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Friday, 29 August 2008

Maize farmers vs the people..

Malawi's government has now implemented the ban on the private trading of maize we discussed here. The move is apparently designed to tackle food hoarding by smallholder farmers who the government accuses of speculating on further increases in prices in the future. The new rules ensures that Agriculture Development and Marketing Corporation (ADMARC), is the sole buyer and seller of maize in the country.

Government has fixed the price at which ADMARC will buy and sell maize: the state marketer will pay farmers and traders K2,500 ($17.86) per 50kg bag, and sell it at K52 ($0.37) per kg, or K2,600 ($18.57) per bag. Private traders have been paying farmers and other suppliers : K3,000 ($21) per 50kg bag and reselling it to the public at K3,500 ($24.55) - K4,000 ($28). Which begs the question, on who the losers are? It can't be the private traders. The margin they get seems broadly similar to the government and sometimes less! Its definitely the farmers in the long term (and smallholder farmers are exactly the poor rural dwellers!).

In short, it does not make sense what the government is trying to do, but urbanites are happy. Its always a distribution issue, the poor rural dwellers far removed from centres of power, are again at the mercy of angry urbarnites. But what the poor urbanites forget is that things will not get back with this particular measure, infact it can only get worse!

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