Poor access to information and weak coordination among farmers have undermined efforts to develop structured agricultural commodity markets, more than two decades after government and stakeholders began implementing the initiative.
The challenge was highlighted on Wednesday in Lilongwe during a Commodity Exchange for Africa Malawi (ACE) project dissemination workshop, where researchers presented findings from a study examining why structured markets have failed to take root in most crops beyond tobacco and tea.
Conducted by the Centre for Agricultural Research and Development (Card) at the Lilongwe University of Agriculture and Natural Resources (Luanar), the study found that many smallholder farmers shun structured markets in favour of quick cash sales.
It also noted limited aggregation of produce, with most constraints linked to inadequate information and infrastructure challenges that make it expensive for farmers to transport produce to warehouses.
Conducted in seven districts, the study offers policy recommendations that could help address the problem on why farmers shun the structured market for their produce which could maximise the country’s revenue from the produce market.
In an interview, Card research fellow Thabbie Chilongo said the study recommends intensified awareness campaigns and incentives to encourage farmers to use structured markets, noting that while farmers complain about lack of markets, processors often cite failure by farmers to meet required volumes.
Chilongo said: “One of the reasons farmers failed to take their produce to the warehouse was poor road network. This makes it very expensive to transport their produce to the markets, including the warehouses.
“There is need to build national capacity to collect and share timely, reliable and regularly updated information for example on crop output, prices, costs gross margins monitoring of stock levels and post-harvest losses.”
ACE senior programme manager Esther Kawale whose institution promotes produce structured market by operating warehouses where farmers deposit their produce, hailed the study as key to the formalisation of produce market.
Among others, Kawale said structured market offers benefits like access to collateral on bank loans, price premiums and reduction of post harvest losses on produce among others to farmers.
Kawale said: “The benefits include access to collateral finance through warehouse receipt systems, better price premiums through aggregation and quality enhancement of commodities.”
Recently the Ministry of Industrialisation, Business, Trade and Tourism said it is developing Export Mandates Regulation to formalise trade for selected agricultural commodities under the Control of Goods Regulations.
In a statement, the ministry said under the initiative, government is providing a framework that enhances inclusiveness of farmers and other commodity producers and traders into sustainable and formal market structures
It said the proposed Export Mandates are for selected agricultural commodities, particularly oil seeds such as soy beans, groundnuts and sunflower; pulses such as pigeon peas, cowpeas, beans in all categories; and rice and rice bran.
“The benefits from this initiative include better prices for farmers, access to financial services, better integration of the private sector in the agricultural value chain, greater inflows of foreign exchange and greater public revenues.
“The proposition of introducing export mandates on the strategic commodities contributes towards solving the problems of maintaining commodity prices attractive enough to encourage farmers to continue producing the commodities and facilitating repatriation of foreign exchange earnings from export proceeds and reduce the scarcity of commodities for the industry.”
Malawi has a privately-owned structured market ACE, which was established in 2006 while the government owned Auction Holdings Limited Group AHCX. which was established in 2013 closed.
