Plans by the government to introduce export mandate regulations for selected agricultural commodities under the structured market system have received a backlash from the private sector where some players are refusing the idea altogether.
Representatives from the Ministry of Industry, Trade and Tourism have in recent weeks been engaging stakeholders in consultative meetings on the development of export mandates particularly on oil seeds such as soya, groundnuts, and sunflower and pulses such as pigeon peas, cowpeas, beans in all categories and rice and rice bran.
During a recent meeting in Blantyre, Principal Secretary in the Ministry, Ken Ndala, said the introduction of export mandates is an important step towards achieving formal trade.
He added that this does not imply any restrictions on exporting or market freedom.
“Through implementation of Export Mandates, we envisage that volumes traded through commodity exchanges will increase substantially and thereby obtaining all benefits from strengthening the formal markets, including better prices for farmers, access to financial services, better integration of the private sector in the agricultural value chain, greater inflows of foreign exchange and greater public revenues,” Ndala said.
However, Grain Traders Association of Malawi president, Grace Mijiga-Mhango, said they do not agree with the idea.
“We have totally refused the idea of using the commodity exchanges but suggested to them to develop a neutral institution something like a Grain Regulatory Authority. These two are for profit and we see it as a plan to monopolise the grain market in the medium to long term,” Mijiga- Mhango said.
She added: “They cannot use a private sector entity to regulate other private sector players. Just as they have done with fuel and forex, they have public regulatory institutions. Why should food be regulated through private institution which have failed to operate their existing entities for the past 10 year.”
The country has two commodity exchange markets which recorded an accumulated traded volume of 43,096 metric tonnes since inception, of which, about 32,600 metric tonnes were under the Warehouse Receipt Financing (WRF) representing 76 percent.
Total turnover is recorded at K34.4 billion and K24 billion under WRF.