Another look at 2019 agricultural path
By Dyson Mthawanji
Goodbye 2019, welcome 2020! The ending year has been a busy one considering that Malawi held its tripartite elections on 21 May. Despite this, the agriculture sector which is the hub of Malawi’s economy continued to tick both positively and negatively. The sector had its ups and downs. Looking back at the year, a lot of developments happened in agriculture sector.
Tobacco overproduced
This year’s tobacco production exceeded demand by 43.82 million kilogrammes (kgs). The country produced 193.4 million kgs against a demand of 149.56 million kgs. This was a bad development because overproduction of the crop could provide buyers some room to negotiate for lower prices which could affect the growers in the long run. At one point during the tobacco market, the average price was lower than the $1.71 per kg owning to overproduction as buyers had resized the budget to accommodate the excess tobacco thereby negatively affecting prices offered. Of course, despite the lower prices, comparatively within the region, Malawi remained competitive.
Tobacco Commission (TC) tried to put the new Tobacco Act into action to deal with overproduction. The new Act sought to address issues of overproduction by restricting production quotas. However, Minister of Agriculture, Irrigation and Water Development (MoAIWD), Kondwani Nankhumwa stopped implementation of this Act. Tobacco remains Malawi’s top most foreign exchange earner.
TC got tough
TC said the auction system of selling tobacco would now be subjected to strict compliant issues just like the Integrated Production System (IPS), also known as contract system farming. One of the critical elements on tobacco production is traceability demanded by cigarette manufacturers worldwide. Malawi is currently implementing such a demand through IPS, but observed that in the past, tobacco under auction system has fallen short of such a compliance issue.
In view of this, the commission advised all tobacco growers that efforts under IPS shall also be applicable under auction system. Basically, TC wants to establish where the tobacco is grown, how is it grown and who is growing this tobacco. This regulatory body will now be ve-ting all new applicant before issuing a licence. TC will also be validating land availability for all new applicants.
Furthermore, TC announced that it will also implement know-your-customer initiative for all tobacco growers while also undertaking Global Positioning System (GPS), a satellite-based radionavigation system, so that every tobacco grower’s database is fully known. In compliance with the law, the commission will ensure that all research, extension services and use of chemicals and pesticides are dully complied with. However, one wonders whether TC will have the capacity to reach out to all tobacco growers in its pursuit for compliance.
Following the adoption of IPS in 2012, the country runs two parallel tobacco selling systems with 80 percent of the leaf sold under auction. Globally, tracing growers’ farming location, farming methods and how growers address issues of child labour and deforestation are pertinent matters of concern to cigarette manufacturers.
USA bans Malawi’s tobacco
It never rained but poured for tobacco industry in Malawi. United States of America (USA) banned Malawi’s export of all tobacco and tobacco products into that country. The decision which was based on alleged forced labour practices, including child labour, is likely to negatively affect the economy if maintained, owing to the fact that tobacco is the country’s main forex earner, contributing at least 60 percent of foreign exchange earnings and accounting for at least 25 percent of tax revenue.
The tobacco industry also contributes around 13 percent of the Malawi gross domestic product (GDP) while the agriculture industry, which accounts for more than 80 percent of its rural population, has a tobacco grower base of about 60,000.
This is a heavy blow for an economy that relies heavily on tobacco, the country’s balance of trade. On the other hand, Malawi is also facing anti-tobacco campaigners who have been demanding from authorities to fast-track efforts to replace tobacco with something else. The development shocked many government officials Nankhumwa.
A Catholic University-based economist Gilbert Kachamba feared USA might influence other big economies to follow suit, especially in Europe where Malawi has the biggest tobacco market.
“Though not big, but we had an emerging market in USA; this is a setback, especially when we also have a strong campaign against tobacco at the global level,” Kachamba said.
Malawi government statistics of 2016 indicate that there are 2.4 million children aged five to 17 years engaged in harmful child labour in Malawi. Recently, Malawi introduced a revised Tobacco Act that seeks to protect tobacco farmers from exploitation and also fight child labour practices.
Tractorgate
In the year ending, MoAIWD apologized to the nation for its disposal of government-owned farm equipment. The farm equipment was purchased using a line of credit from Export-Import Bank of India to mechanise agriculture in the country included 177 tractors and 144 maize shellers. The tractos were meant for distribution to agriculture development divisions (ADDs) to enable smallholder farmers graduate to mechanization by hiring the equipment. However, only 77 of the tractors were distributed to ADDs with 100 sold.
“The Ministry of Agriculture, Irrigation and Water Development and the Ministry of Finance, Economic Planning and Development would like to sincerely apologise to the nation for what happened during the previous administration with regard to the irregularities on the purchase of farm equipment with archaic technology, and the subsequent disposal of 177 Somalika tractors which formed part of the consignment that took place in 2013,” read the press release titled ‘Pubic Apology: Misprocurement of farm equipment and irregular disposal of tractors’ and appeared in various newspaper editions including The Daily Times edition of 15th August 2019.
The case followed a 48-page investigation report titled ‘The Present Toiling, The Future Overburdened’ by the Ombudsman after smallholder farmer in Rumphi and former Dedza East legislator Juliana Lunguzi lodged complaints about the sale of farm equipment dubbed Tractorgate.
Efforts for extension services
On 11th September, various stakeholders flocked to MIM in Lilongwe for the 2019 National Farming and Extension workshop, under the theme ‘Acting on farmers’ Voices for Agricultural Transformation’. The workshop linked various stakeholders in agriculture sector. The Malawi Forum for Agricultural Advisory Services (Mafaas) organized a workshop with farmers to share best practices concerning farming, extension and agricultural advisory services in the country. The enabled farmers to forge links with various stakeholders in agriculture.
Maize crisis
Malawi, which reported a maize surplus in April this year, could end the year on a bad note in as far as maize stock is concerned. The country could be facing a maize crisis with Strategic Grain Reserves (SGR) at record low and State produce trader Admarc failing to stock up. National Food Reserve Agency (NFRA), which manages SGR, should have had 217 000 metric tonnes (MT) comprising 95 000MT buffer stock, 8 000MT emergency stock, 76 000MT safety net stock for non-emergency response and 38 000MT stabilization stock. However, as of early November, the agency had in stock only 25 000MT.
From the K10 billion allocated for maize purchases for SGR, Treasury had released K1 billion and NFRA was yet to start procuring the staple grain to that effect while Agricultural Development and Marketing Corporation (Admarc) had K2.5 billion for buying maize, but is failing to find stock.
Agriculture in 2020
The year is ending on a good note following the Reserve Bank of Malawi (RBM) announcement that in 2020, growth in agriculture sector is projected at 5.1 percent. RBM figures show that real GDP is projected at 5.0 percent in 2019, a 1.0 percentage point increase from 4.0 percent estimated for 2018, due to increased agricultural production on account of favourable weather conditions. Real GDP for 2020 is projected at 5.1 percent.
*Mthawanji is the Communications Manager at Civil Society Agriculture Network (CISANET). He is writing in his personal capacity.