The AHL Commodities Exchange (AHCX) has estimated that Malawi is losing about US$90 million every year through informal and under-declared exports of agriculture commodities.
Making a presentation at the Economics Association of Malawi (Ecama) conference in Mangochi last weekend, AHL Commodities Exchange (AHCX) general manager Davis Manyenje said farmers and traders need to be encouraged to use formal market structures for the selling of their commodities.
He said use of formal structures such as commodities exchange provide benefits to both farmers and the economy.
“We need interventions on the market to make sure that we are leveraging from the production that we currently have. There is a significant loss that we are seeing on the market because of the informal nature of the markets,” said Manyenje.
He said the uptake of the formal market structures and the policy support towards formal market structures should be prioritised.
Manyenje said it should be a standing government policy that all agriculture commodities should be sold through the exchange markets.
He said the proceeds realised through elimination of under-declaration of exports can go a long way in the development of the agriculture sector and the economy.
“We can start collecting what we already have and then re-invest these resources towards productivity and enhancing the values of the commodities so that the exports can start to grow,” he said.
He said through the formal market, farmers are given an opportunity to offer their prices unlike the informal markets.
“AHCX does not set prices for the commodities. What we are doing is to encourage farmers to get involved in setting the price of the commodity,” said Manyenje.
Minister of Industry and Trade Joseph Mwanamvekha said the government is already advocating for farmers to use the commodity exchange markets.
He agreed with Manyenje that through the commodity exchanges, farmers will be incentivised through better prices.
“The problem we are having is that our farmers are not given better prices, hence they are demotivated and do not produce enough,” said Mwanamvekha.
“Farmers should sell their produce through the commodity exchange markets where they can bargain for better prices. They should also form cooperatives so that they produce in large quantities,” said Mwanamvekha.
He said it is through improved production and marketing where value addition can be achieved to create jobs and boost export revenue from agriculture.