Milling companies refuse to ‘bailout’ broke NMC
MBABANE – A stand-off that is potentially volatile has ensued between private milling companies and government, alongside State-owned enterprise National Maize Corporation (NMC).
This is subsequent to an instruction to the milling companies to pay an amount of E961 to NMC for every tonne of white maize imported into the country.
Ordinarily, the companies should be purchasing the maize from NMC, which is the sole importer of maize into the country, but the corporation is reportedly failing in this mandate.
The decision to monopolise the importation of maize was intended to encourage the growth of local white maize production.
It is reported though that the production of maize by local farmers has been drastically low and cannot satisfy the demand, which then necessitates the importation from South Africa.
Impeccable sources within the milling industry told the Times SUNDAY that NMC does not have money to purchase the maize from South Africa, which the corporation would then sell to the local millers, hence these private companies have applied that they be granted import permits so they could directly source the produce from the neighbouring republic by themselves.
But these applications have reportedly not been approved, until NMC issued a letter to the millers informing them that they would be permitted to import the maize, subject to certain conditions, one of which is that they should pay the corporation the amount of E961 per tonne.
It is reported though that the millers, through Eswatini Millers Association, have rejected this condition because they believe they are being made to bailout the cash-strapped NMC, which is not their responsibility.
The letter refers to ‘grant of white maize importation permit’ and was issued subsequent to a meeting between the millers, government (through the Ministry of Agriculture) and NMC.
“Pursuant to the recommendation of the minister and the discussion we had thereafter, the National Maize Corporation intends to grant you a permit to import white maize (WMI) subject to the following conditions: A fee of E961 to be paid to NMC per tonne imported; the permit is valid for a period of seven (7) days renewable based on compliance to the conditions and demand,” reads part of the letter.
It goes on to state that all imported maize under this arrangement will have to go through NMC weighbridge system for verification and quality checks.
WEIGHBRIDGE TICKETS
“The payment of the fee to NMC shall be based on existing contracts/payment arrangements with the miller after invoicing as per the weighbridge tickets. An application from the miler specifying daily requirements must be submitted to NMC. Permits to be issued by NMC should be able to cushion part of the weekly requirements for millers and the remaining part should be sourced from NMC,” adds the letter.
The millers association, through their spokesperson, said it had never happened before that they had to pay a certain amount of money to NMC when they were granted permits to import the maize from South Africa.
He revealed to this publication that should there be no maize imported from South Africa, either by them or NMC, the kingdom would likely run out of maize before the end of the coming week.
As the sole importer of white maize into the country, NMC’s mandate is to ensure that Eswatini does not run out of basic food stuff such as white maize and to ensure that more local farmers farm white maize.
However, the association, through the mandated spokesperson, disclosed that for the last year or so, none of that mandate had been met by NMC.
“I think maize production in the last 15 years has reduced and not increased,” the association’s spokesperson said.
He said this has made millers in the country to see little or no value in the role of NMC and most of them were now of the view that the corporation should be done away with because it was the reason that maize products were expensive in the country.
COST OF MAIZE PRODUCTS
The spokesperson said getting rid of NMC would result in the cost of maize products to be reduced by as much as between 15 to 20 per cent.
He said this was because NMC was selling maize to them with a mark-up of between E1 000 and E1 500 per tonne, which was between E10 and E15 additional price per 10kg – a cost that has to be carried by the end consumers.
According to the spokesperson, when NMC imports the maize from SA, it pays E5 500 per tonne and then sells same to millers for E6 700.
“The reason for that addition, according to the government gazette, is so that they can pay the local farmers more for maize. But local maize production is almost zero, which means most of the maize is imported from South Africa. Now the maize from South Africa is way below what NMC is charging. For the last month or so, NMC doesn’t have maize, so we are currently running in a
position where we are not going to have maize or mealie meal because we understand that NMC lost massive amount of money in the last year or two, due to we don’t know what reasons, and they don’t have any more money to spend and they cannot buy maize. On top of that, they’re not allowing the local maize millers to import the maize even though they don’t have and cannot provide,” said the millers’ spokesperson.
He said in the past, the millers in Eswatini were able to import with a permit, which NMC must agree to whenever they are short of supply.
He said if the millers were allowed to import as soon as tomorrow, they could buy and land maize at their factories at E1500 a tonne cheaper than what NMC could do.
“But because of the government gazette, NMC is the sole importer so they’ve got an absolute monopoly on maize; they’re the only people who can import, but of course, that is causing massive cost to the whole dynamic. The intention from NMC to be the sole importer is because they want to pay the local farmers more, which is not a bad incentive, but they’re failing in their task as they’re actually losing money,” the spokesperson said.
He said millers were all on the same boat about buying maize from NMC but if the corporation did not have the capacity, then they should be allowed to import because currently they were battling.
When the NMC was sought for their side regarding the current standoff with the millers, Acting CEO Doctor Shongwe referred enquiries to the Ministry of Agriculture as he said this had to do with policy.
Nomvuselelo Dlamini, the ministry’s Communications Officer, said they would respond in the coming week.
The National Marketing Board (NAMBoard), meanwhile, said while
its mandate is to regulate importation and exportation of specific scheduled commodities, however, NMC was granted by government a sole importation right for white maize.
Communications Officer Melusi Dlamini said this meant that NAMBoard did not have the privilege to determine who should be allowed and who should not be allowed to import white maize into the kingdom.
“The practice has been that, when NMC runs out of capacity to import maize to supply local millers, they have always engaged NAMBoard and authorised some millers to import direct until the capacity has been established. At the moment, we have not been approached by NMC to report such incapacity,” Dlamini said.
STATE-OWNED ENTERPRISE
He stated that NMC is an independent State-owned enterprise similarly to NAMBoard and is not subordinate to NAMBoard.
“As an equal State-owned enterprise to NMC, we respect their capacity assessment and their ability to overcome any challenge that they may encounter from time to time. We however, remain available to support the ministry and NMC to address any challenge that may threaten food security in the country,” Dlamini added.
It is worth pointing out that Auditor General (AG) Timothy Matsebula, in his report for the financial year ended March 31, 2021, observed that the ministry of Agriculture transferred consumables funds amounting to E40 million to NMC, from the Director of Agriculture’s Office, under the expenditure item for seeds and plants.
This transfer is said to have attracted significant bank charges amounting to E781 250.
Matsebula said he was not aware how these public funds were accounted for by the ministry and/or NMC.