Admarc sets itself on recovery path

Admarc has said it is repositioning itself to become a competitive player on the market without necessarily abdicating its social responsibility.

The newly-appointed chief executive officer for the corporation Dr Jerry Jana said in an exclusive interview with Business News recently that he was optimistic that the organisation’s fortunes would be turned around after getting assurance from government that it would be releasing money in good time to allow the parastatal to engage in commercial activities.

Admarc was failing to compete favourably because government used to release funding to the organisation after the private traders had already depleted farm produce on the market.

Jana said at the time Admarc was being restructured on advice from the World Bank and other donors, the State-owned company did not reposition itself for competition.

He said following the restructuring process, Admarc was restricted to trading, thereby moving away from other activities that used to bring it money.

“But during the transition, market dynamics have changed,” said Jana, who took over the corporation’s top position after Dr Charles Matabwa’s contract was terminated before expiry.

“Because of pressure from the World Bank and other donor partners, while recommending that Admarc should divorce from its other portfolios and focus on its core business, what they also recommended was that commodity trading business should be liberalised and their argument was that there was sufficient capacity from private traders to perform this function of trading in commodities,” he said.

Jana said since Admarc enjoyed monopoly on the farm produce market for a long time and never restrategised following the liberalisation of the economy, it was difficult for the corporation to survive; hence, the shrinking which resulted in annual losses.

“Admarc is facing stiff competition from other players on the market. The unfortunate part with Admarc was that it did not restrategise in the face of new challenges on the market.

“Because it relied much on government support for trading, Admarc had to wait for government support by way of funding to do its trading. What that meant is that it had to play the same game like any other player on the market, but what did not happen is that government, which was supporting Admarc, did not position itself to make the organisation competitive on the market, especially in releasing resources on time.

“Consequently, when Admarc went to the market, private traders had already dictated the price,” explained Jana.

He said Admarc has suffered losses because it buys farm produce at high prices and sells them at low prices, which government sets to satisfy its social obligation role.

Jana cited as examples situations where Admarc would buy maize at K65 (about $0.22) per kilogramme (kg) and sell the same at K60 (about $0.20) per kg to make it affordable to average Malawians.

Going forward, he said Admarc can still provide its social service obligation, but at the same time build a viable commercial base because it has huge infrastructure on the ground.

“An early entry on the market, which is important to make Admarc profitable, depends largely on timely financial inflows. We had discussions with government and it appreciated challenges of late release of funds.

“We are looking at Admarc to be an organisation that is able to serve its social functions because it is its responsibility. We cannot divorce ourselves from social services. Admarc has a huge potential not only to become the biggest trader, but also to add value to produce,” he said.