August 28, 2008

Cheer and concern over ban on private sale of maize

Malawians have cheered the prospect of cheaper food and welcomed government's ban on the private trading of maize. Food security experts and businesses, however, have expressed concern. The government recently announced the ban in an attempt to clamp down on hoarding and appointed the state grain marketer, the Agriculture Development and Marketing Corporation (ADMARC), as the sole buyer and seller of maize in the country.
Andrew Daudi, principal secretary in the ministry of agriculture and food security, said the step had been taken to ensure food security. Despite government assurances of a surplus, Malawi's traders expect maize prices to rise later in 2008 and have been holding on to stocks, artificially pushing up the price at the tills.
The government and food aid agencies projected a food surplus, although the USAID-funded Famine Early Warning Network (FEWS-NET) said it would be lower than initially estimated. The government has yet to release its final figures on the main maize harvest, collected between March and July.
The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) and the Grain Traders and Processors Association (GTPA) both described the ban as "unrealistic", and a disincentive to farmers and traders that would have little impact on hoarding. Government has fixed the price at which ADMARC will buy and sell maize: the state marketer will pay farmers and traders K45 ($0.31) per kilogramme (kg), or K2,500 ($17.86) per 50kg bag, and sell it at K52 ($0.37) per kg, or K2,600 ($18.57) per bag.
Grace Mhango, president of GTPA, said it was unfair to restrict traders to selling maize to ADMARC at a cheaper price, and hinted that the traders were unlikely to sell to ADMARC. "They will be compelled to continue hoarding the maize," Mhango said. "How do you expect them to sell at a cheaper price, when ... they bought the maize at a much higher price?"
Chancellor Kaferapanjira, chief executive of MCCCI, claimed that the fixed price would discourage farmers from producing more maize. Some private traders have been paying farmers and other suppliers K3,000 ($21) per 50kg bag and reselling it to the public at K3,500 ($24.55), and even K4,000 ($28). "This directive counters food productivity," Kaferapanjira argued. "It is obvious that smallholder farmers will not grow enough maize because they will not make any profits. I believe that farmers who have maize should continue selling to a trader who is offering more money." He added that the government should rather opt for reducing the cost of food production by slashing the price of fertiliser. Only vulnerable small-scale farmers have access to subsidised fertiliser, which is available at $0.11 per kg, while others have to buy it from the market at over a $1 per kg.
On the other hand, Malawians have supported government's decision to impose the ban. Mphatso Manda, who lives with her three children in the populous Ndirande township in Blantyre, said the ban would force traders to sell the maize they had been hoarding. "Since January we have been buying maize at prices that were not justified at all," she said. "With ADMARC as the only buying and selling point we are assured of enough maize at an affordable price." Christina Gondwe, another Ndirande resident, urged the government to punish private traders who continued to hoard maize. "They [the traders] sold us our own maize at exorbitant prices for no good reasons," she said. "They started the speculation that there is no maize, when we were told by government that there is enough to feed us till the next harvest. All they wanted was to sell at high prices."
Malawi enjoyed a bumper harvest for two consecutive growing seasons largely because of a successful fertiliser subsidy programme and good rains; this year over 1.5 million households are expected to benefit from the subsidy programme. (IRIN)

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