Trouble is brewing for the Affordable Input Programme (AIP) following revelations that prices of fertiliser on the local market have surged by over 50 percent in recent weeks due to, among other things, weakening exchange rate.
The development means that the government needs to cough an additional K70 billion on top of the K142 billion allocated to AIP in the 2021/22 National Budget if it wants to achieve the same result of reaching out to over 3.5 million farming households.
A snap survey of several retailers on Friday and Saturday revealed that prices for the two types of fertiliser— Urea and NPK— which are part of the AIP programme have significantly shot up on the market.
Random spot checks revealed that the price of Urea has gone up to about K29,400 per 50-kilogramme (kg) bag from K19,000. Further checks revealed that the price of a 50kg bag of NPK had escalated from an average price of K18, 500 to around K28, 600.
Traders who spoke to The Daily Times attributed the sharp rise in the price of fertiliser to three things, namely shortage of forex, weakening exchange rate and the general rise of the commodity on the international market.
The traders noted that, due to the acute shortage of forex in the country, importers are struggling to raise the much-needed United States dollar to bring the commodity into Malawi.
“Again, if you have been monitoring the exchange rate, you would see that the Kwacha has been losing ground against the dollar, meaning that the price of imports has been significantly affected,” said one trader of Asian origin who opted for anonymity.
Ministry of Agriculture spokesperson Grecian Lungu admitted that the price of fertiliser had gone up on the international market.
Lungu was, however, quick to note that expectations are high that the price of the soil-enriching chemicals is likely going to slump as more fertiliser manufacturing plants open on the international market.
“We are confident that, as more and more factories open up, prices will go back to normal, even going below those of last year,” Lungu said.
Finance Minister Felix Mlusu was not immediately available for comment.
Under AIP, each beneficiary household is entitled to a 50kg bag of NPK, a 50kg bag of Urea, and either five kg of maize seed or seven kg of sorghum or seven kg of rice seed, depending on the farmer’s preference.
The government is expected to spend about K37,000 to subsidise each farmer accessing inputs under the programme, with each farmer expected to pay K4,495 per bag of fertiliser accessed and K2,000 for a pack of cereal seed of choice.
Speaking in Blantyre recently during an Economics Association of Malawi (Ecama) Membership and Private Sector Post-Budget Meeting, Mlusu admitted that the initiative was not sustainable in the long term.
“We, as a government, believe that AIP cannot go on forever. We must find a way of exiting at some point. This was a campaign promise we made. We have done this in one year. It cannot make sense for us to scrap it come the second year,” Mlusu said.
During the interface, Ecama President Lauryn Nyasulu said much as the AIP was a great initiative, the country’s economists were worried about its sustainability.
“There is a need for a clear strategy on how we are going to get out of this,” Nyasulu said.
The Tonse Alliance-led administration last year rolled out the AIP as a successor to the Farm Input Subsidy Programme which was being implemented by the previous Democratic Progressive Party administration since 2006.
Malawi harvested over 4.4 million metric tonnes of maize this year, up from 3.78 metric tonnes last year.