Failure by a government instituted committee to come up with a price at which Admarc should sell maize sourced from Zambia, is raising fears that the majority of the people will not afford the commodity as the cost of importing a 50 kg bag is already higher than the institution’s recommended selling price.
Controller of Agriculture Services (Institutions) Gray Nyandule-Phiri told Government Assurances Committee of Parliament last week that there is debate going on among the various ministries and institutions involved in the purchase of maize but the matter has not been resolved.
“We are in a situation where many in the rural areas may not afford if [the maize] is sold at K6 000 [per 50kg bag]. So, there are consultative meetings to come up with a price. I am aware that has not been resolved and I may not be in a position to give you the price,” he said.
Information sourced from the Ministry of Agriculture, Irrigation and Water Development indicates that government has procured the maize at an average price of K95 per kg and a landed price of K136 per kg with part of the K4.8 billion funding Parliament approved during the budget meeting.
This means a 50kg bag bought from Zambia will cost about K6 700 ($12), which is far above the recommended price at Admarc depots which have been selling at K100 per kg in Blantyre as of August 2 2015, indicating that government can incur losses in the purchase of 30 000 metric tonnes of maize from Zambia if the instituted task force puts the price for maize per kilogramme at the recommended charge or below it.
The information from the ministry further indicates that Admarc started bringing in the maize from Chipata into Malawi on July 15 and as at August 21 19 003 tonnes of the 30 000 had arrived at warehouses at Kanengo in Lilongwe. The expected cut-off point for delivery is end of September.
Government did not tender for procurement of maize but used an open sourcing system and travelled to Zambia and Tanzania to look for markets.
Nyandule-Phiri said government officials failed to reach an agreement with Tanzania when they discovered that maize was selling at over K140/kg and landed costs could have reached K200.
Admarc has also so far secured a K1.9 billion ($3.4 million) loan from FDH Bank and K100 million ($178 571.43) from Auction Holdings Commodity Exchange (AHCX), which they have honoured using Treasury guarantee.
Of K2 billion ($3.6 million) loan, about K1.6 billion ($28.6 million) has already been spent to procure 14 566 tonnes of maize, with 10 221 from the Central Region, 3 856 from the North and 489 from the South.
But grain sales at Admarc remain suspended as the marketer procures maize locally and from Zambia for distribution to outlets which are experiencing shortages at the moment.
The food situation in the country is dire after floods that displaced over 230 000 people, washed away thousands of hectares of crops and killed more than 150 people.
Malawi Vulnerability Assessment Committee (Mvac) has estimated that the country needs 90 000 tonnes to meet food needs this year.
The Ministry of Agriculture earlier announced a 30 percent drop in food production this year due to the flooding and drought in most parts of the country.
Mvac report said due to acute food shortage, about 2.8 million Malawians in 25 districts face hunger. These people will need food assistance between October and March.
The Strategic Grain Reserves (SGR) have 36 106 tonnes currently.