Maize farmers are selling their produce at 12 percent below the minimum farm gate price of K200 per kilogramme, a maize market report has shown.
In its April 2020 Maize Market Report published on Wednesday, the International Food Policy Research Institute (Ifpri) said preliminary findings from the institute’s countrywide maize price crowd sourcing activity showed that 69 percent of participating farmers sold at prices below the minimum farm gate price in April.
This is despite Ministry of Agriculture and Food Security announcing the minimum farm gate prices on April 12.
By the end of April, the average retail maize price had decreased by 10 percent to K177 per kg, which is five percent higher than in April 2019.
The highest price was recorded in Mbayani, Blantyre at K217 per kg while Mzimba recorded the lowest price at K146 per kg.
By the end of April, prices in Malawi’s Mzuzu (K208 per kg), Karonga (K191 per kg), Lunzu, Blantyre (K170 per kg) and Mitundu, Lilongwe (K160 per kg) markets were higher than in Nairobi (Kenya), on Safex (the main grain futures markets in South Africa), and the average wholesale maize price in Lusaka, Zambia.
Reads the report in part: “On average, retail prices of old maize were K74 per kg higher than of new maize. This price difference is not unusual as traders argue that new maize has higher moisture content.
“This price decline is expected as the harvest season for maize continues.”
Agricutural analyst Tamani Nkhono-Mvula believes that unless government enforces minimum prices and farmers get organised, the farmgate prices that the government releases every year won’t be of any benefit to the farmer.
Maize, the country’s staple grain’s production is projected to increase by 8.8 percent from 3 391 924 metric tonnes in 2018/2019 growing season to 3 691 866 in the 2019/2020 growing season to favourable weather conditions and increased uptake of inputs by farmers.
Maize, as part of the food component, impacts the country’s economy given that it constitutes 45.2 percent of the Consumer Price Index (CPI), which is an aggregate basket of goods and services for computing inflation.
Farm gate or minimum prices are usually calculated based on gross margin analysis that shows how much a farmer has invested versus what will be the likely benefit.
Nkhono-Mvula observed in an interview that while the structure of the economy doesn’t allow for proper enforcing mechanism, getting organised could help farmers increase their bargaining.
Farmers Union of Malawi (FUM) also ealier observed that on paper, the prices are higher than those offered in previous years, but insisted that protection is needed to ensure that farmers benefit.
Ministry of Agriculture, Irrigation and Water Development Principal Secretary Grey Nyandule-Phiri earlier said as a control measure, the ministry attaches conditions to permits given to traders to buy farm produce at the recommended price, one of which is adherence to minimum prices.