This week, reports of gross abuse at the Mega Farms Unit have emerged. Our Mzuzu Bureau Supervisor JOSEPH MWALE caught up with Malawi Agriculture and Industrial Investment Corporation (Maiic) acting chief executive officer Lloyd Banda, who says the institution is on its deathbed. Excerpts:
Q: How many tonnes of maize were expected from this investment and what was the output?
A: The total number of farmers that were supported in the maize value chain was 952. Apart from the maize farmers, a smaller number of farmers were supported in other value chains, including tobacco and ginger. The qualifying criteria for the maize farmers was ‘availability of a piece of land of not less than 20 hectares’. Expressions of interest to participate in the programme were submitted through the Ministry of Agriculture [Mega Farms Unit]. Part of due diligence of the applicants [the farmers] included physical verification of availability of the said piece of land and this exercise was conducted jointly by Maiic and the Mega Farms Department. This was the second cycle of supporting mega farmers, having started the programme in 2023/2024 agricultural season.
Q: We understand you received so much funding. How much did you get and how has it been used?
A: Maiic received financing from the government only in the first year of the programme amounting to K20 billion. In the second year [2024/25], the programme was not funded by the government and received nothing from the national budget. The only amount that was received in 2024/25 season was K2.4 billion from a Multilateral Development Partner. The total financing received by the programme from inception is, therefore, K22.4 billion. As the programme was rolling out in the second year, Ministry of Agriculture through Mega Farms Unit embarked on an expansion programme and engaged more farmers with the expectation that the programme would receive additional financing from the government. The financing that was provided in year one was supposed to be rolled over. In addition, the ministry was expecting to receive additional financing amounting to K76 billion. The additional financing was not provided.
Q: Basically, how is the programme implemented?
A: We would like to mention that the Mega Farms programme is financing both ‘working capital’ and ‘capital expenditure’ loans. The working capital loans are seasonal and are supposed to be paid back within a year up to 31st December of a particular year. The Capex loans are repayable over a period of three to five years. This means from the initially received K20 billion, it wasn’t possible to roll over the whole amount partly because of the Capex loans that are paid back over a longer period. As the ministry was awaiting receipt of funding from the government, Mega Farms Unit engaged several suppliers of farm inputs to start providing farmers with the necessary inputs (on credit basis) as the ministry was racing against the growing season that is normally time sensitive. The expectation was that the suppliers would be financed through the 2023 collections in addition to more funding that was supposed to be received from the government in support of the programme. The programme was structured in such a way that Admarc and NFRA were appointed as designated off-takers and after delivery of maize and purchase of same by the two institutions, the farmer would be paid through Maiic. In this arrangement, Maiic recovers the loan from a farmer once sales proceeds are received from NFRA/Admarc. ACE as a commodity exchange was also engaged to assist in providing storage of maize and in case of need assist in finding the markets.
Q: How much were you funded and how is that being recovered?
A: The total amount paid to the various suppliers in the current season is K18 billion from the total bill of K48.9 billion. The programme is still owing other suppliers, total balance being K33 billion. Just to highlight that the 2024/25 season was hit by the dry spell. Out of the 47.627 hectares that was financed under the programme, about 44 000 hectares performed relatively well [average]. The projections made were that about 88 000 tonnes of maize would be delivered to NFRA, Admarc and ACE warehouses. Most of the farmers have not yet delivered their maize at both NFRA and Admarc depots in view of several challenges.
Q: What are these challenges?
A: Pricing: the level of pricing was considered to be below their expectation [negotiations
Banda: Farmers were reluctant to supply maize to depots. | Nation
The programme is still owing other suppliers, total balance being K33 billion
with the authorities were on going]. Farmers were making comparisons with how the market had closed end of 2024 where a bag of maize was fetching +/-K100 000.00. The starting price for the mega farmers was K1 050.00 per kg and this was later adjusted to K1 250.00. We have thus seen farmers being reluctant to deliver maize at the depots.
Q: Do these institutions have money ready to buy the maize?
A: The challenge encountered is unavailability of funding at both NFRA and Admarc. For the two institutions to be able to receive maize from mega farmers, they’re supposed to have funding. The challenge is thus cases where farmers are planning to make deliveries and they find that there are no funds in such cases farmers are sent back with their truckloads [most of these being hired trucks]. By the time the two institutions have received funds, it again takes a bit of time to mobilise farmers to start deliveries again. The problem is that the two institutions cannot receive maize with an expectation that payments will be made in future when funds are received from the government. This is done to avoid committing to their companies in case funding is not provided or is not provided in good time [the 2023/24 growing season experiences]. The total tonnage received so far is 5470. Just to mention that the two institutions are also not receiving maize from farmers now. Again, just to reiterate that availability of the structured and targeted market is key to making recoveries from Mega Farmers. We expect that deliveries will start again when the markets are opened.
Q: We also gather that the project has run out of resources and is seeking a bailout from the Treasury. What do you say on this, in terms of what has necessitated the bailout?
A: Yes, the project is seeking funding from Treasury amounting to K33 billion to pay off the various suppliers as the programme was run without funding. This was supposed to be provided at the beginning of the project when expansion plans were made. Partial payments are since being made to the various suppliers using the collections made so far hence the reduction of the amount payable to the various suppliers.
