Suppliers reject Fisp contracts
The 2015/16 Farm Input Subsidy Programme (Fisp) continues to be dogged by a number of challenges, the latest being a disclosure that only six out of 10 fertilizer companies have signed contracts to supply the commodity.
Government and the suppliers continue to tussle on who should shoulder the cost of foreign exchange rate changes in the price of the commodity.
Minister of Agriculture, Irrigation and Water Development Allan Chiyembekeza disclosed yesterday in an interview that the standoff remains, but was quick to add that negotiations were ongoing to have the remaining four companies sign the deals.
“It is no longer my ministry handling the issue. Talk to the Minister of Finance, I don’t deal with issues about money. What I can only confirm is that about six companies have signed contracts with government and we are hoping that the rest shall follow suit,” said Chiyembekeza.
Government is this year piloting the supply of fertilizer by engaging private companies some which are members of the Fertilizer Association of Malawi (FAM).
In a separate interview yesterday, FAM Coordinator Veria Laemmle said it is ‘risky’ to do business with government amid the prevailing economic challenges, hence the reservations by the fertilizer suppliers.
She also disclosed that none of its eight members had signed contracts with government as of Tuesday.
“Our members are expected to supply 40,000 metric tonnes of the commodity for the reform pilot in the selected districts but what is worrying the members is that the previous two years the payment was quoted in US Dollars but now government says payment will be in Malawi kwacha.
“Government has a history of late payment so after the 30 days period, if we will not be paid and considering how the kwacha is fluctuating against the dollar then it means our members are not protected, that is why we would want some clauses changed,” said Laemmle.
She further explained that the companies would have to pay international suppliers in dollars and would, therefore, be taking a huge risk to bank on the kwacha to remain stable in the next coming months.
Meanwhile, the last batch of the Fisp coupons numbering 812,100 was expected to arrive Tuesday and distribution was planned to commence Wednesday.
Last week, Finance Minister Goodall Gondwe told Parliament that government has resolved not to continue shouldering the expenses that come with changes in exchange rate in the administration of the programme.
“It’s too late to stop this year. That is why we have decided to pilot the supply of fertilizer by private companies in some selected districts while Admarc will sell the fertilizer to farmers in the other districts. But come next growing season, government will only be involved in the printing of coupons,” Gondwe told the House.
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