Maize Prices On Increase, Disaster Looms

Five months before the maize lean period starts in October, the staple grain has inched to around K13 000 (about $19) per 50 kg bag from an average of K10 000 (about $15) at the peak of harvest in April.

That represents more than 62 percent price jump in just over two months after a harvest devastated by floods and droughts, which has cut output by 12.5 percent relative to last year’s production.
Output fell by 30 percent in 2015 owing to similar climatic episodes.

Maize traders

Maize traders

According to the second round crop estimates, maize output has been estimated at 2.4 million metric tonnes (MT) before adjusting for post-harvest losses.

This means the country requires an additional 790 000 MT of relief food to support an estimated 8.4 million people who are staring hunger in the face, according to Ministry of Agriculture, Irrigation and Water Development.

This is on top of an additional 250 000 MT required for sale in Agricultural Development and Market Corporation (Admarc) markets while another 250 000 MT is needed to restock strategic grain reserves.

A visit by The Nation yesterday to some local markets in Blantyre and Lilongwe showed that maize is now selling at not less that K13 000 per 50 kg bag, up from a K10 000 average at the end April.

Social welfare monitoring organisation, Centre for Social Concern (CfSC) director Josse Kuppens, on Tuesday said the maize price rise will push up the cost of living and many Malawians will have to dig deeper into their pockets to make ends meet.

He foresees further price increases in the months ahead as many traders have already started hoarding the grain as a market mechanism, hoping to sell it at a much higher price during the lean period that runs from October to February.

people queue for maize at Admarc depot

people queue for maize at Admarc depot

According to the CfSC Basic Needs Basket (BNB) report, maize prices which were last August pegged at around K6 500 per 50 kg bag on the local market, jumped to about K13 000 per 50 kg bag in February this year in all the country’s regions and thereafter dropped in April to an average of K10 000 per 50 kg bag.

What is compounding the situation is that at the moment people can only buy maize from private traders because Admarc—which sells the maize at more than half the market price—has suspended sales in most of its outlets to concentrate on buying.

 

In a separate interview Tuesday, Admarc chief executive officer Foster Mulumbe said they have closed some of their depots to pave the way for restocking and “will open as soon as we acquire enough maize”.
He said the State produce trader plans to buy 300 000MT of maize from both local and international traders.

Mulumbe, however, could not rule out the possibility of raising the price of maize in their markets when they open.

On her part yesterday, Grain Traders and Processors Association president Grace Mhango said the country has seen the worst increase in maize prices from last week, with prices jumping from K170 per kg in some markets to as high as K290 per kg in others.

She attributed the increase to the forces of demand and supply.

Said Mhango: “As of now, we do not have enough maize on the market since farmers are still harvesting. There is also speculation on the hunger situation in the country resulting in some traders hoarding the already scarce commodity and due to high demand prices automatically go up.”

She said it is unlikely that prices will go down since prices will be determined at the end of the buying season in October by where traders are sourcing the maize.

Earlier, Minister of Agriculture, Irrigation and Water Development George Chaponda said government requires about K258 billion to implement short and medium-term strategies to address hunger and food insecurity this year.

In the proposed 2016/17 National Budget government has allocated K35.5 billion to the purchase food within the region and outside, according Minister of Finance, Economic Planning and Development Goodall Gondwe.

Food—where maize is the most influential—accounts for about 50.2 percent of the consumer price index (CPI), which is the aggregate basket used to compute inflation. This means where there is maize shortage on the market, inflation rises which eventually pushes up commercial bank interest rates, which squeezes out businesses and households.- By Precious Kumbani The Nation

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