Debate over export mandate for grains

Post was last updated: October 24, 2017

Agriculture experts are divided in opinion on whether the country should have an export mandate or an auction market for grain produce if the grain sub-sector is to contribute significantly to the country’s economy.

An export mandate is a deliberate policy that restricts exportation of agriculture produce through deliberately established structured markets.

Proponents of the idea argue that having such a mandate, as is the case with tobacco, will force farmers and traders to declare their commodities on the market, hence being obliged to also declare proceeds from the sales made.

Managing Director of AHL Commodities Exchange (AHCX), Davis Manyenje, is of the view that an export mandate would help farmers realise tangible profits from their investment to grow the crops.

“The issue at the market is always about the price. Does the price reflect value to the farmer? Is it encouraging them to continue producing? That is an issue that we have to address from the marketing perspective,” Manyenje said.

Director of Planning Services in the Ministry of Agriculture, Alex Namaona, however said that the current auction system for tobacco sales is not offering enough returns to tobacco farmers because prices are still dictated by buyers.

He feared that the same problem will be passed on to farmers in the grain sub-sector, if the export mandate is introduced.

In a separate interview, Spokesperson in the Ministry of Industry, Trade and Tourism, Wiskes Nkombezi, said that the issue is also being debated at policy level and cannot conclude whether government will introduce an export mandate or not.

“As a ministry, we believe the export mandate can help because, if it is established, then systems will be formalised and benefits will be passed on to all stakeholders at every level of the value chain,” Nkombezi said.

He said government realised that there is a lot of export revenue that is being lost through the use of informal markets.

“This is a problem that we need to address,” he said.

Speaking earlier, African Institute of Corporate Citizenship (AICC) Chief Executive Officer, Felix Lombe, said Malawi’s grain and legume farmers continue to get low prices for their produce despite high demand for their crops on the international market.

“The problem is that the low prices will discourage farmers from continued production of the crops, thereby undermining the National Export Strategy and all efforts to encourage increased production of the crops,” Lombe said.

He said despite increased production of legumes such as pigeon peas, whose production is estimated at 400,000 tonnes this year, export proceeds from the crops still remain low and are still below cotton, which, even after a drop in production to just 10,000 tonnes from 45,000 tonnes annually a few years ago, was still the fourth main foreign exchange earner for Malawi.

“Many companies and traders are exporting grain and legumes out of Malawi but where do the proceeds go?” Lombe wondered.

He said research done by AICC has shown that one of the means through which farmer prices and the country’s export proceeds from the crops can be improved, is through structuring of the market where exports should only be allowed when they go through commodity exchanges.

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