Business

Firms pressure government to restrict oil seed exports

The country’s major oil seed producers have been pushing the government to put a restriction on the exports of oilseed, especially soya, in an attempt to keep prices down, Times Business has established.

Among other things, the firms are said to be pushing for the imposition of $100 per tonne levy on soya bean exports so that domestic prices fall.

But the move has attracted the wrath of agriculture stakeholders who have described the move as retrogressive and in conflict with the principles of Control of Goods Act.

The firms are said to have had a meeting 3 with officials from the Ministry of Trade on April 3 to review the recommendations to restrict oilseed exports.

According to the agenda of the meeting, one of the producers, Sunseed Limited, made a presentation on Concerns by Oilseed Processors on the exportation of Oilseed Products.

But sunseed official, Sameer Ahmed, yesterday said his firm was not authorised to comment on the matter, referring it to Capital Oil Industries Limited (Cori), which, he said, is heading their association.

When contacted Tuesday, Cori Head of HR and Operations, Chrispin Sinjani, asked for more time to identify the right person handling the matter at his firm.

But Farmers Union of Malawi (Fum) Chief Executive Officer, Prince Kapondamgaga, yesterday described the proposal as unfortunate.

Kapondamgaga said there is overwhelming evidence that export restrictions on agricultural produce send mixed signals to farmers as they make their production decisions.

“This explains why we agree with other like-minded stakeholders in the sector that export restrictions misdirect agricultural investments, and encourage stockpiling, thus further distorting already tight markets in the context of weak and unstructured markets.

“For example, there is credible empirical evidence asserting that the maize export bans implemented by government in in 2016/17 depressed the maize markets, with farmers getting less than 60 percent of the government declared minimum support price and cost the country an estimated K50 billion [approximately $65 million] in revenue,”Kapondamgaga said.

He said if the government decides to impose export restrictions on soybean and other key agricultural produce, it should first purchase all the commodities from the farmers who are the backbone of Malawi’s economy and sell it to traders and processors.

“This will ensure that farmers, who are very key in price determination, are not duped but allow them to earn a decent return from their investment. We, therefore, encourage government to resist any influence from a few selfish players in the agricultural value chain and desist from implementing export restrictions that distort trade and cause unintended consequences.

“Our considered view is that the current Control of Goods Act provides better regulation and controls the importation and exportation of goods and guarantees transparency and predictability that allows private sector to invest in the sector,” Kapondamgaga said.

He said Malawi needs a progressive mind-set to achieve her medium to long term structural economic transformational goals.

Agriculture Commodities Exchange (ACE) Chief Executive Officer, Kristian Schach Møller, described the proposed restriction as a tax on the farmers.

Møller said the export restriction takes away the incentive of production and would stop the healthy development the country has seen in the soya value chain in recent years.

Principal Secretary in the Ministry of Agriculture, Grey Nyandule-Phiri, said although his ministry was not approached on the matter, he sees no reason why the authorities could implement such an export restriction.

He said it was the wish of Capital Hill to ensure that the farmer gets the right price for their crops.

The government has this year set minimum price of K280 per kg for soya.

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