Malawi govt subsidizing Admarc maize: Parastatal borrows money to buy grain 

Government is currently subsidizing the maize the Agricultural Development and Marketing Corporation (Admarc) is selling despite that the institution borrowed funds from commercial banks to finance the purchase of the grain locally.

Admarc CEO Foster Mulumbe

Admarc CEO Foster Mulumbe

Starting Monday October 24th Admarc has been selling maize at K250 per kilogram from K110 last year following a directive by President Peter Mutharika that the grain marketer should sell the grain at the same price they were buying.

Admarc purchased about 100,000 tonnes of maize from local growers at a cost of about K22.4 billion, which according to the institution’s Chief Executive Officer (CEO) Foster Mulumbe, was borrowed from commercial banks.

Initially, Admarc was expected to be selling the grain at K312 per kilogram inorder to incur profits to finance the loan interests, but government opted to subsidize the price to K250 to ensure Malawians are able to buy the maize.

The development means that tax-payers are being forced to pay for subsidy on the commercial maize, which initially was supposed to be sold at a profit.

“Our intended price, if we are to consider the bank interests, was to be at K312 per kilogram but government is giving us K62 per kg to ensure we sell the maize at the same price we were buying from growers,” revealed Mulumbe during a Sunday Round-Table program on Capital Radio.

A 50 kilogram bag which was last year, during the same period, sold at K5,500 is being sold at t K12,500 representing about a 127% increase.

The current price has attracted mixed reactions from consumers with opposition politicians arguing that it is not affordable considering the current economic situation.

However, Admarc Director of Operations Feckson Kantonga indicated that the current price is fixed, meaning there is no hope of it going down any time soon to accommodate the opposing views.

Mulumbe said the 100,000 is being stocked in about 1,200 Admarc selling points across the country ready for sale out of the required 400,000 metric tonnes.

“Last year during same period we procured about 56, 000 metric tonnes but this time around we procured the 100,000 metric tonnes locally, and we expect to buy the remaining quantity from outside the country,” added Mulumbe.

Mutharika revealed recently that government is yet to purchase the remaining 300,000 tones from Zambia, Brazil, and Romania and the negotiations already took place.

Meanwhile, government has started distributing relief food to about 6.5 million affected by the food shortage the country is experiencing.

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5 thoughts on “Malawi govt subsidizing Admarc maize: Parastatal borrows money to buy grain ”

  1. Christian Beilke says:

    This is from an interview by Dr. Jerry Jana (then CEO of ADMARC) on 1 Aug 2013: “While we will continue to serve farmers and to buy their crops and export them to earn foreign-exchange revenues, ADMARC must be operated like any private-sector business and we must eliminate any operations that do not make sense commercially.”

    Well, buying input at artificially inflated prices and / or selling output at artificially subsidised prices to me does not make any sense commercially (nor does it incentivise farmers to make the best use of their limited resources). ADMARC and the government of Malawi have to decide whether it should be a 100% private company operating in a competitive environment or continue the questionable history of lack of transparency and accountability. This is what donors wanted to see as change for ADMARC and unfortunately it doesn’t seem to be there yet. Being bound to benefit a few to exploit the system and get rich at the cost of the broader population clearly was not the intention.

  2. Madala says:

    the author of this story seems to be confused. at the outset he seems to tell the public that government is wrong by selling the maize at K250 per kg. at the end of the story, he is portraying that some quarters are angry with the high price. be consistent when writing story and choose one angle

  3. Nambewe says:

    The solution is easy allocate adequate money in good time for ADMARC in the national budget to buy maize cheaper, subsidizing this late is very expensive. for once ignore these donors’ advice on ADMARC and do the right thing for Malawians!!!!!!!!

  4. Christian Beilke says:

    There’s something totally unsettling in this whole story. Who would buy maize from Admarc at K312.5 when the current average market price is K225 (the highest observed prices were K260 by 8th October)? And why did Admarc buy the maize originally at K 250 when the then actual market prices were much lower? Clearly the tax payer having to step in now for Admarc not to incurr losses from their loans means that the original sellers to Admarc are the ones that reaked in the unjustified profits. Admarc should be pressured to reveal the reasons why they overpayed initially and the names of those they sourced the maize from. This is called transparency and warranted as a minimum code of conduct for public companies. At least this smells of yet again of another case of misuse of finally public funds.

  5. E.F.F says:

    And we are not going to allow you guys kuti mtengo ukwere zikatha zisankhozi, if you see ngati ndife Anyani anu imeneyo mwagwanayo, ndipi mudzakhala zitsiru mpakana kalekale.

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