Malawi: Value Chains Deliver Better Returns to Smallholder Farmers

* The farmers are now inspired to think beyond the box on value added farming processes to produce more and better commodities

Through capacity building and technical support that Agricultural Commercialization (AGCOM) project empowers rural smallholder and medium scale food crop farmers, they are now earning better returns than before.

This was said by AGCOM's National Coordinator Teddie Nakhumwa at a business breakfast at Marriott Ryalls Hotel in Blantyre on Friday that Ministry of Trade and AGCOM organised to interface with buyers in order to forge a fruitful partnership.

The US$95 million project from a World Bank loan facility, AGCOM brings farmers to form cooperatives in a which the government funds specific projects that aims at enhancing value added productions.

The cooperatives are trained in business management and when they identify their needs, AGCOM provides 70% of funding and the farmers contribute the 30%.

Most of the cooperatives are now able to add value to their produce through proper farming equipment such as tractors and processing machines.

Nakhumwa said the farmers fetch better prices when they process their produce for the market -- both sold locally and exported.

The value chains were designed taking cognizance that Malawi's small scale farms operate alongside large agricultural estates and a growing number of medium scale farms yet the country's agriculture production generally fails to meet growing demand from domestic and export markets.

Nakhumwa said the farmers are now inspired to think beyond the box on value added farming processes in order to produce more and better commodities.

In his presentation during the business breakfast, trade facilitation specialist, Daniel Chilima, said the AGCOM project now has a national coverage targeting all districts aiming to support over 100,000 farming households and buyers, under the system called Productive Alliance.

The value chains are not determined in advance but designed to the market to decide which value chains and buyers have strong prospective commercial linkages both for domestic consumption and export.

Other cooperatives are doing irrigation farming and so far 20 irrigation schemes have been rehabilitated totalling over 2,000 hectares in Dedza, Thyolo, Phalombe, Machinga, Zomba, Mulanje and Chiradzulu.

These irrigation cooperatives are farming are increasing potential harvest volumes of rice, beans, horticulture, green maize amongst others.

He said the government is set to create an enabling business environment through various regulative and policy reforms that affect agricultural trade such as gazetting of Warehouse Receipt Act to improve access to finance and licensing of commodity exchanges under Reserve Bank of Malawi directive to ensure structured markets are regulated and act within their scope.

It also encompasses streamlining an industry approach in restrictions of imports and exports through gazetting of Control of Goods Act regulations.

Malawi Bureau of Standards (MBS) shall be capacitated to attain international accreditation in various scopes for certification purposes, including construction of secondary lab in Lilongwe.

In his speech, Minister of Trade Sosten Gwengwe added credence that the commodities being targeted by AGCOM "are not pre-selected but are those that display strong links with the markets".

"This too gives an opportunity to the buyers to come in and intervene by suggesting a commodity which is highly marketable and at the same time favourable to the Malawi weather conditions for producer organizations to embark on."

He put the emphasis that AGCOM "is an exceptional project that emphasises on active participation of the off-takers from the design stage to ensure that farmers are indeed producing for the markets".

"This is evidenced from its emphasis and prioritisation of strong partnerships between producers and off-takers-and other value chain players through the Productive Alliance approach.

"To underscore the importance of this partnership, only business plans that demonstrate this strong partnership, among other requirements, are the ones funded by AGCOM.

"This is why you should not be surprised when producer organisations come to your offices requesting for signed agreements."

He disclosed that the AGCOM project has got funds amounting to US$30 million for supporting productive alliances between off-takers and producer organisations.

"In addition, the project has partnered with the Malawi Agricultural and Industrial Investment Corporation (MAIIC) to offer partial credit guarantees for off-takers loans.

"However, uptake of these opportunities remains low. I, therefore, urge you to fully take advantage of these opportunities to commercialize the agriculture sector."

He also reminded the business gurus that in his State of the Nation Address that President Lazarus Chakwera made during the 49th Session of Parliament on May 12 indicated that the Ministry of Trade has completed a number of trade enhancing milestones.

"Some of the well notable ones include the development of the National Export Strategy II (2021-2026) that seeks to increase the proportion of exports from the current level of 14.6% to 18% of GDP.

"To achieve this goal, we must expand and diversify our production and trade, including export trade. That is why my Ministry was quick to ensure that Malawi ratified the African Continental Free Trade Agreement, which will enable the country to access the African Continental Free Trade Area for expanded trade.

"In pursuit of this goal, my Ministry has challenged the Malawi Investment and Trade Centre to explore new markets for Malawian commodities and products so that trade can effectively contribute to the attainment of the inclusive development of this country.

"Complementing this initiative is the Buy Malawi Build Malawi initiative commonly known as the Buy Malawi Strategy. The initiative is there to promote locally produced products and coupled with mindset change as a nation, we will be able to create wealth as well as jobs for our people.

He encouraged the off-takers to be at the forefront in promoting this initiative as well as other programs that the Ministry of Trade is championing with the aim of creating and enhancing a conducive environment for investment and trade.

"We are actively implementing the Doing-Business reforms program that seeks to reduce the procedures, time and cost of doing business in Malawi through legal, administrative and institutional reforms.

"Globally Malawi is ranked 109 out of 183 reforming countries. Our aim is to be below a rank of 100 soon. This will enable those looking for partnerships in business from outside investors be able to find them as they will find it conducive with such rankings."

He also announced that the Control of Goods Act (COGA) has now been gazetted and is operational which will help Government make evidence based and predictable trade decisions such as export of restricted crops, including maize.

Since the COGA emphasises on a more consultative approach in decision-making, it is expected that this will ensure predictability and avoid surprises," he said.

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