Government is pondering on changing policy on the funding of State enterprises tasked to buy maize by prefunding them.
The idea means government has to move Parliament to partially pre-fund Ministry of Agriculture, Irrigation and Water Development so that two State-funded institutions that buy maize, the Agricultural Development and Marketing Corporation (Admarc) and National Food Reserve Agency (NFRA) are timely-funded.
Minister of Agriculture Joseph Mwanamvekha said the ministry was internally discussing about the partial prefund to his ministry considering that the problems the local farmers face appear to be perennial and leave traders to take advantage of them.
He explained that the proposed partial prefund, according to his ministry’s proposal as per the internal discussions, can be accommodated during the Mid-Term Budget Review that takes place in February, so that its easy to factor in Admarc and NFRA funding before farmers start harvesting.
The only stumbling block the ministry must deal with is the law as it does not allow any State institution to spend outside an approved budget by Parliament, he said.
Mwanamvekha was, however, quick to say, it was going to be premature to discuss finer details about the proposal as the matter was being discussed internally and more consultations will be made, especially with Ministry of Justice and Constitutional Affairs.
“You can bear with us, not much can be said about this as this is a matter to do with law. We only spend what has been approved by Parliament, so we are still discussing internally, and more consultations will be made,” Mwanamvekha said.
The minister, nevertheless, said government shares the pain the local farmers go through that in most circumstances, they are lured by traders who buy their farm produce at ‘very lower prices’ taking advantage of their desperation.
“The traders know the local farmers have to repay loans for fertiliser and other farm inputs. By the time Admarc and NFRA get their funding, it is late,” Mwanamvekha said.
The minister said by the time he was giving this interview, Admarc depots had opened some markets according to a report he had on his desk, also indicating the amounts of money allocated to each Admarc market.
An insider at Ministry of Agriculture said Admarc and NFRA every year await for funding from government to start buying maize for reserves.
“The National Budget is passed in June, effective 1st July for each financial year. But if you look at harvesting season in Malawi that has changed over time, farmers start harvesting from March, April and May, but they will have to wait for government to fund Admarc and NFRA after the passing of a budget in June, and clearly, this seem not to make sense,” said the source.
The insider said the internal meetings he has attended have always agreed the necessity for government to partially prefund the ministry, but have also agreed that the change cannot be done without involvement of and consulting Ministry of Justice and Constitutional Affairs as the issue borders on changing law.
“Much as the ministry would love to make the changes, it has been understood that would take some time as government expenditure for each financial year is approved by Parliament and spending outside the Budget, is illegal,” he explained.
Over the years, both Admarc and NFRA have been recieving their funding from government for purchases of maize and other farm produce late, forcing the local farmers to start selling their produce to traders, most of the time at lower prices.
The traders resell the farm produce to Admarc, mostly at a huge profit, disadvantaging the local farmer who toil, but fail to yield the anticipated gain due to lower prices the traders buy from them, according to Civil Society Agriculture Network (CisaNet).
CisaNet national coordinator Pamela Kuwali said in an interview the local farmers have suffered for a long time.
“Government needs to look for lasting solutions to resolving these issues,” she said.
On maize, the official price Admarc is offering K150 per kilogramme (kg), yet the traders bought the same maize from the local farmers in their desperate situations at K50 per kg, killing a 150 percent profit if they sell the same at Admarc.
In informal markets, the traders are selling the maize they bought from the local farmers at K50 per kg for around K100 per kg, still making a 100 percent profit, literally reaping from the sweat of the local farmer.