Study faults Admarc for failure to enforce prices

A study by the Lilongwe University of Agriculture and Natural Resources (Luanar) has found that the Agricultural Development and Marketing Corporation (Admarc) is failing to influence and enforce maize prices on retail markets in Malawi.

The study states that the development is contrary to Admarc’s mandate of serving as an instrument for transmitting maize prices to other markets across the country.

The study titled: ‘Analysis of maize market integration in Malawi: Are government-influenced Admarc prices transmitted to retail markets?’; was done by Beston Maonga and Wisdom Richard Mgomezulu from the faculty of Development Studies, Department of Agricultural and Applied Economics at Luanar.

Reads the study in part: “As a social protection agency, Admarc should purchase maize at a floor price that is competitive with retail market prices. Increased investment and reduced administrative and bureaucratic constraints in the procurement of maize would be required”.

The researchers found that long-run coefficients also show no significant relationship between Admarc prices and those in the retail markets, but strong integration exists among the retail markets both in the short-run and long-run.

The study focused on six strategic retail maize markets spread across the Northern Region districts of Mzimba and Chitipa; Dowa and Lilongwe in the Central Region and Ntaja and Lunzu in the Southern Region.

While agreeing with the findings, Ministry of Agriculture spokesperson Gracian Lungu said things are now different where Admarc will be entering the market early owing to the change in the financial year from June to July to April to March.

He said Admarc has been given K12 billion in the current budget for buying maize from farmers early and that the ministry will be working with law enforcement agencies to enforce minimum prices to protect farmers from exploitative vendors.

However agriculture expert Tamani Nkhono-Mvula faulted the maize marketing situation in Malawi, saying it remains volatile and unpredictable.

“If you look at country by country in the Southern African 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” he said.

He said the situation is worse due to the dysfunctional nature of Admarc which was supposed to be providing a ready market for the staple grain.

Maize is economically an important food commodity whose pricing defines household food security in Malawi.

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.