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'Despite K310 per kilo, traders continued hoarding maize stocks': Agriculture Minister

Written by  Mirriam Kaliza

Despite adjusting the price of maize to K310 per kilo, traders continued hoarding maize stocks with the objective of making abnormal profits at the expense of fellow Malawians, Agriculture, Irrigation and Water Development Minister Kondwani Nankhumwa told Parliament on Friday.

In some communities, maize hit K400 per kilo. In some communities, maize hit K400 per kilo.
14
February

Presenting a ministerial statement on the national food security situation, the Minister said Government has been "adjusting the price to try and attract suppliers to build up stocks at the silos.

 

“ The minimum price was set at K150 per kilogram. It was initially revised to K180 - K200, then K250 and the recent adjustment to K310 per kilogram open up to end February 2020. Despite these price adjustments, traders continued hoarding maize stocks with the objective of making abnormal profits at the expense of fellow Malawians,” he told his fellow lawmakers.


Nankhumwa said the replenishment of the Strategic Grain Reserve (SGR) this year “continues to face enormous hurdles ranging from traders hoarding stocks to unnecessary bargaining of prices to make abnormal profits.”

 

THREAT TO FOOD SECURITY 

He said the situation threatens food security status in the country and renders effective planning and decision making difficult for Government, saying the Ministry is convinced that the country has enough maize stocks and that the current situation has been exacerbated by collusion of traders.

 

Here are some highlights from his statement:

.This August House may recall that government tendered for the procurement of maize through National Food Reserve Agency (NFRA). Ninety-nine (99) bidders were awarded contracts to supply maize to NFRA of which 81 suppliers collected their contracts but only 7 suppliers signed and returned the contracts to the agency. Nevertheless, even those who signed the contracts did not deliver the maize to the Agency with price being the maize reason.

 

.Contracting supply of maize for the SGR- the Ministry has embarked on an exercise of prior contracting farmers, cooperatives and companies that have capacity to produce and supply maize for the SGR. This will protect government in the event that market forces lead to price fluctuations.

 

.As we are all aware Malawi’s larger population depends on rain-fed agriculture, with maize the main staple food crop. However, recent climatic shocks the country has been experiencing threatens this critically important crop. despite the negative climatic shocks, government interventions such as Farm Input Subsidy Programme (FISP), promotion of irrigation farming and agricultural diversification have had positive food security outcomes over the years.


.The August House may wish to be reminded that last agricultural season’s production estimates survey results indicate that maize production was at 3,391,924 metric tonnes, representing 24.7 percent increase when compared to the 2017/18 final round estimate of 2,697, 959 metric tonnes.
.The national food balance sheet as at 1st April shows that the country had a cereal surplus of about 338,630 metric tonnes of which about 84,000 metric tonnes was maize. This is after accounting for food use, seed requirement, minimum Strategic Grain Reserves (SGR) replenishment and feed and industrial requirements in the food balance sheet.

 

.It is important that this August House should take note that the reported maize surplus is not stock under the wraps of Government. Instead, it is the national surplus held by different stakeholders.

 

. I wish to report that as of 10th February, 2020, the official maize stocks held by government institutions (NFRA & ADMARC) is estimated at about 19,992 metric tonnes of maize. Of this tonnage, NFRA available stocks stand at 10,740 metric tonnes with Lilongwe silos holding 8,975 metric tonnes and the rest held at Kazomba in Mzimba district. On the other hand, ADMARC stocks stand at 9,252 metric tonnes regionally distributed as follows: the South has 565 metric tonnes, the Centre has 6,651 metric tonnes while the North holds 2,036 metric tonnes.

PRIVATE SECTOR KEEPING 55, 000 METRIC TONNES


. I further wish to report to the August House that in December 2019, my Ministry collaborated with Grain Traders and Processors Association (GTPA) and Agricultural commodity Exchange (ACE), to verify maize stocks held by the private sector. The activity involved selected members and affiliates of the two organizations in Lilongwe, Kasungu, Mchinji and Blantyre. The results of this exercise showed that the private sector had about 6,6879 metric tonnes of maize in stock. Considering the dynamics on the market, we estimate that the private sector is still keeping about 55,000 metric tonnes.

 

.If we combine official government stocks held by NFRA and ADMARC and those held by the private sector, our current national stocks stand at 74,992 metric tonnes.


.The country’s SGR guidelines recommend that the SGR size be maintained at 217,000 metric tonnes, which comprise of 95,000 metric tonnes buffer stock, 8,000 metric tonnes emergency stock, 76,000 metric tonnes safety net stock for non-emergency response and 38,000 MT stabilization stock.

 

.From the current official stocks I have reported above, it implies that the reserves fall short with about 197,000 metric tonnes of the recommended minimum stocks.

