Govt to pay Admarc K10bn for loss
Taxpayers will have to foot an estimated K10 billion bill to recover losses Agricultural Development and Marketing Corporation (Admarc) will incur in maize deals this financial year, it has emerged.
The State produce trader is buying the staple grain from local traders at K250 per kilogramme (kg) but selling the same at K150/kg between now and April next year. This represents a loss of K100 per kg, excluding logistical costs.
In an interview yesterday, Admarc acting chief executive officer Felix Jumbe said Admarc will restrict each consumer to a maximum of 15kg and will recoup the potential loss of K200/kg from government.
He said: “This is a food ration for the people subsidised through Admarc. Admarc will claim the difference.”
The financially-struggling Admarc plans to buy 50 000 metric tonnes (MT) of maize which translates to about K10 billion.
In a written response last evening, Ministry of Agriculture, Irrigation and Water Development spokesperson Priscilla Mateyu said Admarc has two functions—commercial and social.
She said the corporation is currently playing the social function which government undertakes in times of crisis.
Reacting to the arrangement, University of Malawi’s Chancellor College economics professor Ben Kaluwa described the maize subsidy as “adding on top of a number of other questionable subsidies”.
He observed that the country has no capacity to introduce maize subsidy as it will only balloon domestic borrowing.
Initially, the minimum maize price was pegged at K150/kg. However, the price was revised to K200/kg in August before a further revision to K230/kg in October and the current K250/kg effected last month.
Maize is an important crop to the country, and as part of food, contributes about 45.2 percent to the Consumer Price Index (CPI), an aggregate basket for computing inflation.
On November 30 2019, our sister newspaper Weekend Nation reported that between 2015 and 2019, Admarc has become government’s source of financial pain, draining over K100 billion on recapitalisation and social roles.
