Malawi produces and exports a lot of pigeon peas but the country hardly benefits from the trade due to the unregulated commodities market in the country which results in informal exports and massive under-declaration of proceeds by exporters.
With the pigeon pea marketing season now underway in Malawi, there are still no measures the government has put in place to ensure that exports for the crop and other agricultural commodities are fully accounted for despite evidence that a large chunk of foreign exchange earned from exports of these crops does not come back into the country.
India being the largest market for Malawi’s pigeon peas, one can only guess what happens to the dollars earned when shipments of the peas are delivered in that country.
What is even more worrying is that the traders who buy the commodity from ordinary Malawian farmers for export have been paying very low prices to the farmers, even where international prices for the crop are high.
Thanks to the establishment of the commodity exchange in Malawi, farmers are now able to get better prices for pigeon peas and other crops as there is now a lot of transparency and information dissemination on real market prices for the crops.
But Malawi as a country is still losing hundreds of millions of dollars in would-have-been foreign exchange earnings from the commodities as it still allows unregulated exports of the crops.
Crop estimates from the Ministry of Agriculture show that Malawi is this year expected to produce 336,077 metric tonnes of pigeon peas, up from 335,091 metric tonnes produced in 2015. About 80 percent of pigeon peas produced in Malawi is exported while only 20 percent is consumed locally.
Based on last years’ average international price of pigeon peas at US$1,250 per metric tonne, Malawi can easily earn up to US$331 million from exports of pigeon peas if just about 265,000 metric tonnes – which is about 80 percent of the total tonnage produced, can be legally and transparently exported.
Official figures will, however, show you that Malawi only earned about US$70 million from the export of pigeon peas in 2015. The rest would have been lost through smuggling and under-declaration as records also show that exporters declared US$545 per tonne as the export price of pigeon peas in India.
Unless bold steps are taken to control the commodities market, Malawi will continue to lose hundreds of millions of dollars in would-have-been foreign exchange earnings while foreign traders will continue to externalise forex to their home countries through container loads of pigeon peas, groundnuts, rice and various other crops.
Meanwhile, Indian demand for pigeon peas continues to grow and there is a lot of interest from the Indian government to buy more pigeon peas from Malawi and a few other African countries.
Just last week, the Indian government has signed an agreement with Mozambique that will see the former Portuguese colony exporting pigeon peas to India over the next 10 years. Yet Mozambique is nowhere near to Malawi in the production of the crop.
Unless Malawi gets organised and takes control of the market, informal exports will be the order of the day while other countries continue to benefit from pigeon peas grown in Malawi.
We already did it with tobacco when the government put in place laws and systems restricting exports to only through the auction floors. It is high time the government did the same with agricultural commodities as the growing anti-tobacco campaign internationally means Malawi has to quickly find alternatives for earning foreign exchange. And agricultural commodities are an existing and ready means through which Malawi can find a means of economic survival.
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