AIP suppliers to shoulder forex burden—ministry

Ministry of Agriculture has said supplier s of fertiliser for this year’s Affordable Inputs Programme (AIP) will be paid in kwacha to avoid delays in implementation of the programme due to forex shortage.

Ministry of Agriculture PS for Irrigation Services Geoffrey Mamba revealed this on Thursday when the ministry appeared before the Parliamentary Committee on Agriculture and Irrigation to update it on progress of preparations for this year’s AIP.

He said the government will not have to be burdened with forex issues as all contracts will be in kwacha.

Said Mamba: “There is a small difference in the way we have structured the contracts this year. The contract requires that suppliers, when they supply, will be paid in Malawi kwacha.

“So, in terms of the forex burden, it has shifted from the ministry to the suppliers because they will be paid in Malawi kwacha and they have to discuss with their banks to arrange for the forex,” he said.

Mamba further said the ministry has made progress in procurement of suppliers and expects that contracts will be awarded by the end of this month.

The PS also said they expect distribution of the inputs will be done in September or October.

This year’s AIP has been allocated K161 billion up from K109 billion last year.

AIP national coordinator Justin Kagona said this year’s subsidy programme is targeting 1 054 945 down from 1.5 million beneficiaries targeted last year.

“Government is expecting to source 104 844.5 metric tonnes [MT] of fertiliser to support beneficiaries under crop production,” he said.

According to Kagona, the country has about 109 408 MT of fertilizer in stock.

“More ferti l iser is expected to be in the country as there is about 164 700 metric tonnes in the ports,” he added.

Kagona also told the committee that the farmer contribution for a bag of fertiliser has been maintained at K15 000 to enable them afford fertiliser after being heavily affected by El Nino. Each farmer will benefit one bag of NPK and Urea.

“Although we are seeing an increase in fertiliser prices, the farmer contribution has been maintained at K15 000 per bag.

“G o v e r n m e n t contribution is K67 900 for each bag of fertilizer,” said Kagona.

The commi t t e e ’ s chairper son Sameer Suleman doubted if suppliers will accept to be paid in kwacha, saying AIP requires huge volumes of fertiliser which needs forex to be sourced.

“So, there is a need for the Reserve Bank of Malawi (RBM) to put aside forex for procurement of fertiliser to avoid import challenges,” he said.

During the launch of the 2023 programme on October 20, President Lazarus Chakwera gave the Ministry of Agriculture 40 days to implement the programme.

However at the expiry of the deadline, the ministry had reached only 46 percent of the beneficiaries and most had accessed only NPK due to forex shortages.