Economists Speak Out On ADMARC Losses, Politics

Economists Speak Out On ADMARC Losses, Politics

Loss Maker: People queuing for their turn to buy cheap maize

Despite the much-touted reforms to enhance efficiency in public sector enterprises, the Agricultural Development Marketing and Corporation (ADMARC) will be excused for a little longer as it will continue to thrive on state subventions as the entity will continue to operate as a loss-making entity.

iHubOnline has it on good authority that the state grain marketer is selling the produce at K160 per kilogram after buying the same at K300 per kilogram.

This represents a K140 loss per kilogram, an average of K 7,000 loss per 50 kg bag.

ADMARC Spokesperson Agnes Ndovi acknowleged that the produce is heavily subsidised to benefit the poor and the current allowable maximum quantity is 30 kg per person.

This, by our calculation represents a K 4,200 loss per person.

Speaking during his most recent State of the Nation address on Covid19 situation, President Lazarus Chakwera reiterated the need for subsidized maize prices to cushion the after-shocks of COVID-19.

Chakwera: Made the Pledge

Polytechnic College based Economist Betchani Tchereni has described the move to continue on the loss making trajectory as worrisome.

This, warns Tchereni, will only prompt further domestic borrowing.

“We have always discussed on the need for ADMARC to learn from the past. Despite the fact that it works in two dimensions, one being commercial and the other being to cater for social responsibilities, there is need for government to change some policies on running the corporation,” said Tchereni.

Also commenting on the current business model being pursued by ADMARC, another economic expert Professor Ben Kalua said it is surprising that the grain trader continues its old ways despite much talk for reforms.

Kalua said:

“This is a political move, but we have to move away from this, it’s high time we decided otherwise for ADMARC to start making profits on its own without relying for bail outs each season.”

Appearing before Agricultural and Natural Resources Committees in Parliament last year, the then Chief Executive Office of Admarc Felix Jumbe said that the corporation needs required a K300 billion for its recapitalization in the process of transformation.

Maize is an important crop to Malawi and as part of food contributes about 45.2 percent to the Consumer Price Index (CPI) an aggregate basket for computing inflation.

Over the past years ADMARC has been registering losses due to, among other things, buying the produce at a higher price and selling it a lower price.

The sensitivity of maize pricing has political implications hence a more relaxed manner of dealing with the grain marketer especially during a time of crisis.

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