Demand pushes up maize prices

Famine Early Warning Systems Network (FewsNet) has projected that maize prices will continue to rise above average due to demand from traders and Agricultural Development and Marketing Corporation (Admarc).

In its August 2019 Malawi Food Security Outlook Update,  FewsNet, a provider of information and analysis on food insecurity, has attributed this to the “unusually high demand from large-scale traders” who are buying the staple grain to supply to institutions and processors.

According to the update, anticipated maize grain shortages as a result of below-average imports from Zambia and Mozambique has motivated large-scale traders to buy larger than normal quantities, contributing to the price increases and hoarding of maize by some farmers and traders in anticipation of high prices during the lean period.

“Crisis outcomes are anticipated to emerge in some southern districts around October, persisting through at least January 2020. Households in these areas are expected to exhaust food stocks atypicallyearly due to poor harvests.

“In addition, household income will most likely be below average due to below-average payment power of middle and better-off households and earnings from self-employment activities. This is likely to result in below-average purchasing power as food prices are expected to be abnormally high.

In July for instance, FewsNet figures indicate that retail maize prices in Mitundu, Lilongwe were 68 percent above the five-year average and 62 percent higher than the same time last year.

It expects maize prices to go as high as K14 000 per 50 kg bag or K280 per kg.

In April this year, Ministry of Agriculture, Irrigation and Water Development put the farm-gate maize price at K150 per kg.

However, last month, the ministry directed Admarc to buy 16 000 metric tonnes (MT) of maize from farmers at K200 per kg, which is about 30 percent above last year and 40 percent above the five-year average.

Agriculture expert Tamani Nkhono-Mvula in an interview on Monday said currently, it is traders who are benefitting and not the actual farmers because government delayed buying maize from farmers in April.

“It is important to understand the political economy of maize pricing. As it is now, I don’t think our farmers are benefitting.

“This is so because the adjustments were after farmers had already sold out their produce,” he said.

Meanwhile, National Food Reserve Agency (NFRA), which is yet to enter the market, is expected to buy 200 000MT from September to October, which will also push up maize prices.

Earlier, Grain Traders and Processors Association of Malawi president Grace Mhango said maize price rise are speculative worsened by high demand in the region.

Last month, Minister of Agriculture, Irrigation and Water Development Kondwani Nankhumwa said increasing maize prices have been worsened by declining stocks from previous season held by smallholder farmers.

Share This Post