26 October 2017

Malawi Milk Markets, Prices Remain a Challenge - CISANET

Civil Society Network for Agriculture (Cisanet) executive director Pamela Kuwali says dairy farmers in the country continue to face challenges in accessing markets as well as covering costs related to the production of milk.

The sentiments follow a report from study findings which CISANET commissioned on milk pricing. The study, among other things, sought to provide policy recommendations to improve competitiveness in the dairy sector.

Kuwali says from their discussion with stakeholders, it shows there is need to do a series of more studies to generate more evidence on other issues that affect the dairy industry.

"There is a general perception by milk producers in Malawi that suggests they get low farm gate prices for their raw milk. As a result, the farmers are of the view that they realize low returns from their dairy enterprises," said Kuwali.

She said because of other challenges, raw milk pricing remains a thorny issue and a tag of war in the dairy value chain in Malawi as processors claim to be paying decent prices for the raw milk while producers, on the other hand, claim to be getting a raw deal.

Kuwali said: "Examples include the absence of processors in Northern Region, need for unceasing production [of milk] by dairy farmers and effects of imported powdered milk on the demand for locally produced milk."

She said, as CISANET, they will use the findings to dialogue with all relevant stakeholders in the industry, including processors, government, legislature and the farmers themselves, to explore ways based on recommendations of strengthening competitiveness of the products.

"It is our belief that this study provides us with the necessary basis for initiating a healthy dialogue among all players in the value chain in a bid to ensure a more fair distribution of risks and benefits between milk producers and processors," she said.

Managing Director for Lilongwe Dairy, Edwin Chilundo, says there is need to clearly understand the pricing mechanism as the price of milk is relative and dependent on the quality of the milk itself.

"Sometimes we have problems with the adulteration of milk and productivity. For example, if a cow is only producing four litres a day instead of its full potential of almost 50 litres a day, that price then tends to look low.

"But when we compare with the region in terms of the quality of milk, the chemical balance in the milk shows that our price is very competitive," said Chilundo whose company is one of the leading milk processors in the country.

However, he conceded that the price point for powdered milk is so attractive, a development which has meant rural farmers who are farming traditionally are competing with farmers who are producing milk on a commercial scale from Europe.

"When we look at the region, we are the only ones with a significant disadvantage because we are charging a tariff that is less than what the rest of our contemporary countries like Zambia and Zimbabwe are charging," he said.

Deputy Director of Animal Health and Livestock Development in the Ministry of Agriculture, Patricia Mayuni, says farmers should check the amount of milk they produce and bring on the market if they are to realise more from their toil.

"On the other side, it is a matter of the farmers knowing what really it takes for them to produce a litre of milk. This will require our farmers to be able to keep records and know how much input they have invested for them to produce a litre of milk," said Mayuni.

She has since advised the rural farmers to be conducting gross-margin analysis and use the details to negotiate with the processors by showing them what it takes for a farmer to produce milk.

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