State-run grain trader, the Agricultural Development and Marketing Corporation (Admarc) has set strict conditions for smallholder farmers supplying it with grain which it is buying using the K22.2 billion it borrowed from one of the country’s commercial banks.
Earlier this month, the Treasury guaranteed Admarc to borrow the money from commercial banks to buy the grain from smallholder farmers in the 2020/21 season.
In a letter dated October 16 to the Ministry of Local Government, which Times Business has seen, Admarc says it intends to buy 80,000 metric tonnes of commercial maize from smallholder farmers using the K22.2 billion loan facility obtained from CDH Investment Bank.
According to the memo, one of the requirements of the bank is that the maize should be stored in convenient and easy to access warehouses as the maize will be under the watch of collateral managers.
To meet the required volume, Admarc says in the communication, that all farmers interested to sell their maize should fill an Expression of Interest Form stating quantity they are willing to offer.
To ensure that it reaches out to bona-fide farmers only, the grain trader would be working with agriculture officers in respective areas where they will be vetting the purchase process.
Admarc spokesperson, Agnes Chikoko Ndovi, said in an interview yesterday that the conditions have been set to ensure that the borrowed money is strictly used for its intended purpose.
“We are using borrowed money. So, this [process] will make sure that the money we are getting is specifically to buy maize and then when we sale the maize we are giving back the money to the banks,” she said.
With the money Admarc, is expected to purchase 80, 000 metric tonnes of maize from farmers through associations and cooperatives and 5, 000 metric tonnes each, from Nasfam and Farmers Union of Malawi (Fum).
Fum president, Fryton Njolomole, said it is not too late to purchase maize because some farmers still have the commodity in stock.
He, however, expressed worry that some farmers especially in the rural areas will not be able to follow the set processes, especially, on where one needs to source, fill and submit an Expression of Interest form.
“There are no concrete procedures on how farmers can do the process on the forms so, as Fum we want sanity on this,” Njolomole said.
Commenting in an earlier interview, agriculture expert, Tamani Nkhono Mvula said the arrangement will help curb corrupt practices in instances where some purported Admarc officials purchase maize from farmers at lower prices and sale it to the entity at a higher price.
“The challenge, however, is that the people who are going to benefit are not the farmers but the middlemen because by now, most of the farmers have already disposed of their crops. If Admarc is being given money to start buying in April or May next year, that would have been more ideal,” he added.
So far Admarc has bought 55, 000 metric tonnes of maize, 3, 500 metric tons of soya beans, 3, 000 metric tonnesof seed cotton, and 2, 000 metric tonnes of beans.
Recently, the Centre for Social Concern (CfSC) urged government to ensure that Admarc is well capitalised to perform its functions of ensuring that Malawians have a ready and reliable market.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.