Farmers sell crops below farmgate prices—study

International Food Policy Research Institute finds Malawi farmers sell crops below farmgate prices

Post was last updated: October 14, 2020

Findings by the International Food Policy Research Institute (IFPRI) show that 75 percent of maize farmers and 90 percent of soybean farmers sold their crops below the official minimum farmgate prices.

The report released this month established that 39 percent for maize and 52 percent for soybeans were sold either on farm or at nearby markets (41 percent for both crops), and were mainly sold to assemblers and retailers.

This study used an innovative call centre-based method to crowdsource the prices that Malawi maize and soybeans farmers received during the 2020 marketing season.

The official minimum farmgate prices set by the government is K200 per kg for maize and K300 per kg for soybeans.

While about two-thirds of farmers were aware of official minimum farmgate prices, the report further notes that many of them could not state these prices accurately.

“Furthermore, about one-third of those who were aware of minimum farmgate prices did not find them useful when negotiating prices with buyers. Overall, farmers had weak bargaining power vis-à-vis buyers,” read the report further.

These findings point to a widespread lack of awareness and enforcement of minimum farmgate prices, and therefore their limited usefulness in raising prices farmers receive for their crops.

“Previous studies show that, while costly and informal, agricultural markets in Malawi are broadly efficient. Therefore, rather than calling for stricter enforcement of minimum prices, we suggest encouraging greater competition at all levels of the market chain. This can be a more effective way to ensure that farmers receive better prices,” reads part of the report.

In an interview, Farmers Union of Malawi (Fum) president, Frighton Njolomole, said the problem is not lack of awareness but rather state-run grain trader— Agriculture Development and Marketing Corporation—Admarc appears on the market late to buy from the farmers at good prices.

“Admarc is the only institution that can buy from the farmers at better prices. But then the problem is Admarc comes on the market late to buy from the farmers. You know when farmers are harvesting they are always hungry for money you know the laborious work that they do. We believe that if Admarc is revamped, there will be change,” he said.

It is feared that about 2.6 million Malawians will face hunger between October and March 2021 a report by Malawi Vulnerability Assessment Committee indicates.

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