Admarc and its reverse maths

In July, the Agricultural Development and Marketing Corporation (Admarc) started buying maize from farmers. The corporation got a K2.5 billion loan for the purchase of 16 000 metric tonnes of the staple.

Farmers, nonetheless, shunned selling their maize to Admarc, which was buying at K150 per kilogramme. The farmers were opting to sell to vendors who were buying between K180 and K200. Admarc was buying at the government set farmgate price.

Agriculture minister Kondwani Nankhumwa announced last Friday that the buying price at Admarc has been raised to K180 if the corporation goes to buy at farmers’ doorstep and K200 if they take it to Admarc.

At the same time, the National Food Reserve Agency (NFRA) has set aside K8 billion to buy 40 000 tonnes of maize at K200 per kilogramme.

In his words, the minister says the purchases will allow government to flood the market with maize, to stabilise the prices. How feasible that will be, remains to be seen, but the perennial trend has been that Admarc mostly sell at lower prices than what they used to buy.

At a time the talk has been about public sector reforms, the reverse mathematics at Admarc costs the taxpayer much. Last year, the taxpayer had to dig deep to make a K45 billion for Admarc.

Without consent from Parliament, as required by law, government repaid K45 billion to four commercial banks, money which Admarc had borrowed for the purchase of maize. Due to other market forces, including proliferation of free maize from charities, Admarc could not sell the maize.

It is very likely, Admarc will again make another gross loss from this endeavour. This is a perennial malady that the corporation has chosen to adopt as business as usual.

It seems the think-tank at Admarc is so much bent on learning nothing from experience. Borrowing money from commercial banks in July to buy maize does not make sense.

The proper time should have been between March and April when the maize is in abundance. People at Admarc know full well that this is the very time vendors go out in the villages to buy maize from farmers.

Currently, the price of maize is constantly rising, with most districts selling it at about K240 per kilogramme. This clearly shows that those who have maize would rather hoard it for the lean period from December to March next year, or sell it on the street where the price is higher.

The constant increases in the price of maize are clear indication that the country faces hunger, again, this year. Admarc did not have the eyes to see this and to say that the body will stabilise the price by flooding it with maize is a tall order, like trying to catch the wind.

Last year, the Malawi Vulnerability Assessment Committee (Mvac) said 3.3 million Malawians were at risk of hunger. The committee is yet to meet for this year’s predictions but one can already see that the pangs of hunger will bite harder this year with heavy flooding in some areas, dry spells in others and fall armyworms that reduced produce.

The lack of vision at Admarc is costing the economy hard. The volatility of maize prices affects the consumer price index, which measures the average change in goods and services’ price. Since vendors have a grasp on much of the maize in the country, they hold the key to the pricing.

That defeats the very role Admarc is supposed to play, control the price which in turn controls the food inflation.