Government helpless on maize market
Malawi government says it cannot do anything to deal with the practice by small scale farmers who opt to sell their maize to private traders instead of Admarc where they can access the grain at a cheaper price in lean times.
Minister of Agriculture, Irrigation and Water Development Allan Chiyembekeza said this in response to our questions on how the liberalised maize market makes it difficult for Agricultural Development and Marketing Corporation (Admarc) to have enough maize to supply when in need.
Every lean period, Admarc comes into the spotlight for the struggles consumers experience to access maize from its markets.
Previously, Admarc used to establish temporary markets in remote locations to buy the produce from farmers, a development which enabled the parastatal to have enough stocks for people in times of food shortage.
However, since the liberalisation of the market in mid 1990s, Admarc has had to compete with private buyers who are first in the market and also offer competitive prices, which attract many farmers.
Yet in time of food crisis, the same farmers turn to Admarc for the staple grain as it sells the maize at a cheaper price than private traders.
Asked whether government can reign in on the problem, Chiyembekeza said even though everyone turns to Admarc in times of food scarcity, it is not in government’s place to force people to sell their produce to Admarc.
“Malawi has a liberalised market and this includes agricultural produce. We can’t blame farmers or Admarc for what has happened this year as everyone has the right to sell to whoever they want,” he said.
Chiyembekeza added: “All we can do is to ensure that Admarc has money ready to buy the produce from farmers alongside other traders.”
The agriculture minister, however, appealed to farmers to be reasonable in this harvesting season.
“It’s an open secret that traders have had lots of maize but none of them came out to help ease the food scarcity like Admarc has done,” he said.
Chief Executive Officer for Admarc, Foster Mulumbe, insisted that the corporation does not actually face any challenges in purchasing produce from smallholder farmers.
He also explained why they are always late on the market to purchase the produce.
“We begin buying maize and other farm produce late not because of financial problems. We delay because we want to ensure that the maize is dry enough so we can keep for two to three years. Other traders don’t care about quality,” he said.
He also argued that Admarc offers equally competitive prices.
Spokesperson for the Ministry of Finance, Nations Msowoya, said Admarc does not get any funding from government. Instead, the ministry guarantees it to borrow from banks to purchase the maize.
“This is a profit making statutory corporation which we just authorise to borrow money from commercial banks as they can repay after sales,” he said.
National Coordinator for Civil Society Agriculture Network (Cisanet), Tamani Nkhono-Mvula, told Malawi News last week that delay by Admarc to enter the market to buy the produce has a bearing on the pricing of the produce.
If Admarc had been entering the market earlier, he said, it would have been easier for the government to ensure that the minimum prices it sets are being followed because Admarc would have been a price leader and all other players on the market would have followed.
“Its late entry also causes it not to procure as much quantity as in most cases it is forced not to buy directly from the farmers but the traders who have bought from the farmers,” he said.
According to Nkhono-Mvula, Admarc could still regain its old image if it can leverage on the developments taking place in the agri-business environment.
He suggested that Admarc should enter into partnerships with organisations such as Nasfam, Agricultural Commodity Exchange and Farmers Union of Malawi where these organisations can use its warehousing facilities in remote locations at a fee.
“Admarc should [also] go back to doing value addition. It must invest in machinery and start producing flour, producing corn flakes and other products other than just being a buying and selling entity for raw maize. We long for those days when we used to have Admarc canning factory. Admarc has to adjust; otherwise it will remain a suckling that always depends on loan guarantees from the government.
“At the same time, I also feel that for all these to happen, Admarc needs to be given space to innovate. Too much government interference is also chocking the growth of the institution. Political pressure is forcing the company to be more of a social entity than a commercial one,” he said.
Admarc was established as a statutory corporation under Chapter 67.03 of the Laws of Malawi.
The Act and other laws allowed Admarc to enjoy monopoly status in respect of the purchase from smallholder farmers of a range of controlled crops.
This enabled the Corporation to manage price support systems and subsidise farmers on customary land.
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