The Agricultural Development and Marketing Corporation (Admarc) has signed a maize purchase agreement with the National Smallholder Farmers Association of Malawi (Nasfam) to provide ready markets for smallholder farmers.
The agreement will also ensure that farmers benefit from government- set minimum prices that will bring return on their investment.
The move comes as Admarc has been given K10 billion in the 2020/21 National Budget. The State produce trader has been authorised to borrow K22 billion from commercial banks to buy maize.
Admarc chief executive officer Felix Jumbe said Admarc is supposed to be a primary market for farmers.
He said: “For a long time, we have not been buying large quantities from farmers and this agreement helps us to reconnect with farmers.
“We are targeting maize for food security purposes. We should not be limiting people to 10 kilogrammes during the lean period.”
Jumbe said Admarc will buy 80 000 metric tonnes (MT) of maize, 5 000MT of rice and 4 000MT of cotton.
On her part, Nasfam chief executive officer Betty Chinyamunyamu said the agreement entails that the farmers’ association will buy from its members and aggregate the commodity to supply to Admarc in bulk.
She said: “The agreement that we have signed will work to assist Admarc to buy produce directly from farmers.
“As an association, we interact directly with farmers, so we are providing this channel through which farmers can benefit.”
Chinyamunyamu said the agreement will also work to the advantage of farmers in enforcing minimum prices set by government.
Admarc earlier also signed a similar agreement with the Farmers Union of Malawi aimed at giving farmers ready and lucrative markets.
In 2016, Treasury also allowed Admarc to borrow K22.4 billion from commercial banks for maize purchase but the State producer trader struggled to pay back the loan because the maize it bought was sold below market value.
Government owns 99 percent of Admarc with one percent owned by its chief executive officer.
Experts have proposed the need for government to offload about half of its shareholding to the private sector as part of recapitalisation drive.