Admarc, CISANET clash on maize price
The price at which Admarc is buying maize from farmers has brought the State produce trader and Civil Society Agriculture Network (CisaNet) on a collision course.
The bone of contention is the price of K165 per kilogramme (kg) that Agricultural Development and Market Corporation (Admarc) is buying the staple grain from farmers.
CisaNet argues that farmers should have been offered K180 per kg to cushion them from the effects of drought and also recover the production cost.
Admarc plans to buy 250 000 metric tonnes (MT) of maize this year, comprising 60 000 MT from farmers and 150 000 MT from private traders through a tender process.
Admarc chief executive officer Foster Mulumbe, in an interview this week, said the K165 per kg is better than last year’s K100 per kg price.
He said: “We have already started buying maize in some parts of the country at an average price of K165 per kg depending on moisture content of the grain.
“Most of the maize that we are now buying has a moisture content of 14 percent while the recommended content is 10 percent. We are taking into account the fact that although the maize is not yet dry, farmers have already started selling their maize to vendors.”
But CisaNet executive director Tamani Nkhono-Mvula argued the price Admarc is buying the maize is on the lower side, considering the food crisis the country is facing and the cost of production.
For instance, he said it costs a farmer an average of K110 to produce a kilogramme of maize, but said the cost of production may have gone up as a result of increased prices of farm inputs.
“While K165 per kg may be deemed as the best for the farmer, it is good that when buying maize from farmers, government should also look at other factors such as the amount of maize on the market and cost attached to producing the commodity,” said Nkhono-Mvula.
Spot checks by Business Review show that vendors have already started buying maize from farmers in some parts of the country at as low as K100 per kg.
But Mulumbe said while government is yet to release minimum buying prices for maize this year, the 14 percent moisture content means that after maize has fully dried up, the weight will drastically reduce.
Treasury has guaranteed Admarc a loan of K6.9 billion from commercial banks to purchase maize in the 2016 marketing season.
Malawi’s maize requirement for human consumption, seed, stock feed and industrial use is estimated at 3.2 million metric tonnes.
Last year, the country produced 2.7 million metric tonnes of maize, creating a 27 percent deficit.
This year, according to the second round crop estimates, the country has produced 2.4 million metric tonnes, which is 12 percent below last year’s output.
Statistics from Regional and Sectoral Economic Studies on Agricultural Sector Performance in Malawi by Greenwell Matchaya and others indicate that maize yield has varied annually between 2000 and 2013 but the trend has been positive. n
I am not sure how the price was reached by ADMARC and how CisaNET came up with their recommendation. But the bigger picture is that from experience ADMARC has been subsidizing consumption through buying at high prices and reselling at a loss, and pan-territorial pricing. Which means government has both subsidized production and consumption with the limited available resources. Now the farmers are selling because they need the money for other equally important needs, but they are the same farmers to come back and buy from ADMARC. Statistics show that 40 to 55% of smallholder farmers are net food buyers. If the buying price is optimistically raised It’s the same government to take the tab, through a heavy consumption subsidy. Thus technically operating in circles as the situation will persist into the future. Offering realistic prices is crucial and removing subsidies and pan-territorial pricing are paramount to empowering the farmers.