Minister of Finance, Economic Planning and Development Goodall Gondwe says Admarc will pay back the K5 billion from Unforeseen Expenditure Vote for the purchase of produce, including pigeon peas, from farmers.
Briefing journalists in Lilongwe a day after officials from Agricultural Development and Marketing Corporation (Admarc) and Ministry of Trade, Industry and Tourism met Parliament’s Agriculture Committee, the minister said Treasury, with approval from Parliament, allocated K5 billion of the K10 billion from the Unforeseen Expenditure Vote as advance funding to Admarc for the purchase of produce in the financial year ending June 30, 2018.
He said the other K5 billion was allocated to National Food Reserve Agency (NFRA) to buy maize for humanitarian relief.
Said the minister: “This move has been made to ensure that farmers are encouraged to grow the crop again next year. It has nothing to do with elections, but I know this being an election year even when you do a good thing, people want to turn it into a bad thing.”
Gondwe said Admarc would use part of the K5 billion because it has not utilised the whole funding; hence, the directive that part of the money be used to buy pigeon peas.
“There is no question of where the money to buy the commodity has come from. Obviously, if the government is going to fund this exercise, the money is coming from the budget,” he said.
Gondwe also addressed concerns that the K5 billion was meant for maize purchases and has instead been diverted to buy pigeon peas.
He said the K20 billion allocated for maize purchases by Admarc and NFRA for the 2018/19 financial year remained untouched and would only be disbursed once the K10 billion is accounted for.
“There is no market in India now [for pigeon peas] and we hope it will be available in the coming period. Admarc will have to sell the legumes and return the money to the government. All money extended to Admarc has to be returned,” the minister emphasised.
Gondwe’s explanation followed failure by officials from his own ministry, Ministry of Industry, Trade and Tourism and Admarc to give convincing explanations on the directive to the Agriculture Committee of Parliament on Wednesday.
President Peter Mutharika’s directive on Admarc to buy pigeon peas at K230 per kilogramme has received negative feedback from several stakeholders, including Parliament’s Committee on Agriculture and an association of pigeon peas farmers who have argued that the directive is ill-timed or that the money should be directed towards the purchase of maize instead.
Nandolo Farmers Association of Malawi has since called for the suspension of the sales at Admarc on the basis that it has come at a time when most of them had already sold the produce to vendors at very low prices.
But Gondwe has justified the directive, arguing that Ministry of Industry, Trade and Tourism and Ministry of Agriculture, Irrigation and Water Development estimates showed there was a lot of pigeon peas still with farmers after the India market was closed to the Malawian legume.
The Ministry of Industry, Trade and Tourism estimates that farmers have over 20 000 tonnes of pigeon peas which can be sold to Admarc during this window.
Opposition United Transformation Movement (UTM) has alleged that the directive is targeted at lining the pockets of cronies of the Democratic Progressive Party (DPP).
However, Gondwe vehemently denied this assertion, arguing that plans were in the pipeline to purchase legumes including pigeon peas.
But he could not rule out the possibility of individuals who had already purchased from smallholder farmers for possible export selling the pigeon peas to Admarc.
Admarc still owes the government billions which came about as a result of a K45 billion bailout after failing to pay back government guaranteed loans in 2015/16 financial year.
There are ongoing reforms at Admarc which include putting up a framework of a business model and discussions are underway to take out the social function of Admarc to turn it into a commercial entity with a strong balance sheet.
Gondwe said until that was done, the Admarc social function would remain and it was the government’s responsibility to ensure it remains functional.
Reacting to the clarification, chairperson of the Parliamentary Committee on Agriculture Joseph Chidanti Malunga said Gondwe’s explanation was confusing to the committee because Admarc officials had repeatedly informed them the funding for pigeon peas purchases was initially for maize buying.
“We believe Admarc is telling the truth in that they are using the money meant for maize not that this was for buying all produce. The committee is aware Parliament approved K20 billion for maize purchase,” he said.
The Agriculture Committee has since embarked on field visits to observe the purchases and speak to farmers after which they will come up with a position. n