Malawi Government and other players in the economy need to seriously consider providing special lending rates for medium to large-scale farmers to stimulate agriculture production, the Farmers Union of Malawi (FUM) has said.
Malawi is an agro-based economy and the agriculture sector is the countryâ€™s largest employer and contributes about 30 percent to the gross domestic product (GDP).
FUM head of programme Jacob Nyirongo has observed that most farmersâ€™ profit margin is hugely affected because they spend more to service the debts.
â€œOur [Malawiâ€™s] cost of capital is higher than regional neighbours such as Zambia, Tanzania and Lesotho. This means they produce the same quantity of crop at a lower cost than us,â€ he argued at an Association of Business Journalists national conference on Friday in Mangochi, adding that this reduces competitiveness of Malawiâ€™s products on the global market.
Nyirongo said in most cases, the yield is also low because the production prices are higher than expected.
Not only is the cost of credit high in Malawi but also storage is a problem with post-harvest losses more than regional neighbours.
â€œPrice instability is also a big challenge. Farmers are exposed to both intra-season and inter-year price fluctuations,â€ said Nyirongo.
FUM has since called for a guaranteed fund to be accessed by farmers to stimulate production and establishment of structured marketing, among other interventions.
The farmersâ€™ organisation also said farmers have to use efficient technologies and improved seeds to reduce the cost of productions.
And because financial institutions would not be comfortable to lend to individual farmers, Nyirongo encouraged farmers to form cooperatives which could act as a platform where they can grow and access finance.
â€œMost of the farmers have remained isolated due to weak farmer organisations,â€ he said.