An assessment by the Agriculture Policy Research Africa (Apra) has faulted government’s failure to enforce the minimum farm gate prices, which leads to most traders not complying with the same and eventual losses for farmers.
It its latest assessment, ‘Do farmers benefit when they sell to small-scale traders in the rural market in Malawi?’ Apra observes that while traders are supposed to purchase agricultural commodities from smallholder farmers at or above the set minimum farm gate prices, most traders do not comply.
According to the assessment report, done by Economist Stevier Kaiyatsa and others, the purchasing prices that traders use are below the official farm gate prices by about two-thirds.
It reads: “The traders are supposed to purchase agricultural commodities from smallholder farmers at or above the set minimum farm gate prices. However, the government does not enforce the minimum farm gate prices; as such, most traders do not comply.
“Evidence indicates that the purchasing prices that traders use are below the official farm gate prices by about two-thirds. Further, most traders use unstandardised equipment (i.e. weighing scales) to purchase from smallholder farmers, which rips off farmers’ income.”
Although the farm gate prices are lower than the government minimum prices in general, the report notes that small-scale traders also purchase smaller quantities from smallholder farmers at very low prices compared to what the large-scale traders purchase.
According to this report, stable markets and better prices may strengthen farmer organisationsis and improve the living standards of its members.
Conversely, it argues that smallholder farmers that operate in isolation produce smaller quantities that may be geographically dispersed and attract operations of small-scale traders that penetrate the rural remote areas.
It adds: “The authors find that within a span of 10 years crop income for smallholder farmers that sell to small-scale traders marginally improved by K11 917 ($16.41), on average. However, there was no improvement in their value of assets.
“The authors attributed the marginal improvement in crop income, and not in the value of assets, to poor prices that small-scale traders use to purchase agricultural commodities from smallholder farmers that produce smaller quantities in isolation.”
Spokesperson for the Ministry of Agriculture, Gracian Lungu said he needed more time before responding on the matter.
But in its August 2020 paper titled ‘Can a maize price band work in Malawi? International Food Policy Research Institute (Ifpri) also said over the last 12 years, government intervention has been unable to lift estimated farmgate maize prices above the floor set by minimum farmgate prices.
Government, through the Ministry of Agriculture sets minimum farm gate prices for major agricultural 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.