Admarc choked

State produce trader Agricultural Development and Marketing Corporation (Admarc) has for the past month not bought maize from smallholder farmers despite obtaining a loan facility and receiving funds from Treasury for the same.

The corporation secured a K25 billion loan from NBS Bank and received K12 billion from Treasury to purchase maize in its markets which opened on August 2, 2021 at K150 per kilogramme (kg) but suspended the exercise immediately.

Admarc board chairperson Alexander Kusamba Dzonzi and general manager Rhino Chiphiko while confirming the development this week, gave conflicting accounts for the deferment.

In an interview Kusamba Dzonzi said the suspension of markets was not sanctioned by his board. But after receiving news, his board demanded an explanation from management. 

“The response was that they [management] were waiting for funding from NBS Bank. But we actually advised them to immediately reopen the markets. As of last week, I got an assurance that the funds were in and if they have not lifted the suspension then they should have good reasons for not doing so.” 

But in a separate interview, Chiphiko said the suspension was motivated by insufficient storage space for the produce in the markets.

Said Chiphiko: “Most of our rural markets are filled with maize [which we have been buying] because the markets are there just for purchasing. So we have been transferring that maize to our depots for safe keeping and treatment and that process takes a bit long.”

He also attributed the congestion in the markets to farm input subsidies which Admarc is also handling under the Affordable Inputs Programme (AIP).

“So, it’s basically an issue of decongesting the rural markets. You may wish to know that the AIP products are also going into the same markets where we are buying the maize. As such it is difficult to buy maize in high volumes now. Once the markets are cleared, we will resume procuring the maize very soon.”

Chiphiko also stated the suspension would not affect their procurement plans as Admarc will continue buying maize up to January or February next year until all smallholder farmers have sold their maize.

On his part, Farmers Union of Malawi president Frighton Njolomole said the suspension of markets could disturb farmers’ productivity next season.

He said: “It is an unfortunate situation and may affect some farmers because they want to use the same proceeds from their maize sales to purchase fertiliser and other inputs for next season.”

An agriculture policy expert, Tamani Nkhono-Mvula bemoaned Admarc’s poor planning saying the organisation’s failure to buy enough maize will affect the country’s food security during the lean months.

Our investigations show that while Admarc suspended buying maize in rural markets, it has, however, been procuring the same from commercial farmers in its depots such as Malangalanga and Chilambula in Lilongwe.

But Kusamba Dzonzi described the development as “wrong”, arguing Admarc deals with rural farmers and recognised commercial farmers and not city vendors.

“The understanding is that Admarc must always procure maize, especially using its rural markets because what we have in the cities are depots.

“So, unless we make specific arrangements, for instance with cooperatives, to deliver their maize at such depots, they are not supposed to open markets to vendors who have been stealing maize from our farmers.

“Buying from vendors is killing the farmers and that is not the Admarc we want to have.”

As of this week, according to Chiphiko, Admarc had purchased 86 000 metric tonnes (MT) of the staple grain worth K12 billion and are remaining with K13 billion from the NBS Bank loan facility.

The 86 000 MT is part of the 300 000 MT that Admarc targeted to buy in the first phase of the procurement exercise this season. In total, the firm intends to buy about one million MT to restock the Strategic Grain Reserves. Admarc also bought 4 000 MT of maize with part of the K12 billion from Treasury. Chiphiko did not explain how the rest of the money was used.

Chiphiko also complained that the company was losing a lot of money transporting the maize to some selected markets as per the arrangement for collateral management with NBS Bank.

Admarc normally gets about K5 billion from NBS Bank for 34 000 MT of maize. Once they aggregate the purchase, they apply for the next tranche.

To aggregate the 34 000 MT, Admarc needs to transport the maize from their scattered markets to some designated markets where NBS collateral managers are stationed for the task.

“With collateral management it’s quite expensive. The collateral managers control our markets. For example, even to access our own warehouses is a challenge because they put seals on the doors. They have to come and break their seals for us to gain access and seal again.

“They are controlling all the operations and this is the biggest challenge for us. Some markets open late and close early because these managers dictate operations of the markets,” he lamented.

Parliamentary Committee of Agriculture chairperson Sameer Suleman said the procurement suspension has resulted in farmers’ unsold maize piling up in Admarc markets. The parastatal has 441 established markets nationwide and an additional 277 temporary markets.

“We advised government against forcing Admarc to obtain loans because besides high interest rates, we feared such bottlenecks would happen again, but even after Parliament allocated money to Admarc, government went behind and forced Admarc to get a loan.

“As a committee we are very dissatisfied with the manner government is running Admarc. They preached about revamping Admarc but it is not what we are seeing here. There is no political will to recapitalise Admarc. This parastatal will soon collapse just like other State companies did and this will not help our country,” Suleman grieved.