Malawi has the highest level of maize price volatility compared to other sub-Saharan African countries, a recent study has shown.
The study by two researchers from International Food Policy Research Institute (Ifpri) Dennis Ochieng and Rosemary Botha, investigated the structure, conduct and performance of the country’s maize market.
The findings show a widespread lack of maize grading standards and common weights measures that characterise the country’s maize marketing compared to other countries in the region; hence, it does not fetch desired revenue on the market.
Reads the report in part: “In terms of the performance of the maize market, maize prices have been highly volatile with high volume seasonality and high price volatility.
“Overall, Malawi had the highest level of price volatility in comparison to other regional countries such as Ethiopia, Kenya, Mozambique, Rwanda and South Africa. About 61 percent of traders perceived that prices were most volatile during main harvest seasons.”
The report also found that the local maize market is not transparent enough to facilitate traders’ planning, which would likely help stabilise both volumes and prices.
This means that prices in different markets do not follow the same patterns, which suggests poor integration between markets in different locations both within and between regions.
“Discretionary policy interventions that restrict and undermine incentives in the maize trade should be minimised if not eliminated and that upgrading road and telecommunication infrastructure in remote areas, as well as better warehousing, will facilitate timely and cheaper access to markets and market information,” reads the report.
Agriculture expert Tamani Nkhono-Mvula said the findings are a true reflection of the maize marketing situation in Malawi.
“Since there is no commercial maize production in Malawi, the market itself responds to the informality of maize production and marketing in the country.
“If you look at country by country in the region, there is commercial production because the maize value chain is well established and there are companies that use maize as raw material for production, for instance, the production of cornflakes” said Nkhono-Mvula.
He said the situation is worse due to the dysfunctional of Agricultural Development and Marketing Corporation (Admarc) which was supposed to be providing a ready market for the staple grain.
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.
This means shortage of maize has a direct bearing on inflation.
This year’s maize surplus was estimated at 355 000 metric tonnes out of a total output of 3.3 million MT.