 

.The August House may recall that MK10 billion was allocated to my Ministry in the current budget for the procurement of maize to replenish the SGR. The August House may wish to be informed that NFRA had some funds amounting MK2 billion from the 2018/19 financial year which were meant for procurement of maize between March and June 2019, but procurement faced pricing related challenges. These funds combined would have bought an estimated 48,000 metric tonnes at K250 per kilogram.

 

.In addition, government activated the Contingency Emergency Response Components, for its two World Bank funded projects, the Bank approved USD 1.2 million and USD 7 million from Malawi Disaster Recovery and Resilience Project (MDRRP) and Agriculture Commercialization Project (AGCOM) respectively for replenishment of the SGR.

 

.It is estimated that these resources (estimated at K6 Billion) could buy about 24,300 metric tonnes at K250 per kilogram. In total the available funds would have procured an estimated 72,300 metric tonnes at the price of K250 per kilogram.

 

.The replenishment of the Strategic Grain Reserve (SGR) this year continue to face enormous hurdles ranging from traders hoarding stocks to unnecessary bargaining of prices to make abnormal profits. The situation threatens food security status in the country and renders effective planning and decision making difficult for government.

 

.This August House may recall that government tendered for the procurement of maize through National Food Reserve Agency (NFRA). Ninety-nine (99) bidders were awarded contracts to supply maize to NFRA of which 81 suppliers collected their contracts but only 7 suppliers signed and returned the contracts to the agency. Nevertheless, even those who signed the contracts did not deliver the maize to the Agency with price being the maize reason.

 

.Prior to the recent maize price adjustment of K310, NFRA had only procured about 774 metric tons while ADMARC procured 15,839 metric tonnes. However, the August House may wish to note that the recent adjustment has brought positive response on the inflows. As of 10th February 2020, NFRA has managed to procure 4,118 metric tonnes while ADMARC has procured 2,171 metric tonnes. There are high prospects of getting more maize as the two institutions have experienced increased traffic of delivery trucks.


.Based on this assessment a total of 1,247,582 out of 4,141,374 farm households, representing 30.1% had no food of their own production as of 7th February, 2020. This situation was slightly worse off than same time last year when 948,645 farm households had no food of their own representing 22.5%.

.The worst hit ADDs were Machinga (43.8%), Blantyre (35.9%) and Lilongwe (35.6%). The least affected ADD was Karonga where 6.1% of farm households were reported to be food insecure. Among the regions, the most affected was the South (41.9%), followed by the Centre where 26.3% while as in the north 8.1% of the farm households had no food of their own production.

HUNGRY HOUSEHOLDS

.This House will recall that the Malawi Vulnerability Assessment Committee (MVAC) first assessment reported that 1.1 million people were food insecure. The figure was revised to 1.9 million people in the second assessment done in November 2019.

.Indeed, all these figures underscore the fact that the country has hungry households that require food assistance.

. Government is committed to responding to the food insecure areas through ensuring that affordable maize is distributed through relief programmes as well as through ADMARC for those economically stable and that can afford maize. Government has further put in place mechanisms to ensure medium term food security. The following are the measures:

.Maize Prices Stabilization: The country experienced record high maize prices averaging K300 per kilogram. In some parts the prices recorded were as high as K400. In order to assist the consumers in maize deficit areas, Government released 7,000 metric tonnes of maize from the Strategic Grain Reserves through ADMARC to be sold at a subsidized price in all identified deficit areas.

.Procurement of Maize Flour for relief- Government is also procuring 18,000 metric tonnes of maize flour through two commodity exchange platforms and Agricultural Commercialization Project (AGCOM) for humanitarian response. To date, 624.51 metric tonnes has been delivered and uplifting for distribution to the affected households has already started.
Procurement of Maize for SGR and Price Stabilisation-Maize procurement through both ADMARC, NFRA and tender applying resources from AGCOM will continue. This maize will go to ADMARC for price stabilization as well as being stocked in the SGR.

.Contracting supply of maize for the SGR- the Ministry has embarked on an exercise of prior contracting farmers, cooperatives and companies that have capacity to produce and supply maize for the SGR. This will protect Government in the event that market forces lead to price fluctuations.

ASSURANCE OF ENOUGH MAIZE STOCKS

. I wish to assure Malawians that the country has enough maize stocks and that the current situation has been exacerbated by collusion of traders which has led to the current food insecurity predicament. However, I wish to emphasise and agree with what His Excellency repeatedly says that No one will die of hunger in this country. I have also been assured by the Minister of Finance, Economic Planning and Development that resources will be made available to support the planned interventions.

.My appeal therefore is for all of us to work together in order to achieve the planned intervention. Allow me to urge my fellow Parliamentarians in this August House, partners, non-governmental organizations and all well-wishers to work together and support government as we address this food insecurity problem.

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