Poor farmers who were meant to benefit from a farm mechanisation scheme that saw government borrow K23 billion ($50 million) from India have been left out as the equipment has been sold to civil servants and other well-off commercial farmers.
Despite this, taxpayers will from 2017 start paying back K760 million (US$ 1.7million) a year to a bank in India for the loan obtained to buy farming machines that have only managed to raise K542 million (US$1.2 million) in four years.
In 2011, the Malawi Government acquired farm machinery through the Ministry of Agriculture, Irrigation and Water Development loan under the Indian Line of Credit to purchase 177 tractors with their allied implements, 144 maize shellers, 90 tipping trailers and 48 seed-cum-fertiliser applicators with the aim of increasing the productivity of smallholder farmers.
Four years down the road and a year before the grace period for repayment of the loan, the country has only managed to raise K477 million (US$1million) through selling of the farm machinery and K131 million (US$291 111) through hiring of the equipment.
Ministry of Agriculture, Irrigation and Water Development Principal Secretary Bright Kumwembe said in an interview that—despite the huge loan obtained to buy the farming machines—the ministry did not intend to make profits since that would have been against the objective of popularising agriculture mechanisation in the country.
He said: “Loan repayment is under Ministry of Finance since proceeds from the tractor hire scheme go in government account.”
He said for the past four years, government institutions, through the hiring scheme, have realised more than K131 million and, as of now, 104 tractors and 64 maize shellers are operational.
In an advert published in The Nation edition of April 15 2015, 69 tractors were sold at K5.6 million (US$12 444) each.
The sale resulted in government getting K387 million (US$860 000). It was also indicated that 15 tipping trailers of three metric tonnes each were sold at K1.2 million (US$2 667) each, realising K18.7 million (US$41 556). There were also 70 motorised maize shellers sold at K803 108 (US$1 785) each all adding up to K 56.2 million while 17 seed-cum-fertiliser drillers were sold at K865 100 (US$1 922) fetching K14.7 million (US$32 667).
The sale of all the equipment totalled K477 million.
Kumwembe said: “Tractors that have been sold or given out on loan with a set of allied implements have been sold out at the initial cost of K5.6 million, which included shipping, assembling, commissioning and pre-delivery inspection cost that were incurred by then 2011.
“It is true that prices of tractors being sold within the country have skyrocketed. As can be evidenced that just right now tractors ranging from 45 to 90 Hp like the best brands of Massey Ferguson, John Deer or New Holland are going within the range of K11 million (US$24 444) to K17 million (US$37 778). The ministry did not intend to make profits since this would deter the objective of popularising agriculture mechanisation in the country.”
But Economic Association of Malawi (Ecama) president Henry Kachaje said the tractor loan and investment should have had a proper project implementation team or committee that should have ensured that the machinery was well utilised to benefit the nation.
He said: “The reason for which the loan is being obtained must be clearly outlined and adhered to. It is even worrying if indeed the machines have been sold even before the government has started repaying the loan. Hopefully all the proceeds will be channelled towards settling part of the loan.”
Kachaje said government’s decision to borrow money to buy tractors was a very good decision.
“This country requires mechanisation of farming. If the tractors were put to good use, it would have helped the country to increase its agriculture output,” adding that Malawi was losing out on a golden opportunity to mechanise agriculture by empowering the smallholder farmers.
“The country might also lose out as we will be burdened with loan repayments for a loan that probably benefitted individuals more than it might have done to the nation as a whole,” he said.
Ministry of Finance spokesperson Nations Msowoya said Treasury was not aware of the total revenue the tractors generated in the past four years, saying the Ministry of Agriculture was responsible for the running of the tractors.
He said: “The Indian loan under which government bought tractors and harvesters have a grace period of five years and maturity of 30 years. We will start paying in 2017.”
However, Msowoya refused to discuss where money for the repayment of the loan would come from given that the tractors have been sold for a song and the multiplier effects of their usage cannot be ascertained.
Chairperson of the Parliamentary Committee on Agriculture Felix Jumbe faulted government on the decision to sell tractors with allied implements to government officials because they are not full time farmers.
Farming in Malawi is predominantly by way of smallholder farming, making up 85 percent of the total area cultivated. However, 70 percent of the farmers use simple tools and implements and 20 percent use ox ploughs.
But Kumwembe said those that have bought the tractors are expected to be hiring them out.
He added: “Already, existing commercial farmers are hiring the machinery at very high rates as compared to the government farm machinery that are under Tractor Hire Scheme in our ministry and yet farmers are still scrambling for such services.”