Ministry outlines strategies to unlock agriculture financing

Controller of Agricultural Extension and Technical Services in the Ministry of Agriculture Alfred Mwenifumbo has urged local farmers to promote irrigation farming and create structured markets for emerging agricultural value chains to unlock much-needed financing and investment to the agriculture sector.

He made the recommendation last Thursday at Sunbird Capital Hotel in Lilongwe where the Commercial Farmers Cooperative Society (Cofaco) held a business breakfast to facilitate information sharing between industry captains in agribusiness.

Said Mwenifumbo: “Farmers need to de-risk their farms by investing in irrigation to boost their resilience to climate-related shocks such as droughts. Banks do not go anywhere near a farm that is dependent on rain-fed agriculture because it is considered high risk.”

He further urged the development of structured markets to promote predictability in the market and instill confidence in financiers that there will be ready markets to buy the final product from farmers.

The recommendation followed concerns from LM Aquaculture managing director David Nkhwazi, who said that local commercial farmers have very limited access to funding from commercial banks and other financing institutions which, when available, is usually offered at a high cost.”

Speaking at the same event, Minister of Trade and Industry Sosten Gwengwe urged the cooperatives to graduate from being primary cooperatives that deal in raw materials to secondary cooperatives that focus on value addition to generate more from their proceeds.

He said: “Our focus should be on value addition to promote import substitution and export diversification. Global food demand is projected to rise by 70 percent by 2050. If commercial farmers organise into secondary cooperatives, they can sell in international markets and capitalise on this demand.”

Cofaco secretary general Hellen Chabunya described the interface meeting as a success, having brought together farmers with donors that have already committed funds to the agriculture sector to share information on which financing options are available.

“The farmers are now more aware of the financing options that they can use to scale up their ventures. There are billions of kwacha available for investment in the country. We just need to get the right information to the right people,” she said.

Financing institutions such as Palladium, International Fund for Agricultural Development, European Union, World Bank, British Foreign, Commonwealth and Development Office and Malawi Agriculture and Investment Industrial Corporation made presentations on the financing options available to local farmers.