By Bob Baulch and Rosemary Botha
August 2020
This policy note updates previous IFPRI analysis which examined, based on historical maize prices, how often ADMARC would need to intervene in different markets to defend a plausible range of ceiling and floor prices.
Summary
- Over the last twelve years, Government intervention has usually been insufficient to raise estimated farmgate maize prices above the floor established by the MoAFS’s minimum farmgate price, while the ADMARC sales price has not acted as a ceiling price for consumers.
- The frequency of purchases and sales required to maintain floor and ceiling prices varies with the width of the price band and its height relative to market prices. This poses serious budgetary and logistic challenges.
- More attention should be paid to the timing of maize market interventions. ADMARC purchases of maize are needed early in the marketing season but NFRA releases and ADMARC sales of maize are required later during the lean season.
- Price volatility, operational challenges, and high costs make it very difficult for Malawi to stabilize maize prices using a price band combined with a buffer stock.
Authors: Bob Baulch and Rosemary Botha, August 2020.
Click here to read and download Policy Note 38: "Can a Maize Price Band Work in Malawi?" (PDF 241 KB)
