To ease your site search, article categories are at bottom of page.

May 04, 2008

Fertiliser subsidy delivers Malawi bumper harvest, but at what cost?

Worries about food shortages are easily aroused in Malawi. In 2002 unripe cobs rotted in waterlogged fields while the national grain reserves were empty, prompting famine. A dry spell during three crucial weeks in 2005 kept female maize flowers closed until the males had sprinkled their pollen away. Again, a third of the population needed food handouts.

But in the past two seasons Malawi's smallholders have patted fuller bellies. Propitious weather helped the country produce a record maize harvest in 2006; the next year the harvest was even better, by nearly one-third. Official estimates put this year's output above average, despite months of lashing rain that swelled the Zambezi river and submerged farmland in much of the south of the country.

Politicians, foreign aid-givers and regularly famished farmers all attribute the bumper harvests to a massive government subsidy on fertiliser and a smaller one on maize seed. Andrew Dorward, a professor at London's School of Oriental and African Studies, who recently reviewed this scheme, reckons that a fifth of Malawi's harvest in 2007 can be attributed directly to farmers dressing their soils more handsomely and switching from local seed varieties, little altered from those first brought by the Portuguese centuries ago, to less water-sensitive hybrids.

Both bountiful seasons began with local officials providing wads of vouchers to village leaders, who distributed the discounts. Each farmer then took his coupons to a local shop where he exchanged them for reduced-price seed, 50 kilograms of urea and the same amount of a nitrogen-phosphorus mix, both used as fertilisers, for which he paid about a quarter of the normal sum. Because the government promised a minimum price for surplus maize at the end of the season, the whole enterprise was assuredly profitable for those smallholders who used their fertilisers and seeds well, and were lucky with the rain; nearly everybody was. As a result, President Bingu wa Mutharika's standing and his government's purse have grown.

It would be rash to label the policy a success, though. When the scheme started, the government, shell-shocked from the food crisis of 2005, its first year in power, did not trust private suppliers to procure or distribute subsidised fertiliser and seeds, so it did the task itself. But much of the government-procured fertiliser arrived too late to reach farmers during the first ten days of planting, when it does maize the most good. The agriculture ministry had to go begging at the warehouses of businessmen it had previously snubbed, who expressed their irritation by upping the price.

This weakened and annoyed the private sector. Even though the policy put fertiliser into the hands of farmers who could not previously afford the stuff (which it was supposed to do), it also made fertiliser cheaper for many who would have bought soil nutrients anyway (which was not the intention). At Farmers' World, one of Malawi's main agribusiness dealers, sales dropped by 70% and profits by 60%, so the company closed 30 of its 100 shops, says its boss, Dimitri Giannakis. Critics also lament the scheme's inefficiency, saying that it subsidised an imperfect type of fertiliser for the country's soils, that village headmen misunderstood or corruptly pocketed vouchers, and that landless Malawians peddled cheap fertiliser over the border in Mozambique and Tanzania.

The destruction of private distribution networks in the policy's first year led worried foreign donors to cajole the government into tinkering with the plan. The same donors had previously refused to get involved, saying that subsidies for African fertilisers had too often failed in the past. But they helped meet the policy's considerable costs during the second season in return for the government's improving its fertiliser tender and letting Farmer's World and companies like it accept vouchers in their shops and redeem them later. Such changes reawakened competition between those selling the seeds and fertilisers just in time to pull many back from the brink of bankruptcy.

Which is why experts promoting Malawi as an advertisement for a renewed effort to bring about an African green revolution should do so with care. To be sure, the subsidies have been a massive improvement on the panicky food buying of 2002 and 2005; they have enabled poor farmers to plant their crops more cheaply; they have given them more to eat; and they have avoided the perverse outcome, in some other African countries, where farmers are reducing the amount of land they are planting at a time of high food prices because they cannot afford fertilisers.

Yet more efficient, longer-term investments have worked elsewhere. Kenya stopped fertiliser donations in the early 1990s and binned its import licence and ceiling price on the commodity, yet private depots of it have grown and farmers have bought more fertiliser as transport has got cheaper. A season or two of bad weather could recast Malawi's policy as a heavy fiscal burden which the country has to carry because its farmers, who make up most of the country's voters, now view big subsidies as a right rather than a last resort.

The Economist

Article Categories

AGRA agribusiness agrochemicals agroforestry aid Algeria aloe vera Angola aquaculture banana barley beans beef bees Benin biodiesel biodiversity biof biofuel biosafety biotechnology Botswana Brazil Burkina Faso Burundi CAADP Cameroon capacity building cashew cassava cattle Central African Republic cereals certification CGIAR Chad China CIMMYT climate change cocoa coffee COMESA commercial farming Congo Republic conservation agriculture cotton cow pea dairy desertification development disease diversification DRCongo drought ECOWAS Egypt Equatorial Guinea Ethiopia EU EUREPGAP events/meetings expo exports fa fair trade FAO fertilizer finance fisheries floods flowers food security fruit Gabon Gambia gender issues Ghana GM crops grain green revolution groundnuts Guinea Bissau Guinea Conakry HIV/AIDS honey hoodia horticulture hydroponics ICIPE ICRAF ICRISAT IFAD IITA imports India infrastructure innovation inputs investment irrigation Ivory Coast jatropha kenaf keny Kenya khat land deals land management land reform Lesotho Liberia Libya livestock macadamia Madagascar maiz maize Malawi Mali mango marijuana markets Mauritania Mauritius mechanization millet Morocco Mozambique mushroom Namibia NEPAD Niger Nigeria organic agriculture palm oil pastoralism pea pest control pesticides pineapple plantain policy issues potato poultry processing productivity Project pyrethrum rai rain reforestation research rice rivers rubber Rwanda SADC Sao Tome and Principe seed seeds Senegal sesame Seychelles shea butter Sierra Leone sisal soil erosion soil fertility Somalia sorghum South Africa South Sudan Southern Africa spices standards subsidies Sudan sugar sugar cane sustainable farming Swaziland sweet potato Tanzania tariffs tea tef tobacco Togo tomato trade training Tunisia Uganda UNCTAD urban farming value addition value-addition vanilla vegetables water management weeds West Africa wheat World Bank WTO yam Zambia Zanzibar zero tillage Zimbabwe

  © 2007 Africa News Network design by

Back to TOP