Local seed firms fault ministry on contracts

In the 2021/22 National Budget, Minister of Finance Felix Mlusu announced that out of the K160.2 billion allocation, K132.7 billion was for fertiliser payment, K25.7 billion for maize seed and K1.8 billion for logistics.

As Malawi is enforcing policies to end foreigners’ monopoly in public contracts, the Ministry of Agriculture has awarded the lion’s share of the 2021/22 Affordable Inputs Programme (AIP) K12.1 billion seeds procurement deals to multinational companies, sparking an outcry from indigenous firms.

This is contrary to the preferential treatment provision stipulated in Section 44 (10) of the Public Procurement and Disposal of Assets (PPDA) Act.

The Act compels procuring and disposing entities to award 60 percent of all contracts under national competitive bidding to Malawian companies and the remaining 40 percent to others.

While acknowledging the failure to meet the requirement, the Ministry of Agriculture has justified the move, arguing that most local companies did not have adequate verified quantities and that their seeds fell outside the demanded varieties.

Last week, the ministry issued a notification of intention to award the contracts to supply 18 570 metric tonnes (MT) of certified maize, sorghum and rice seeds which will be sold to about 3.7 million families at subsidised prices.

Three multinational companies—Seed-Co, Bayer and Seed Tech—have been awarded contracts to supply 11 732MT while seven indigenous firms have been given the remaining 6 838MT.

In terms of monetary value, the foreign-owned manufacturers will pocket over K7.9 billion while the indigenous firms’ cut totals K4.1 billion.

In an interview on Wednesday, Ministry of Agriculture spokesperson Gracian Lungu said it was difficult to fulfil the requirement when most local suppliers failed to meet the requirements.

He said: “We carried out an assessment of the seed producers. We inspected their warehouses. Most of the indigenous Malawians did not have enough verified quantities while some did not have the necessary paperwork to earn consideration.

“Again, most local producers have open pollinated varieties. What we need in this programme are hybrid seeds for maximum production. Another factor is that most farmers prefer seeds from Bayer and Seed-Co. So, we can’t just short-change them now.”

Lungu said 26 companies bid for the seed contracts. Our snap survey shows that almost all of those that were turned down were indigenous bidders.

Meanwhile, Seed Trade Association of Malawi general secretary Nessimu Nyama has said it is sad that most indigenous companies were unsuccessful with their bids.

He blamed the development on delays to have their seeds verified.

Said Nyama: “This year, we had too much rain so by July, most seeds’ moisture content was high which made it difficult for their seeds to get certified on time. Meanwhile, the multinational companies had bulks of verified seeds which gave them an upper hand.”

He said to support the home industry, the ministry was supposed to wait for the indigenous firms’ seeds to be verified before proceeding with the inspection of seeds.

“That said, the ministry may not have time to wait. procurement are trickier when it comes to seeds. It’s not like any other commodity as there are strict assessments that are followed.

“Let us accept that it has been a tough year for indigenous companies. Let us also learn from this experience. Being indigenous alone will not get us deals. We must jack up and be competitive,” said Nyama.

But some of the local seed manufacturers, who spoke on condition of anonymity for fear of being blacklisted, hit back at the ministry for giving lame excuses to justify its failure to honour the presidential directive.

Said one source: “My seeds were certified a long time ago. I followed almost 99 percent of all the requirements. My only sin, they say, was that I did not have a bank credit line letter.

“I didn’t need one because I didn’t want to borrow money as our firm already has the financial capacity to supply the seeds successfully.”

Another producer also bashed the ministry for hyping hybrid seeds when some Malawians prefer open pollinated varieties widely known as “local maize seeds”.

Said the producer: “We trade is several districts and, I can assure you that there are a lot of farmers out there who want our open pollinated variety seed which is disease- resilient and its yields are almost the same as hybrid. Sadly, the farmers will be forced to grow hybrid seeds because they are the ones being subsidised.”

Since the Tonse Alliance administration came to power last year, it has been pushing for the enforcement of 2017 PPDA Act’s provision that promotes preferential treatment in favour of local suppliers.

Meanwhile, the PPDA has formulated regulations aimed at operationalising and offer guidance on the implementation process of the provision which it says seeks to address inequalities, especially with regard to participation by black indigenous Malawians in public procurement.

While some have commended government for seeking to empower local seed producers, political analysts have critised it for drafting members of Parliament in AIP transport logistics, arguing the legislators are supposed to provide oversight and not be involved themselves in inputs transportation.

According to the Ministry of Trade, in the 2019/2020 financial year, out of the K600 billion government procurement budget less than 15 percent was taken up by black indigenous Malawians.

In the 2021/22 National Budget, Minister of Finance Felix Mlusu announced that out of the K160.2 billion allocation, K132.7 billion was for fertiliser payment, K25.7 billion for maize seed and K1.8 billion for logistics