By: Vincent Nhlema
The National Agriculture Investment Plan recognises that low productivity, access to finance, perennially low prices for primary agriculture commodities, and unavailability of secured markets remain serious obstacles that choke the agriculture sector. The sector is inherently fraught with a variety of risks.
Climate change risks result in inability of even the most highly trained experts to predict the outcome of economic activities in agriculture with exactitude. Incidences of floods and droughts have become common in recent years. These risks cause challenges in accessing finance. Financiers are unwilling to finance investments of high risk.
“To mitigate this challenge and improve productivity that can lead to growth of industries, we need innovative financing including collateral investments in irrigation and agro-processing. In this regard, NASFAM applauds the Government of Malawi for the establishment of the Malawi Agricultural and Industrial Investment Corporation (MAIIC) which aims at bridging the financing gaps,” says Dr Betty Chinyamunyamu, Chief Executive Officer for the National Smallholder Farmers’ Association of Malawi (NASFAM).
“NASFAM recommends that deliberate products should be developed to target smallholder farmer agribusiness across the value chains with terms and conditions that will catalyze increased participation from agribusinesses.
“As this is a private sector-led initiative, there is need to scale up provision of innovative insurance products to hedge against production and market risks,” Chinyamunyamu adds.
Making her remarks, during the official opening of the 22nd Annual General Meeting for NASFAM in Lilongwe, Chinyamunyamu reminded the audience of the need to invest in value addition.
“You may have noticed during the tour of the exhibitions that mango Juice is being processed using machinery manufactured by our own engineers. For these implements to be used by farmers making fruit juices, there needs to be a market for this to be a viable business case. At the moment we are importing a lot of juices made from fruit concentrates when we can have healthy fruit juices made locally.
“Given the heavy reliance of our economy on agriculture, there is need to have a deliberate strategy to promote agricultural exports and value addition for import substitution for both traditional and non-traditional crops, so as to broaden and deepen the sources of foreign exchange and save on forex, which is critical to supporting the current macro-economic policy framework,” said Chinyamunyamu.
Chinyamunyamu further pointed to the need to identify a finite number of agricultural commodities in which Malawi has well defined competitive advantage and come up with a well-structured strategy to produce such commodities, not only aiming at producing primary commodities as has been the case, but looking at a value--chain approach.
She also urged government to come up with a policy framework that would provide incentives for organized farmers to invest in the sector and promote agro-processing and value-addition rather than production of primary commodities.