Financially-struggling Agricultural Development and Marketing Corporation (Admarc) says it needs about K103 billion to purchase 600 000 metric tonnes (MT) of maize for the 2020 harvest season as part of its turnaround strategy.
The State produce trader is expected to present its proposed budget, which represents about 62 percent of Ministry of Agriculture, Irrigation and Water Development’s K167 billion allocation in the 2019/20 National Budget, before the end of January ahead of the Mid-Year Budget Review Meeting of Parliament scheduled from February 10 to 28.
In an interview yesterday, Admarc acting chief executive officer Felix Jumbe said the parastatal, branded by analysts as “government’s source of financial pain” for expending over K100 billion in the past five years on recapitalisation and social roles, needs about K103 billion to buy maize from farmers from March this year.
He said Admarc seeks to buy the staple grain from farmers “as early as possible” to avoid a repeat in recent years where it found most maize bought by its competitors, private traders.
Jumbe said: “K103 billion is for one crop [maize] we would like to buy. Then if you look at all other crops, you will see that Admarc will need about K150 billion. That’s the estimate. From the maize alone, we need to accumulate 600 000 MT.
“Our eyes are set on Parliament to capitalise Admarc with money for trade financing and money for capital investment.”
In an analysis published by our sister newspaper, Weekend Nation, between 2015 and 2019, the Malawi Government cumulatively gave Admarc K24 billion for maize procurement, K53 billion as bail out to offset bank loans while the corporation obtained about K30 billion in loans.
Admarc’s loans included K27 billion owed to commercial banks and K2.9 billion unprocedurally obtained in 2016 from the fuel Price Stabilisation Fund (PSF) managed by Malawi Energy Regulatory Authority (Mera).
In a separate interview yesterday, Ministry of Finance, Economic Planning and Development spokesperson Davis Sado observed that what Admarc has presented was a business plan and that Treasury in consultation with Ministry of Agriculture, Irrigation and Water Development would analyse it.
He said: “We cannot commit to the amount proposed, but government is always committed to make sure that Admarc is provided with resources to function well, mainly on the social function component.”
Ministry of Agriculture, Irrigation and Water Development spokesperson Priscilla Mateyu declined to comment on Admarc’s proposal, saying the ministry has no information on the matter.
In his reaction to Admarc’s ambitious proposal, Ben Kaluwa, an economics professor at University of Malawi’s Chancellor College observed that in recent years Admarc has not performed well.
He said investing over K100 billion in the corporation would, therefore, not be a good decision.
In a related development, Ministry of Finance, Economic Planning and Development says a comprehensive review of Admarc has been completed. The exercise was part of reforms in agriculture regulations and market intervention systems.
Sado said in an interview government has resolved to strengthen the separation of Admarc’s social and commercial functions.
He said: “As part of reforming the parastatal, we commit to implement a reforms programme within the parastatal to balance maize price stabilisation while improving efficiency and transparency.”
Agriculture expert Tamani Nkhono-Mvula has since welcomed the separation of the social and commercial functions, cautioning government to put words into action.
Between 2015 and 2019, Admarc failed to account for K9.3 billion on personal emoluments and is said to have wasted about K10 billion from maize sales after reducing the price from K270 per kilogramme (kg) to K150 per kg, according to our sister newspaper Weekend Nation.
Admarc was created in 1971 as a statutory corporation mandated to, among others, market agricultural produce and inputs, facilitate the development of the smallholder agricultural subsector and also attend to social obligations on behalf of government.
Until 1987, Admarc was the sole buyer of smallholder produce, but in 2004, it was incorporated as a limited liability company with government owning 99 percent of the shares.
A Poverty and Social Impact Analysis on Admarc conducted by former Secretary to the Treasury Milton Kutengule and two others—Antonio Nucifora and Hassan Zaman—indicated that the parastatal’s social functions ceased in early 2000s.
The cessation followed establishment of National Food Reserve Agency (NFRA) and the Department of Poverty and Disaster Management Affairs (now Department of Disaster Management Affairs-Dodma).
In line with the changes, Admarc’s storage capacity, which used to reach 468 000MT, was reduced to 200 000MT with the transfer of storage facilities to NFRA.
Before the reforms, Admarc operated up to 1 300 seasonal markets, 217 unit markets, 80 area offices, 12 district headquarters, three regional offices and 18 storage depots. Half of these were closed and Admarc now operates 700 seasonal markets nationwide.