Ministry of Industry and Trade has launched investigations into allegations of low prices offered by sugar manufacture Illovo Sugar (Malawi) plc to smallholder farmers.
The ministry’s spokesperson Mayeso Msokera told Business Review received submission of concerns from Sugarcane Growers Association of Malawi (Sugam) on the declining prices.
He said: “The matter is under review and currently a fact-finding investigation is underway to gather sufficient information from all the parties including Illovo Sugar Milling Company.
“The process has slightly delayed due to travel and meeting restrictions adopted by most public and private sector entities as a result of coronavirus (Covid-19) pandemic.”
In a statement on Tuesday, Sugam executive secretary Geoffrey Nkata said that in 2018, the company was buying a tonne of sugarcane at K302 290, which is a 22 percent decline from the K235 658, per tonne being offered now.
He said: “This [sugar cane price decline] is despite the fact that the prices of other inputs such as labour, fertilisers and chemicals keep rising. The implication is that the smallholder sugar cane farmers will not make any returns on their investment.
“If the farmers don’t make any significant revenue, there will be a crisis. The smallholder farmers will not be able to pay for harvesting of their cane and field maintenance.”
Nkata, however, said farmers acknowledge that Illovo has been offering lower prices because of lower international sugar prices coupled with smuggling of sugar into the country by unscrupulous traders.
He said some farmers in Dwangwa, Nkhotakota are selling to Salima Sugar Factory, a public private partnership venture under Green Belt Authority, which is located about 170 kilometres from their farms, but the factory is paying for the transportation of the sugar cane.
He admitted that the farmers have little or no influence to bargain for better prices because the prices are determined by Illovo alone.
Nkata said there are 8 000 farmers in Chikwawa and Nkhotakota and Illovo grows 80 percent of the sugar it process while farmers contribute only 20 percent.
Illovo Sugar Malawi plc spokesperson Ireen Phalula said she could not respond as she was still consulting on the matter. Sugar is Malawi’s third major foreign exchange earner after tobacco and tea.