Empty strategic reserves worry NFRA

The strategic grain reserves (SGRs) are almost empty as Admarc is yet to deliver maize it was mandated to buy for the reserves, National Food Reserve Agency (NFRA) board chairperson Denis Kalekeni has revealed.

But Agricultural Development and Marketing Corporation (Admarc) general manager Rhino Chiphiko has played down the concerns, saying Malawians should not panic as the parastatal bought the maize for the reserves.

In an interview on Monday, Kalekeni accused Parliament of transferring the responsibility of buying maize for the SGRs from NFRA to Admarc, which is already burdened with the mandate of buying farm produce for commercial purposes.

Before the 2021/22 National Budget was presented in June this year, the Parliamentary Committee on Agriculture asked Parliament to transfer the mandate of buying maize for SGRs from NFRA to Admarc, and Parliament later allocated K12 billion to Admarc for that purpose in the current budget.

But Kalekeni said NFRA is yet to receive the maize from Admarc, further worrying that the agency was failing to monitor the procurement or audit Admarc–which is currently choked by bank loans it has been obtaining for its operations–to ascertain the money was used for the intended purpose.

He said the challenge to monitor or audit Admarc follows an arrangement the State-run produce trader has with commercial banks that all the maize it buys is collateral for the bank loans which means the banks’ collateral managers control its maize trading.

But Admarc dismissed NFRA fears, saying the corporation has bought 66 667 metric tonnes (MT) of maize which is being kept in its depots nationwide, using the K12 billion allocated.

In an interview on Tuesday, Chiphiko said Admarc used the K12 billion it received from Treasury to buy maize from farmers on behalf of NFRA.

He said: “There is nothing to worry about. We have the maize in our depots across the nation and we’ll deliver to NFRA, but I cannot say when. As a matter of fact, we have capacity to keep this maize even for one year before delivery. Issues of the maize getting rotten are issues we dealt with.”

Chiphiko said Parliament gave his institution the mandate to purchase maize for NFRA because of its expertise and the market chain it has nationwide.

But Kalekeni said Admarc is not being sincere and condemned the casual approach it has taken on the matter, adding the maize for SGRs should have been in NFRA silos back in September.

Said the board chair: “Everyone, including Parliament that allowed depriving us of our mandate, knows you cannot handle maize during rainy season. But now the rains are here and Admarc still thinks it has all the time in the world to deliver the maize to us.

“This is a serious matter and we’re talking of SGRs that are empty, save for some carryover tonnages which we’ve started releasing to Dodma for distribution to families facing hunger.”

He warned that the country maybe sitting on a time bomb because if what Admarc is saying that is anything to go by, moving that maize to NFRA silos is a tough job that requires thorough transport logistical arrangements.

Kalekeni said upon moving the maize to the silos, the produce also requires careful handling and treatment before it is stored, adding it’s difficult to do all these processes during the rainy season.

NFRA has multipurpose warehouses at Bangula in Nsanje that holds 3 000MT, a 4 000MT-capacity warehouse at Kazomba in Mzimba, a 40 000MT-capacity warehouse in Limbe; Lilongwe concrete silos with a 180 000MT capacity, 20 000MT-capacity Luchenza metallic silos, 20 000MT-capacity Mangochi metallic silos and 20 000MT-capacity Mzuzu metallic silos.

According to Kalekeni, all these storage facilities are empty, except Kanengo which has some maize carried over from previous years that is being released to the Department of Disaster and Management Affairs (Dodma) to support families that are experiencing food shortages.

He said Luchenza and Mzuzu silos need maintenance. Thus reducing total capacity of SGRs to 247 000MT.

Meanwhile, Parliamentary Committee on Agriculture vice-chairperson Ulemu Chilapondwa has justified the committee’s decision to take away the maize procurement role from NFRA to Admarc.

In an interview on Tuesday, he argued that NFRA was established by an Act of Parliament in 1999 for the sole purpose of storing maize.

Said Chilapondwa: “Procuring of maize was never their role; it was a mistake that they took up this role.  NFRA has no mandate and capacity to procure because they’ve no structures reachable by the farmers, so their mandate remains that of storing.”

NFRA was created in 1999 by an Act of Parliament with the mandate to manage SGRs and, according to the Agriculture Produce (Maize Marketing) Regulations of 2008, the agency is tasked to purchase, store and release grain as determined by the trustees within the financial resources available.

“NFRA is not limited to buying maize from only Admarc but also smallholders, private traders etc. as grain storage for emergency purposes so long as it is within the stipulated buying price as set by government through Admarc,” the regulations reads in part.

This contradicts Chilapondwa’s claim that NFRA was never mandated to procure the grain.

