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Government says fertiliser suppliers under this year’s Affordable Input Programme (AIP) will be paid in Kwacha to avoid the burden of foreign exchange problems as suppliers have to source for foreign exchange on their own.
Deputy Minister of Irrigation Services at the Ministry of Agriculture, Geoffrey Mamba, disclosed this to the Parliamentary Agriculture and Irrigation Committee last week, informing on the progress of preparations for this year’s AIP.
He said the government would not have to bear the burden of foreign exchange problems as all contracts would be denominated in Kwacha.
“This year our contract structure is slightly different. The contract states that suppliers should be paid in Malawian Kwacha when they deliver goods.
“So, in terms of the foreign exchange burden, it has shifted from the ministry to the supplier because they will be paid in Malawian Kwacha and they have to arrange the foreign exchange with the bank,” he said.
Mamba further said the ministry has made progress in sourcing vendors and expects to award the contract by the end of this month.
The PS also said they expect the distribution of inputs to be completed by September or October.
This year’s AIP allocation is K161 billion, up from K109 billion last year.
Justin Kagona, national coordinator of the AIP, said the number of beneficiaries of the subsidy program this year is 1,054,945, down from 1.5 million last year.
“The government expects to procure 104,844.5 metric tonnes of fertilizers to support beneficiaries in crop production,” he said.
According to Kagona, the country’s fertilizer stocks stand at about 109,408 metric tons.
“More fertilizer is expected to come to the country as there are currently about 164,700 metric tons of fertilizer at the port,” he added.
Kagona also told the committee that the contribution of farmers for each bag of fertilizer has been kept at K15,000 to enable them to afford fertilizers after being severely affected by the El Nino phenomenon. Each farmer will benefit from one bag of NPK and urea.
“Even though we have seen an increase in fertilizer prices, farmers’ contribution has remained at 15,000 kyats per bag.
“The government subsidy for each bag of fertiliser is K67,900,” said Kagona.
Sameer Suleman, chairman of the committee, doubted whether suppliers would accept payment in Kwacha, saying AIP required large quantities of fertilizers which required foreign exchange to purchase.
“Therefore, the Reserve Bank of Malawi (RBM) needs to set aside foreign exchange for the procurement of fertilizers to avoid import challenges,” he said.
On October 20, at the launch of the 2023 program, President Lazarus Chakwera gave the Ministry of Agriculture 40 days to implement the plan.
However, by the time the deadline came, the ministry had reached only 46 percent of the beneficiaries, and most were only able to get NPK due to foreign exchange shortage.
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