Farmers Union o f Malawi (FUM) has asked government to adjust upwards the minimum farm gate price for maize from K150 per kilogramme (kg) to K200 for farmers to make profits.
FUM president Frighton Njolomole said this in an interview yesterday in reaction to the minimum farm gate prices for the 2020/21 agricultural season released last week.
He said such an adjustment would be a good compensation and an incentive to medium and large-scale farmers who use more inputs in their production mix.
Said Njolomole: “We are compelled to think that government assumes that the cost of production for maize went down due to the Affordable Input Programme [AIP]. However, data from the Ministry of Agriculture indicates that only 3.4 million households (out of the targeted 3.7 million) actually redeemed their inputs.
“This means that about half a million farming households produced their maize with fertiliser purchased at a commercial price; hence, the set K150 per kg maize price will greatly erode their profit margins.”
He argued that their gross margin analysis indicates that farmers who did not benefit from AIP will only break even at a price of K170 per kg and that any price above that will ensure
farmers make profit.
“However, considering that gross margin analysis does not include all costs, FUM would like to request government to raise the farm gate price for maize to at least K200 per kg,” said Njolomole.
But in a separate interview yesterday, Parliamentary Committee on Agriculture chairperson Sameer Suleiman said considering that maize production was heavily subsidised, resulting in low production costs to the farmers, it is the sales margin that will motivate farmers going forward.
He said: “My assumption is that the lower farm gate price of K150 is arising from that background of the heavy subsidy that has dampened production costs while at the same time, surging production volume.
“In considering whether there is progress over the years, one has to look at sales margins as opposed to the sales price. I strongly believe that the sales margin is what will encourage or motivate farmers.”
Minister of Agriculture Lobin Lowe last week said the minimum farm gate prices are determined by cost of production, market forces, price trends for previous years and export parity; hence, consultations are made with key stakeholders within the agricultural sector.
He said: “The process of determining farm gate prices involves a wide dimension of agricultural stakeholders.”
Agricultural policy and development expert Tamani Nkhono-Mvula and Civil Society Agriculture Network (CisaNet) executive director Pamela Kuwali, told yesterday’s edition of The Nation that the prices are fair as many farmers benefited from AIP.
Both Nkhono-Mvula and Kuwali said since most farmers benefited from the input programme, they incurred less costs; hence, they would make profit at the same prices.
In the 2017/18 season, maize was set at K170 per kg while in the 2018/19 season, it was pegged at K180 per kg. In the 2019/20 season, it was set at K200 per kg before the current K150 per kg.
According to the new farm gate prices, polished rice will be selling at K600 per kg, unpolished rice at K250 per kg, pure beans at K510 per kg from K450 per kg, mixed beans at K410 per kg, shelled groundnuts at K480 per kg, unshelled groundnuts at K330 per kg, pigeon peas at K240 per kg while cotton will be selling at K320 per kg, just to mention a few.
Government, through the Ministry of Agriculture, sets minimum farm gate prices
for major agriculture commodities such as beans, cassava, groundnuts, maize and rice at the onset of each season to regulate grain prices and protect farmers from exploitation by traders.
The minimum prices are based on historical monthly prices that are collected across the country in 72 markets.
But in November last year, an assessment by the Agriculture Policy Research Africa faulted government for failing to enforce the minimum farm gate prices, leading to traders not abiding by them and in turn leading to of farmers incurring losses.
In its August 2020 paper titled Can A Maize Price Band Work in Malawi?, International Food Policy Research Institute also stated that over the last 12 years, government intervention has been unable to lift estimated farm gate maize prices above the floor set by minimum farm gate prices