The Bankers Association of Malawi (BAM) has advised government to make serious efforts in ensuring that the country migrates from subsistence farming to commercial, irrigation farming if the rising inflation is to be tamed.
Malawi’s inflation remains comparatively the highest in the Southern African Development Community (Sadc) region at 22 percent in July.
In an interview with Business News, BAM president Misheck Esau said subsistence farming has failed Malawi considering the lack of progress despite massive investment in the initiative.
“We have been subsidising the price of maize, as you know most of the inflation comes from maize; the Consumer Price Index basket is dominated by food at about 60 percent. What that means is that inflation has been tackled from the supply side. The Reserve Bank of Malawi has been dealing with the demand side of the inflation equation.
“If we tackle supply, that is if we start producing crops that are needed to tame inflation, then we could do better,” he said.
Esau said that there is need for collaborative effort from experts from the ministries of Agriculture, Irrigation and Water Development, and Lands, Housing and Urban Development if this initiative is to be successful.
Mid this year, Minister of Finance, Economic Planning and Development Goodall Gondwe said that the cost of the Farm Inputs Subsidy Programme (Fisp) would be limited to K40 billion ($66,429,000), a considerable saving over K59.7 billion ($99,145,200) spent during the 2014/15 financial year.
But in October, government committed K15 billion ($24,910,900) more for the seed component of the programme, bringing the total of Fisp to K55 billion ($91,339,800).
In an interview with The Guardian last month in Lilongwe, President Peter Mutharika said as one way of eradicating hunger in Malawi, his administration intends to commercialise agriculture by, among other things, distributing tractors to farmers through cooperatives with assistance from the government of India.
In 2012, however, a similar arrangement failed to take off in earnest when government disposed of about 177 tractors, 144 maize shellers, and other accessories meant to mechanise agriculture which was funded to the tune of a $50 million loan from India. n