MALAWI: Hoarding affects food supply

LILONGWE, 12 August 2008 (IRIN) - Despite government assurances of a food surplus, Malawi's traders are betting that maize prices will rise later in the year and are holding on to stocks, artificially pushing up the price at the tills for consumers.

Government and the food aid agencies have projected a food surplus, although the USAID-funded Famine Early Warning Network (FEWS-NET) said it would be less than initially estimated.

The main maize harvest in Malawi takes place between March and July. The government issued its estimates in April, based on quantities collected so far, but has yet to release the final figures, which are compiled after the entire harvest has been gathered.

However, some traders have begun hoarding maize, expecting prices to go up even further during the lean season from December 2008 to March 2009, by which time the household stocks of subsistence and small-scale farmers have usually been consumed.

"Heavy speculation of localised food shortages have resulted in heavy competition for maize purchases and an increase in maize prices compared to what is normally expected at this time of the season," said FEWS-NET.

The price of maize across Malawi shot up from K17 (US$0.11) per kg around early January to K45 ($0.31) per kg last month. Some private traders are paying suppliers K3,000 ($21) per 50kg bag and reselling it to the public at K3,500 ($24.55) and even K4,000 ($28).

Artificial shortage

Andrew Daudi, principle secretary in the ministry of agriculture and food security, insisted that Malawi would realise a maize surplus and accused private traders of hoarding grain in their warehouses.

He said the last round of crop estimates showed that Malawi would produce 2.8 million tonnes of maize this year. "Our national requirement is 2.4 metric tonnes (mt), and that gives us a surplus of 400,000 metric tonnes this year," he said. Reports indicate that an additional 300,000mt from irrigation farming is expected.

Frank Mwenifumbo, Malawi's deputy agriculture and food security minister, told parliament that the country would produce a maize surplus of 500,000mt.

Mwenifumbo said government did not have a hand in the price of maize. "We are suffering because of a liberalised economy, but we won't sit back and watch traders dictating prices to us. We are working on drastic measures that will make maize a protected produce and a property of the Malawi government," he said.

Last week alone, Malawi's Agriculture Development and Marketing Corporation (ADMARC) and the National Food Reserve Agency (NFRA) bought 110,000mt of maize from local markets. "If ADMARC and NFRA are able to get the maize locally it means that the grain is available in most households," Daudi said.

ADMARC's market depots are closed at present, and although spokeswoman Agness Chikoko acknowledged that the organisation was buying maize at prevailing market prices, she could not say at what price it would be selling the staple grain once the depots reopened. "It's obvious that we won't be selling at old prices because prices keep changing," she said.

Maize is readily available but few traders are selling in the local markets, according to FEWS-NET. "Traders are focusing on purchasing maize now for sale after the main harvest period, when household stocks of own-produced food deplete."

Grace Mhango, president of the Grain Traders Association, admitted that some traders were hoarding maize with a view to selling it at a higher price when the situation worsened.

"It's true that as traders we have contributed to the rise in maize prices. Some areas in the country do not have maize, yes, but we are not in a crisis yet to justify the high grain prices," she said.

Media reports hinting that the country would not produce enough were prompting a scramble for maize, Mhango commented. She warned that unless the situation was checked, prices would keep rising and the poor who lived below the bread line would suffer.

Government reaction

The government imposed an export ban on maize and maize products in April to protect domestic food supplies and ensure food security, but later clarified this to mean the enforcement of licensing regulations on traders, according to FEWS-NET. During the lean period from December 2007 to March 2008, exports by traders were blamed for maize shortages, despite surplus maize production.

Government has been buying maize on the local market, initially paying K45 per kg ($0.31/kg), but is now spending K65 per kg ($0.45/kg) to fend off the private traders it is accusing of hoarding Malawi's staple grain.

Malawi's minister of trade and industry, Henry Mussa, said the government would clamp down on private traders hoarding maize at a time when people were in need of it, and that his ministry, in collaboration with the ministry of agriculture and food security, would come up with a fixed price for maize to help poor households.

Early this year the parliamentary committee on agriculture and natural resources, chaired by Vitus Dzoole-Mwale, toured all the districts in the north, eight in the centre and five in the south, and established that a number of households in all three regions would face hunger, despite maize surpluses in the last three growing seasons.

The committee also looked at problems facing the subsidised fertiliser and seed programme. Malawi's agriculture has turned a corner since the drought in 2005, which left close to five million people in need of food aid. Successive bumper crops since then have been attributed to the subsidised fertiliser and seed programme.

However, Dzoole-Mwale disclosed that the committee had also found that the programme "is a total mess, was not properly strategised and is highly politicised".

According to FEWS-NET, inputs were delivered late to some areas in Machinga, in the south, and the Agricultural Development Divisions (ADDs) around Blantyre, Malawi's second city, preventing farmers from applying fertiliser on time, or sometimes not at all, and/or forcing them to plant low-yielding local maize variety seeds when the planting rains came earlier than expected and farmers could not wait.

A study between late March and early April this year by the Catholic Development Commission of Malawi (Cadecom) on the food situation in eight districts showed that many households did not harvest enough maize because erratic weather patterns produced heavy rains in parts of the country and dry spells in others.

The study found out that vendors were importing maize from neighbouring Mozambique, Tanzania and Zambia, and were selling a 50kg bag at K2,000 ($14).

Chris Chisoni, national director for the Catholic Commission for Justice and Peace (CCJP) said the situation on the ground was not as rosy as presented by some people. "Household vulnerability to hunger is very high and there is all reason to worry, because by October this year many people will be starving."