- Rice (ex Thailand) = USD 60.00 per MT to Durban + USD 40.00 to Beira

- Cotton (ex Far East, Cot look A-Index reference price) = USD 220 per MT to Nacala

# **IV. INPUT PRICE ANALYSIS**

34. Agriculture value chain analysis begins at the input supply level. The efficiency of a country’s input supply system has an obvious bearing on final SV not only in terms of the direct impact on unit prices, but also because of the influence on farmer decision making, optimal cropping patterns, choice of processing technology, and competitiveness of different transport arrangements. By looking at the composition of input prices at the place where each item is used, the quantitative methodology helps to identify areas where costs could realistically be reduced as a strategy for improved competitiveness. Further consideration of how the inputs are used in each value chain is needed to understand the relative importance of each item, but analysis of basic input prices is the first essential part of value chain assessment.

# **A. Fuel Price Build-up**

35. Domestic transportation costs have an important bearing on the price of agriculture inputs and outputs and are therefore critical to the competitiveness analysis. A breakdown of Malawi’s fuel price build-up is presented below and shows that 32.9% of the pump price (or total SV) is made up of foreign costs and that 83.2% of domestic costs are taxes.

**Table 4: Build-up of domestic fuel prices (MWK per liter)**

||**Price Buil-up**|**(per liter)**||**DVA**||**Foreign**|**Total**|
|---|---|---|---|---|---|---|---|
||Tambala|MWK|Costs|Tax|Total DVA|**Costs**|**SV**|
|FOB|6,902.32|69.02|||-|69.02|69.02|
|Ralilage|72.84|0.73|||-|0.73|0.73|
|Road|1,222.14|12.22|6.11||6.11|6.11|12.22|
|Insurance/handling|85.37|0.85|||-|0.85|0.85|
|Losses|52.91|0.53|||-|0.53|0.53|
|**IBLC (BT/LL)**|**8,335.58**|**83.36**|**6.11**|**-**|**6.11**|**77.25**|**83.36**|
|MERA levy|37.00|0.37||0.37|0.37||0.37|
|Road levy|1,170.00|11.70||11.70|11.70||11.70|
|MBS cess|16.67|0.17||0.17|0.17||0.17|
|Enery fund|40.00|0.40||0.40|0.40||0.40|
|Price stablization fund|8,238.26|82.38||82.38|82.38||82.38|
|**Duty free price**|**17,837.51**|**178.38**|**6.11**|**95.02**|**101.13**|**77.25**|**178.38**|
|Duty|833.56|8.34||8.34|8.34||8.34|
|Excise duty|2,750.74|27.51||27.51|27.51||27.51|
|**Duty paid price**|**21,421.81**|**214.22**|**6.11**|**130.86**|**136.97**|**77.25**|**214.22**|
|Distribution margin|200.00|2.00|2.00||2.00||2.00|
|Gross margin|934.86|9.35|9.35||9.35||9.35|
|**Wholesale price**|**22,556.67**|**225.57**|**17.46**|**130.86**|**148.32**|**77.25**|**225.57**|
|Retail margin|893.33|8.93|8.93||8.93||8.93|
|**PUMP PRICE**|**23,450.00**|**234.50**|**26.39**|**130.86**|**157.25**|**77.25**|**234.50**|

36. With a total estimated tax burden of MWK 130.86 (USD 0.94) per liter, these data show that Malawi has considerable scope to influence the price of domestic transportation. Based on the 2006 price build-up of fertilizer shown below, for example, it can be estimated that the farm gate price includes at least USD 32.14 (MWK 5,199) per MT for domestic transportation. Given the accumulated tax rate and foreign exchange percentage from Table 5 above, this works out to 13