The Famine and Early Warning Systems Network (FewsNet) says Admarc’s lack of money to buy agriculture produce has put farmers at the mercy of unscrupulous traders who are ripping them off.
FewsNet, a USaid-funded provider of early warning and analysis on food security, said this in its August 2020 Malawi Food Security Outlook Update published on Tuesday.
It said because of this, some farmers in the Northern Regioni— especially in Chitipa— are selling most of their maize to unscrupulous traders, with some across the border in Tanzania.
FewsNet said this has been compounded by a drop in demand from companies that buy maize for manufacturing due to the impact of the Covid-19 pandemic on economic activity.
Reads the update in part: “Apart from above-average production, downward pressure on prices has resulted from a slump in demand from companies that purchase maize for manufacturing due to impacts of Covid-19 on economic activity.
“Additionally, bulk maize purchases by Admarc [Agricultural Development and Marketing Corporation]and National Food Reserve Agency remain low due to funding constraints.”
Retail prices for the staple crop remain lower than the government-set minimum farmgate price set at K200 per kilogramme (kg) on April 7 2020.
FewsNet figures show that in July, maize prices fell below levels recorded at the same time last year, which were five to 21 percent lower.
At the national level, retail maize prices averaged K 169 per kg in July 2020 with prices ranging from K135 to 193 per kg in most markets, with only Mangochi selling the grain at K200 per kg.
Meanwhile, FewsNet cross-border monitoring data indicates that during the month under review, informal imports of maize stood at 6 800 metric tonnes (MT) while informal exports were recorded at 8 500MT.
The main sources of informal maize imports in July were Zambia and Mozambique while the main destination of informal maize exports was Tanzania.
“This increase in exports likely reflects a combination of factors, including shifting trader strategies in response to limited Admarc purchases and relatively lower prices in Malawi relative to Tanzania compared to previous months,” reads the update.
Maize output has this year increased by 8.8 percent to 3.6 million MT from 3.3 million MT in 2018/19 growing season largely due to favourable weather conditions and an increased uptake of inputs by farmers, according to the Ministry of Agriculture.
Admarc acting chief executive officer Felix Jumbe said earlier that considering the country’s maize reserves are negligible, exports cannot hold despite the rising demand in the region.
He said Admarc was hoping on getting another facility to buy 50 000MT, but it still needed another 100 000 MT.
As of August 5 2020, Admarc had purchased 35 000MT of maize at 200 per kg from the K7 billion it got from Treasury and another another 20 000MT using a facility from the commercial banks.
Both Admarc and the strategic grain reserves require 180 000MT and 217 000MT, respectively.
In the 2020/21 Provisional Budget Statement, Minister of Finance Felix Mlusu said Treasury would release extra funds to enable Admarc buy produce and allow the parastatal to borrow from commercial banks.
Maize is an important crop to the country’s economy.