Centre for Social Concern (CfSC), a faith-based economic think-tank, says Admarc’s decision to increase its retail maize price by 28 percent will trigger a further rise in the cost of living which has remained high.
In a written response yesterday, CfSC economic governance officer Bernard Mphepo said the rise in maize price will compel traders to also adjust upwards the price of the country’s staple food.
He said: “The average cost of living from April to July 2021, according to a report produced by CfSC, has been at K203 000.
“With the minimum wage pegged at K50 000 and majority of Malawians receiving less than K100 000, the increase in price of maize will push Malawians into the poverty bracket.
Mphepo said the rise in maize price will only benefit the rich as most of the smallholder farmers sold their maize to traders.
CfSC has since asked State produce trader Agricultural Development and Marketing Corporation (Admarc)to reconsider the decision as it is bound to negatively impact poor Malawians who are already struggling.
On Friday, the Ministry of Agriculture announced that it has revised upwards maize selling price in all Admarc outlets from K160 to K205 per kg. Admarc is buying maize at K150 per kg.
The price, according to Secretary for Agriculture Erica Maganga, was arrived at after observing the cost of procuring maize as well as that “significant amount of resources for the procurement of maize have been sourced from commercial banks; hence, the proceed also factors the cost of loan repayment”.
On the retail market, maize prices have also been rising.
In August, for instance, while maize prices in Admarc depots remained at K160 per kg, in retail markets, maize prices increased by five percent with some produce markets selling the grain at a maximum of K200 per kg.
By the end of August, the average retail price of maize was slightly below Admarc’s purchasing price averaging K140 per kg.
This is about seven percent higher than the previous month’s average price and 22 percent lower than in August 2020, according to the International Food Policy Research Institute (Ifpri).
In an interview yesterday, Consumers Association of Malawi executive director John Kapito said low maize prices were cushioning consumers from the high cost of living.
He said: “Malawian consumers are currently going through hard times, the majority of them have no access to reliable incomes and this increase is so huge that not many families can afford.
“Government could have used the same taxes to buy maize as a priority considering its implications. It is unfair and unrealistic.”
On his part, Malawi University of Business and Applied Sciences associate professor of economics Betchani Tchereni said while ordinary Malawians will find it tough to buy maize, Admarc needs to recover the costs of buying and storing maize in its silos “without which it will be hard for the company to continue existing”.
On his part, agriculture development policy analyst Tamani Nkhono-Mvula said the raise in maize prices is justifiable to enable Admarc excel and repay its loans.
He said considering that the lean season is not yet here, maize prices in Admarc can also drop based on market demand.
Admarc earlier indicated that it obtained a K60 billion commercial bank loan, apart from receiving K12 billion from Treasury to buy maize.
Maize output this year was estimated at 4.5 million metric tonnes (MT), 27 percent higher than the estimated national requirement of 3.5 million MT.