Details have emerged that the Malawi Government’s decision to award contracts to some firms with little experience coupled with logistical incompetence in the supply chain have crippled the Affordable Inputs Programme (AIP).
By last week, at least 40 companies, representing around 47 percent of the 85 firms selected to supply 428 000 tonnes of fertiliser as part of the K158.3 billion AIP, had delivered nothing.
Interviews with officials knowledgeable about the issue established that the reasons for the firms’ failure to meet their contractual obligations ranged from delays to secure financing from banks to insufficient fertiliser on the market due to the quadrupled volume quantity under AIP which has 4.2 million beneficiaries compared to 900 000 for its forerunner the Farm Inputs Subsidy Programme (Fisp).
In the case of some struggling suppliers, the other issue was that they neither had the money to order the input nor the distribution infrastructure to take the products to designated areas, said one official who attended a meeting at Crossroads Hotel in Lilongwe on November 20 2020. During the meeting, the suppliers were taken to task.
Even among those able to take the inputs to farmers, there are several firms only distributing in one extension planning area (EPA) instead of at least three as agreed. there are several firms
The narrow distribution outreach could partly explain the congestion that has left the poor spending several nights at selling points to get their inputs.
To get to the bottom of the AIP mess largely attributed to network glitches, we talked to officials from the Ministry of Agriculture, the Agriculture Committee of Parliament, Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM), suppliers and some AIP beneficiaries.
Worsening the situation is the fact that roughly 180 000 tonnes of fertiliser,
representing around 42 percent of the AIP component, is held up at the ports of Beira and Nacala in Mozambique, according to Agriculture Committee of Parliament chairperson Sameer Suleiman.
He said his committee was not furnished with an explanation on why the commodity was stuck at the ports.
On his part, Minister of Agriculture Lobin Lowe expressed surprise that the inputs were held up, but said he would check with his officials in the ministry.
But Suleiman, who is Blantyre City South East legislator affiliated to the opposition Democratic Progressive Party (DPP), said: “Apart from suppliers abandoning the programme, we also have almost half of the fertiliser still outside Malawi.”
The legislator said as suppliers were delaying with distribution, 600 000 beneficiaries have been removed from the list while another 200 000 were being scrutinised.
Said Suleiman: “We feel there has not been enough scrutiny done on some of the companies as some of the suppliers have neither been in fertiliser business nor done any government tender.” Random interviews with some suppliers showed that the crisis was far from over.
One of the suppliers who was yet to enter the market, SeedCo Malawi Limited, contracted to supply 5 000 metric tonnes (MT) of fertiliser in some parts of Phalombe, Neno and Lilongwe, said the high
demand for fertiliser in Malawi due to expansion of the programme has led to delays to take the product to farmers.
SeedCo Malawi managing director Boyd Luwe said in an interview on Friday that his firm hopes to enter the market next week, but plans to finish its distribution by December 15.
Sunseed Oil Limited, another supplier, attributed the delays to some commercial banks allegedly taking time to complete processing documentation.
However, the firm’s chief executive officer Sameer Ahmed said the firm will soon start selling its 2 000 tonnage in 180 locations in Blantyre, Mchinji and Dowa districts.
Some of the indigenous firms we talked to indicated that most of them failed to meet deadlines because unlike in the previous years when they could access bank loans within 24 hours, this year the process took long due to additional documentation from the Ministry of Agriculture.
“It’s sad that Malawian firms are being blamed because of the late delays, but the truth of the matter is that we have no fertiliser in Malawi because bank processes delayed everything,” said Alex Major, a manager at one of the AIP suppliers Tsogolani Investments.But the private companies are not the only ones failing to supply.
Even the State-run Agricultural Development and Marketing Corporation (Admarc) which boasts the broadest distribution architecture nationally has not started.
Admarc and SFFRFM are the only two public entities among the 85 AIP suppliers participating in the programme.
The duo is charged with supplying 20 percent (10 percent each) of the total programme tonnage while the private firms are supposed to bring in 80 percent.
However, although 47 of the 83 private sector AIP suppliers have not started distribution because they did not have the financing; those on the ground have also struggled with network challenges.
One of the companies, Midima Holdings, which was contracted to supply 5 000MT in Balaka, Phalombe and Machinga, was hoping to sell 300 bags per day since they entered the market on November 17 2020.
But in an interview yesterday, the firm’s managing director Ali Osman indicated that due to network challenges, the firm has been selling an average of 150 bags per day.
Another supplier, Agora Limited, which is supplying 11 000MT in 98 places nationwide, has also reported similar challenges.
“We are yet to see how the issue of network challenges will be addressed,” said Agora Limited regional manager [South] Morotho James.
In an interview yesterday, TNM plc head of brand and marketing communications Louis Chipofya indicated that the system, which was developed by some consul tant and only approached TNM when they needed website, had low capacity, speed, memory and low power of Internet.
He said at the moment, TNM plc was helping to improve the system which was developed manually. But in a written response to a questionnaire on Saturday, Lowe said service providers had managed to upgrade their system.
The minister also said there would be no extension of the programme although going forward consideration will be given on buffer stock purchases.
But Suleiman observed that while buffer stocks would save the country in such situations, government needs to start investing in fertiliser manufacturing industries.
He feared the delays in distributing fertiliser could shrink maize output this season. In a written response yesterday, agronomist Frank Kaulembe of Bvumbwe Research Station observed that once a farmer delays to apply fertiliser they can lose between 20 and 25 percent of their produce. He said this may lessen food harvests and income and could as well threaten food security.
Comment ing on the programme, agricultural analyst Tamani Nkhono-Mvula on Saturday feared that the delayed delivery of fertiliser will mean most people failing to access it in time, resulting in lower productivity and reduced harvest next year.
He said even if the fertiliser stuck at the border was to reach the country in the next two weeks, the logistical challenges the country experiences will affect its delivery to hard-to-reach areas since the rains have now started.
Initially sold as universal subsidy by the Tonse Alliance during the campaign, the initiative turned out to be a near five-fold expansion of Fisp that only targeted 900 000 farming families for less than K30 billion per year while AIP is covering 4.2 million households for K158.3 billion at a much lower redemption price.
With AIP, government is expected to spend about K37 000 to subsidise each farmer accessing inputs under the programme.
Each farmer will have to pay K4 495 per bag of fertiliser accessed and K2 000 for a pack of cereal seed of choice.
Every smallholder farming household is entitled to a 50-kilogramme (kg) bag of NPK; a 50-kg bag of Urea; either five-kg of maize seed or seven-kg of sorghum or seven kg of rice seed, depending on the farmer’s preference.
The tender for warehousing, supplying and retailing of fertiliser was floated on July 29 2020 and opening of the bids was done on August 16 2020.
Of the 161 companies that expressed interest to participate in the programme, 85 firms, of which 49 are owned by indigenous Malawians, were selected and were being cleared by Government Contracting Unit (GCU) before contract negotiations and signing