Government to sell part of maize reserves

Faced with an unexpected surplus, the Malawi government has decided to sell 50,000 mt of its maize stores, with the blessing of donors. "This will not come from the strategic grain reserves (SGR), but from government imports," Famine Early Warning Systems Network (FEWS NET) Country Director Sam Chimwaza told IRIN on Friday. He was referring to a previous controversial sale of the government's strategic grain reserves shortly before a massive food shortage struck. Chimwaza explained that the government recently held a meeting with NGOs and donors to discuss what to do with 250,000 mt of maize bought with a World Bank loan to avert another year of critical shortages which put 3.6 million people in need of food aid. Chimwaza said that due to timely government imports and a government-imposed price freeze which had reduced maize prices by up to 60 percent, market speculators had not been able to repeat the previous year's tactic of withholding stocks and then selling them at a large profit. In addition, cautious after two years of food shortages, households in Malawi had been extremely careful with their supplies, rationing themselves to make their supplies last longer. He added that due to shortages last year, consumers stopped going to the government maize depots and turned instead to small suppliers and private importers who sold small affordable quantities in the market, and became used to not sourcing supplies from the government depots. "Of course the consumer benefited from it, but not the government," he observed. When it became evident that this year's harvests were looking positive, in spite of heavy rains, and the SGR contained the required 60,000 mt, the government decided to discuss the possibility of selling one fifth of the maize to raise cash for other projects. They also decided against flooding the market with the maize to protect farmers from depressed prices in the next market season. "The government had initially hoped a donor would fund the transfer of the maize to bump up the SGR to 110,000 mt but at a meeting [attended by donors and agencies like FEWS NET] there were no takers. So today [Friday] the government is opening tenders for its sale. They need the cash and are still waiting for the International Monetary Fund to release US $47 million that they need," Chimwaza said. The World Food Programme (WFP), which is targeting most of those identified for food aid, and which launched a massive regional appeal last year, said it had "no problem" with the sale. "It was discussed and we don't have a problem with it because government reserves are on the high side and they are worried about the food rotting," WFP spokesman Abdelgadi Musallam said. "The [food security] situation here has stabilised, malnutrition rates have stabilised, food prices are low and the whole situation is quite different to last year," he said.