The regulations further read that in the year 2000, the NFRA’s Trust Deed was amended to include the stabilisation of prices and the grain market besides being responsible for the importation and exportation of grain on behalf of government.

“The main mandate of NFRA is the management and maintenance of the strategic grain reserves by holding ready resources in the form of physical grain stocks and funds necessary for use through normal marketing channels to help reduce the impact of failure of the private sector to respond to market signals and/or make adequate provisions to satisfy national requirements of grain,” the regulations states.

But the Admarc Act of 1974 states that Admarc is the sole buyer of maize from smallholder farmers and seller of maize in Malawi.

“Admarc is also responsible for the pricing system for smallholder farmers particularly for maize and the establishment of markets in non-economic areas. Is responsible for purchasing maize and other cash crops from the smallholder farmers for resell at a subsidised price.

“Admarc plays de facto social function of providing maize at affordable prices to the poor and urban workers,” reads in part the Act.

But Chilapondwa insisted that Parliament passed the resolution to give Admarc the mandate to procure maize because involving NFRA in the procurement created a fertile ground for corruption and fraud as some middlemen would be getting contracts from NFRA to buy maize from farmers for supply to NFRA at a profit.

He said Admarc, on the other hand, buys directly from farmers. 

Meanwhile, agriculture expert Tamani Nkhono Mvula has said it is a grave anomaly to not have the required stocks of maize in the SGRs for over three months.

In an interview on Thursday, he further condemned the fight between NFRA and Admarc, which he said emanates from government “unjustifiably” transferring NFRA’s mandate to buy maize to Admarc.

Nkhono Mvula said: “The fight is not warranted. According to the law, NFRA is the only institution that can get subventions from government to procure maize for SGRs. But as it is, politicians appear to be having some interest.

“The decision to give Admarc the mandate to procure the maize should have been independently made by NFRA if it wanted, not Parliament. NFRA should have decided who they wanted to procure maize for them. Admarc always enters the market late and they end up buying the maize at higher prices.”

On Admarc being highly indebted, Nkhono Mvula blamed government for forcing the grain trader to secure loans from commercial banks, adding Admarc got it wrong to use such loans to perform its social services.

“Admarc always buys its maize at a high price, but it is expected to sell the same maize at a lower price as it is seen as a government institution designed to serve Malawians. This makes it difficult for Admarc to repay the loans,” he said.

Chiphiko is on record as having told our sister paper, The Nation, in August that the State-run grain trader was being forced to borrow from banks at expensive interest rate of 17 percent and the loans were choking them.

He complained then that Admarc was “working for the banks” as all issues that included transportation, storage and fumigation were being done by Admarc.

“If you look at it as a package, it is true there’s a third force operating and probably the cartel exists between the banks, the ministries and some individuals,” Chiphiko said.

But in an interview on Wednesday, Ministry of Agriculture spokesperson Gracian Lungu painted a rosy picture on the SGR issue, saying government was monitoring what was happening on the ground.

He disclosed there was 36 000MT in the SGRs as a carryover from previous years and government has directed the release of 16 000MT to Dodma.

Said Lungu: “This maize started moving out of SGRs last Tuesday.”

He said his ministry would ask Admarc to move the maize bought for NFRA to SGRs. He said no one is expected to defy anything passed by Parliament.

Lungu said: “Previously NFRA was given that power to procure, store and even sell outside Malawi. But as government, we do have our own ways of doing things, and as directed by Parliament this time around, we had to follow that.

“What was discovered was that NFRA was only buying maize in designated places, not beneficial to farmers in remote areas, and small farmers were not benefiting. But Admarc has a wider network base in Malawi.”

Leader of Opposition Kondwani Nankhumwa told Parliament on Wednesday that government should immediatelystart distributing maize to families facing hunger in the country.

A Dodma report issued early this year indicates that 1.4 million Malawians are food insecure, while a 2021/22 report by Malawi Vulnerability Assessment Committee (Mvac) issued on August 28 2021 pegged the figure at 1.5 million.

An assessment report by World Food Programme revised in April 2021 states that Malawi continues to face development challenges that constrain its capacity to achieve food and nutrition security.

In 2019, the Parliamentary Committee on Agriculture members took Admarc officials to task for allowing the sale of rotten maize which the grain marketer had bought in 2015.

During the meeting, which attracted NFRA officials, it transpired that Admarc bought 7 000MT of maize which got rotten in its grain reserves. Admarc said the maize was discoloured due to moisture.

The grain trader has also been riddled with debt, with government giving it a K45 billion bailout package in 2018. This was after Treasury also paid Admarc K23 billion in 2017 to offset a loan it got from banks.