The African Institute of Corporate Citizenship (AICC) has asked State grain produce and trader Agricultural Development and Marketing Corporation (Admarc) to keep its hands off the cotton sector arguing that the entity is dampening competition in the sector.
AICC chief executive officer Felix Lombe has said the involvement of Admarc in the sector seems to be “doing more harm than good”.
“Much as Admarc has a social component, not all sectors of agriculture will require the social hand to avoid distorting the market,” he said.
Lombe explained that Admarc should operate just like ginners are operating and work on the principle of marginal returns.
He noted that Admarc, in as far as cotton is concerned, does not care whether it makes profits or losses while the other players are into profit-making arguing that as far as sustainability of the sector is concerned, the State trader is failing the sector.
Sharing these sentiments, Cotton Council of Malawi vice-chairperson Spencer Zinyemba, in response to an e-mailed questionnaire said the case of Admarc working alongside other eight ginners has been causing problems since last year.
“We can recall last season when they were buying at higher prices than any ginner even when any increase in price brought them a loss. Ginning is a business and can continue thriving well only if there is a reasonable level of profit,” he said.
Zinyemba said the council, however, appreciates efforts by organised groups working in consultation with Competition and Fair Trading Commission (CFTC), such as the ginners, saying such moves are helping reduce some unfair trading practices.
Cotton, mainly grown by smallholder farmers, is the main cash crop for about 30 000 farming families. The crop is mainly grown in the Lower Shire valley and the lake shore areas.