CAMA asks cooking oil manufacturers to engage farmers to grow more of their raw materials

Soya beans is one of raw materials for manufacture of cooking oil

* Raw materials the industry needs include soya beans, groundnuts, sunflower, olives and others

* This follows controversy over the 16.5% value added tax (VAT) which government re-introduced last year

* Current price increase of refined cooking oil is due to global price of imported crude oil

By Duncan Mlanjira

Consumer Association of Malawi (CAMA) Executive Director, John Kapito has suggested that perhaps the cooking oil manufacturers should engage farmers to grow more of the raw materials their industry need such as soya beans, groundnuts, sunflower and others.

Kapito made the suggestion when CAMA — in collaboration with Malawi Revenue Authority (MRA) — asked the manufacturers not continue attributing that the current price increase of refined cooking oil is due to the 16.5% value added tax (VAT) which government re-introduced last year.

Kapito said, according to their findings on the grounds, the current price increase of refined cooking oil is due to many factors, including the increase in globally price of the imported crude oil, which the manufacturers themselves disclosed during the press conference CAMA organised at College of Medicine Sports Complex in Blantyre on Wednesday.

This disclosure of the global price of the crude oil prompted Kapito to encourage the manufacturers to opt for locally produced raw materials if the farmers can be engaged to be empowered and inspired grow more such crops knowing they already have markets for them.

However, in her remarks, representative of the manufacturers, Mrs. Patel said they tried this avenue on soya beans before but it failed. She disclosed that at first they were getting some 80,000 tonnes of soya beans a year of locally grown soya which increased to 250,000 tonnes.

“But this was not enough as we needed over 500,000 tonnes in six months for our production lines because only 18% of what we need is extracted from soya, the rest is just cake [converted into soya meat pieces]” she said.

“The farmers failed to meet this demand and thus we had to rely on imported crude oil.”

One of the contention she made was of cooking oil that is being smuggled from neighbouring Mozambique and Zambia, which she alluded to have increased due to Malawi government’s re-introduction of VAT on the commodity.

She also implored on Malawi to support and protect farmers just like the neighbouring countries’ governments are doing, which in turn makes their manufacturing industry rely on locally grown raw materials — thus having low prices on their commodities which lead to the smuggling.

She said they discovered that low supply of soya was because the produce is now being sold to the neighbouring countries’ manufacturers or their agents — and getting back into Malawi in smuggled products.

When President Lazarus Chakwera officially opened the 2021 tobacco market season at Lilongwe Auction Floors in Lilongwe on Tuesday, April 20, he had said the country needs to transition from a tobacco-based economy and identify a viable crop that can substitute the green gold.

He disclosed that he has tasked the Ministry of Agriculture to roll out consultations with relevant stakeholders to explore other crops like industrial hemp to replace tobacco — the country’s main strategic crop which rakes in about 60% foreign currency earnings.

He said the future for the tobacco industry looks bleak because of international anti-smoking lobbies which are leading to a decline in tobacco trade — which is a harsh reality that farmers and all other industry players needed to accept and look for alternatives.

The President also said although much of the country’s crop is for exports, the industry relies heavily on imports that results in small margins of profit for Malawi compared to other commercial crops.

He added that there was need for an exit strategy that would transition the country’s farmers from tobacco to other crops that are more sustainable and more profitable.

Thus Kapito’s strong suggestion that the cooking oil manufacturers should re-engage with farmers on an another high scale and to entice them with competitive prices that can deter them from opting to sell their produce to foreign agents.

However, on the smuggling of cooking oil products from Mozambique, MRA Head of Corporate Affairs, Steven Kapoloma said their fight against smuggling of any commodity is their priority and that they have dedicated patrol units that are plying along the borders of Mozambique operating from Muloza in Mulanje.

Kapoloma said since they intensified the patrols, they have intercepted lots of smugglers and confiscated many tonnes of cooking oil and would maintain their vigilance to protect the Malawian economic industries.