Malawians will have to brace themselves for harder times as the low maize stocks in the Strategic Grain Reserves (SGRs) could be a key factor in a potential sharp rise in prices of the staple grain in the course of the year, analyst say.
National Food Reserve Agency (NFRA) acting Chief Executive Officer David Kaputa Loga told Malawi News on Wednesday that currently, the institution has 55,000 metric tonnes (MT) in the SGRs.
“We have purchased 8,500MT using the K6 billion received out of the K12 billion allocation in the National Budget. We have purchased another 8,500MT from Admarc using funds carried over from 2022-2023 (budget),” Loga said.
He further said the World Bank is also financing the purchase of 21,000MT using an open tendering method.
“Market dynamics are the major challenge. We initially faced the incidence of high moisture content but this has subsided,” Loga said.
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A third round crop estimates which the Ministry of Agriculture published last week shows that Agricultural Development and Marketing Corporation (Admarc has) 15,960MT in stock, bringing the total to 70,950MT.
The estimates further indicate that maize production has decreased to 3,509,837MT, representing 5.6 percent decline from the 2021-22 final round estimate of 3,716,479 metric tonnes.
According to the World Bank Malawi’s annual maize requirement is 3.1 million MT which local commentators argue has grown to above 3.5 million MT in recent years.
Lilongwe University of Agriculture and Natural Resources (Luanar) agricultural economist, Horace Phiri, said traditionally, the reserves are supposed to be between 100,000 and 140,000 MT.
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However, he said, in a year like this where the country has faced disasters, the levels were supposed to be much higher as the affected people may need food aid.
“The prices are not really influenced by who has the maize but basically who is participating on the market; so right now the maize is with the people and we are not sure whether it’s with the farmers or the traders.
“In the event that a lot of it is with the traders that are hoarding it to take advantage of good prices later on in the year then that will greatly impact the prices that we are going to observe in coming weeks and months. Unfortunately, with our small reserves and Admarc not having huge stocks it means the government is powerless in cushioning the market,” Phiri said.
Another agriculture commentator, Leonard Chimwaza, said the trends point to short supply of maize in the country.
“This is something we need to be worried about because of the responsibility orientation. The private sector responsibility orientation goes where there is demand. For example, if there is demand in Zambia or Mozambique, the trader will go to that market so it becomes very difficult for the government to control what the private sector has,” Chimwaza said.
He added that the recent instruction by the Ministry of Trade and Industry for the Malawi Revenue Authority and other authorities to allow importation of maize without charging duty is an indication that government is not sincere on the levels of the grain which the country has at the moment.
“That, to me, is an indication that the figures the government is mentioning are not true.
“In essence, if we had enough maize, we would avoid importation of the commodity and we could have seen limitation but the stance [by the Ministry of Trade] just goes to show that the commodity is in short supply,” Chimwaza said.
The third-round crop estimates statement indicates that the government will further procure about 42,000MT additional maize for the SGRs using the K12 billion in the National Budget, Contingency Emergency Response Component through Agricultural Commercialization Project and African Risk Capacity Insurance payout funds.
Recently, the Reserve Bank of Malawi noted that food inflation rose to an average 38 percent in the second quarter from 31.7 percent between January and March and compared to 25.4 percent for second quarter of 2022.
The rise in food inflation reflected the impact of high costs of farm inputs, which has been sustained by the ongoing Russia-Ukraine war.
Early in the years, Malawi was hit by Cyclone Freddy which devastated large tracts of crops.
