week,” the statement revealed. Unfortunately, Lesotho Flour Mills needs to increase maize meal prices accordingly by 15%, effective from May 6, 2024.

In early April the Lesotho Flour Mills announced a 7% price adjustment on all maize products, effective April 8. This decision follows a significant increase in Safex maize prices in March 2024. The South African Futures Exchange (Safex) is the futures exchange subsidiary of JSE Limited, the Johannesburg-based stock exchange. It consists of two divisions; a financial markets division for trading of equity derivatives and an agricultural markets division (AMD) for trading of agricultural derivatives.

Lesotho Flour Mills offers prices based on SAFEX. In its statement it highlighted that while white maize traded between R3,700 and R3,900 per metric ton in January, recent levels have shot up to as high as R5,300. “This spike follows high temperatures and low rainfall experienced during February and March 2024,” the statement stated. It went on to indicate that major maize production crop failures are expected across Southern Africa, which caused the surge in maize prices.

Anticipate further price increases in early May 2024, with wholesale prices projected to reach up to M8,800 per metric ton, the statement warns. This comes as an additional burden for consumers also facing increased electricity tariffs that rose by nearly 10 percent. The Lesotho Electricity and Water Authority (LEWA) revealed that it approved a 9.6286 percent increase in energy and maximum demand tariffs, along with a 5.0 percent rise in the lifeline tariff. The new rates came into effect on 1 April 2024. 

The energy and maximum demand tariff is charged for consumers who gobble more power, especially in the commercial sector, and the “lifeline” tariff is mainly for domestic users. According to LEWA, LEC has requested a 23 percent adjustment for the “maximum demand” category and a 15 percent adjustment for the “lifeline” category for the financial years 2023/24, 2024/25, and 2025/26 in order to meet its financial goals.

LEWA stated that the approved tariffs for the previous financial year will still be in effect for the current financial year, resulting in under-recovery. Therefore, the new higher increase will be implemented for the financial years 2024/2025 and 2025/2026. This electricity hike comes as an additional financial strain on the back of the recent surge in petrol prices. The Petroleum Fund has also reported a substantial increase in fuel expenses, after last month increase.

There have been adjustments made to the prices of petroleum products. Petrol93 went up by M0.55 to a new price of M23.25 as Petrol95 increased by M0.55, resulting in a price of M23.70, while Diesel50 and paraffin remained unchanged at prices of M23.35 and M17.60, respectively. On the other hand, Lesotho Bureau of Statistics reports stated that food cost in Lesotho also increased by 11.70 percent in January of 2024 over the same month in the previous year. Food inflation in Lesotho averaged 7.77 percent from 2003 until 2024, reaching an all-time high of 18.72 percent in January of 2003 and a record low of 0.67 percent in December of 2003.

Speaking to this publication, economic commentator Topollo Motlamelle, highlighted that climate change is a significant factor contributing to the rise in prices across various sectors. “The adverse impact of prolonged dry seasons has severely affected agriculture not only in Lesotho but also in neighbouring country (South Africa) that we heavily depend on,” he said, explaining that there has been a noticeable decline in crop production this year.

He also pointed out that the ongoing conflict between Russia and Ukraine remains another significant factor driving up food prices. “We must consider that Russia is responsible for around 40% of grain production, so it’s natural for prices to rise when a major grain producer is involved in a war,” he explained. Motlamelle also proposed that as the situation worsens, the government of Lesotho may need to provide subsidies for essential items. He emphasized that maize is a crucial part of their diet, and if people cannot afford it, it would lead to extreme poverty.