By William Kumwembe & Audrey Kapalamula:
The announcement of 2019 minimum farmgate prices by the government has drawn mixed reactions from stakeholders.
The Ministry of Agriculture, Irrigation and Water Development has set minimum maize price at K150 per kilogramme (kg) from K170 last marketing season.
In its earlier communication, the ministry erroneously announced that the minimum price for the staple grain would be K180 per kg.
Estimates show that this year’s maize production will be at 3,387,587 metric tonnes, representing a 25.6 percent increase in production as compared to the 2017/18 final round estimate of 2,697,959 metric tonnes.
Price for soya beans has been maintained at K280 per kg. Pure beans price is pegged at K420, mixed beans at K340, pigeon peas at K230, shelled groundnuts at K450 and unshelled groundnuts at K290 per kg, respectively.
Agriculture is the backbone of the country’s economy and crops dominate the sector accounting for 17 percent of GDP followed by forestry at nine percent. Production is concentrated on one main food crop (maize) and one main cash crop (tobacco).
Economists say price-pegging would be meaningless in the absence of well established research.
Economics Association of Malawi Executive Director, Maleka Thula, said Monday that emphasis should be on letting the market decide where prices should be.
“This is where finalisation of Regulations of Control of Goods Act would be needed to guide whether such controls are required. The fear is if prices are set below or above the market equilibrium price, there are distortions in the market.
“Specifically, if prices are set too high above the market price, buyers will not be able to buy and when set too low below market price, sellers will sell at a loss. Subsequently, price controls affect production in the next growing season and affect productivity of the affected sectors and entire economy,” Thula said.
Civil Society Agriculture Network National Director, Pamela Kuwali, said the set prices are meant to protect farmers.
Kuwali, however, said producers would reap if government opens Agricultural Development Marketing Corporation (Admarc) markets earlier.
She said the minimum buying prices were higher than those proposed by stakeholders.
“Our appeal to the government and stakeholders is that they must create an enabling environment to allow farmers sell their commodities at profitable prices,” Kuwali said.
Admarc spokesperson, Agnes Ndovi, was not immediately available for a comment.
Farmers, on the other hand, feel more needs to be done if they are to benefit from the farming season.
Farmers Association of Malawi President, Alfred Kapichila Banda, echoed Kuwali’s sentiments that delayed opening of Admarc market would accord vendors a chance to reap from early purchases.
“This year, most farmers might not have produced nandolo [pigeon peas] as they are frustrated. The vendors that have nandolo in stock might eventually reap the most,” Kapichila Banda said.
Recently African Institute of Corporate Citizenship also recommended a systematic approach to enforcement of minimum prices.