Minister of Agriculture Lobin Lowe says government will not bow down to pressure from major private fertiliser suppliers and agro-dealers to raise the price of subsidised fertiliser above K27 000 per bag.
He stated the position yes t erday when he delivered a ministerial statement in Parliament in Lilongwe on the state of the 2021/22 Affordable Inputs Programme (AIP).
Members of Parliament (MPs) had asked the Ministry of Agriculture what it was doing to raise AIP fertiliser prices in line with the demands from 13 suppliers who are boycotting the programme because government capped a 50 kilogramme (kg) bag at K27 000, which is below the market value.
Other queries bordered on what the government will do to mitigate supply deficit likely to affect implementation of the programme.
Reacting to the questions, Lowe said suppliers who are boycotting AIP should rethink their position and sign the contracts or else government will find alternative suppliers.
He said: “Our findings show that globally fertiliser is selling around K23 000 to K25 000 per 50 kilogramme bag, which is why we capped the local AIP fertiliser prices at K27 000 for suppliers to break even.
“We are learning from the media about 13 suppliers boycotting the AIP. As government, we will not wait for them. They should take it or leave it, otherwise we will increase volumes for the public suppliers and provide addendum to the willing private sector players after they complete their quota.”
Lowe accused what he called ‘cartels’ in the fertiliser business of being bent to rip off poor Malawians by raising fertiliser prices beyond the expected band.
Budget and Finance Committee of Parliament chairperson Gladys Ganda asked Lowe to tell the House how much extra the taxpayer will cough towards the AIP amid rising prices as the K142.2 billion budget was passed before the price rise.
In response, the minister said he did not have the figure off his head, but assured that the information will be provided in due course.
He said under the programme government is contributing K19 500 per bag, up from last year’s K17 000 while farmers are contributing K7 500 per 50kg fertiliser bag.
Lowe said government capped the 50kg bag at K27 000 because succumbing to private sector demands of K36 000 per bag would mean the whole agriculture budget will be consumed by the AIP only.
Yesterday, The Nation reported that this year’s AIP has suffered a fresh setback as 13 companies, including major agro-dealerships, have shunned the exercise despite being issued contracts to sign.
The suppliers are Chipiku, Rab Processors, Kulima Gold, ETG, GYP Imports & Exports, Kelvam Enterprise, Tiwale Investments, B a kwe n a Investments , Milazi Holdings, Worldwide Wholesalers, Midima Holdings, Ellite Engineering Supplies Limited and Nellie Investment.
The move could leave a shortfall of 800 000 bags of fertiliser as the 13 collectively were expected to supply 40 000 metric tons (MT) to cover 400 000 beneficiary smallholder farming households. The programme has 3.7 million beneficiaries.
Fertiliser Association of Malawi executive administration officer Mbawaka Phiri, who is on record as having cautioned government against pegging the price of fertiliser at K27 000 per bag, said the suppliers might have boycotted the contracts due to low price.
Agriculture policy expert Tamani Nkhono Mvula said he was not surprised that some traders have rejected the contracts as the K27 000 price was not practical for business.
But in his statement, Lowe said the ministry will work with two State agencies Agricultural Development and Marketing
Corporation (Admarc) and Smallholder Farmers Fertiliser Fund of Malawi (SFFRFM) and 164 private fertiliser companies to supply NPK and Urea to programme beneficiaries.
The statement said this is the second week of selling the inputs.
As of midday yesterday, 38 374.85M) of fertiliser (22 979MT NPK, 15 396MT Urea) and 1 143MT of seed have been accessed by farmers representing 10.6 percent and 6.16 percent respectively. The State agencies will retail 34 percent and private sector will retail 66 percent of the inputs