The African Institute for Corporate Citizenship (AICC) says the grain sector in Malawi needs a well-structured commodity marketing system if farmers are to realise maximum profits from their grain produce.
AICC, an organisation promoting development of business, especially in the agriculture sector, said the current grain marketing system in which everyone is a buyer leaves many grain farmers worse off.
AICC head of programmes Driana Lwanda said this on Tuesday at a media briefing in Lilongwe.
She said Malawi needs a proper direction in grain commodity marketing, either by using an auction or export mandate system.
“Through the auction system, multiple buyers compete in offering prices and that would be easier for the grain to be marketed and for farmers to make profits from their grain produce,” Lwanda said.
The export mandate system calls a single commodity exchange market or buyer.
The current grain marketing system whereby everyone mounts a scale and starts buying grain commodities is said to leave many farmers worse off.
A position paper on the future of grain markets in Malawi adopted in August this year by 49 stakeholders in the agriculture sector, acknowledged that price fluctuations in the current market regime eats out 40 percent of a farmer’s average income from grain produce.
“The prevailing grain marketing compromises the potential that the subsector has in socio-economic development of the country. As farmers lose out, the nation also loses out on potential earnings,” the paper stated.
The establishment of an enforceable system guiding grain commodity marketing is billed as the viable way in boosting the grain sector in the country.
The country already has Auction Holdings Limited and Agriculture Commodity Exchange (AHCX) that are trading as commodities exchange markets. But the two are not using the auction system that key players in grain sector are promoting, according to Lwanda.
Apart from the auction system, export mandate system is also mooted as another way to go with government as its staunch supporter.
If Malawi can adopt the latter, it means one of the current commodities exchange markets, AHCX and ACX, has to go.
The debate is expected to bring together stakeholders in agriculture value chain to look for solutions at how best Malawi can structure the grain marketing under the big question “Should Malawi extend the Auction System and Export Mandate to Grain Marketing?”
“We expect this debate to come up with solutions and actions in adopting the best grain marketing system,” Lwanda said.