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June 11, 2009

Malawi's bountiful maize harvest tempered by high input costs

Malawi's bumper maize harvest of 3.66 million tons is being attributed to good rains and the success of an agricultural subsidy programme targeting poor smallholder farmers - an initiative donors want to review.

Small-scale farmers account for about 80 percent of the country's agricultural production, with the rest coming from commercial farmers in the land-locked southern African state. About 75 percent of the 13 million population live in rural areas.

Erica Maganga, Malawi's secretary of agriculture and food security, said, "The success in high production is due to the
farm input subsidy programme the government implemented for the fourth time last year, where inputs, mainly improved seeds - hybrid and open-pollinated varieties - are given to resources-poor smallholder farmers at a subsidized price."

Malawi's national maize consumption is about 2.2 million tons, which should give the world's 14th poorest country a surplus of about 1.4 million tons.

The subsidy programme was first implemented in 2002; Maganga said that in a pool of "3.4 million resource-poor smallholder farmers" about 1.7 million had benefited from subsidies in the 2008/09 farming season, which runs from November to April.

The registration of small-scale farmers was supported by Britain's
Department for International Development (DFID), which promotes development and the reduction of poverty. Once registered, the beneficiaries receive a coupon allowing them to purchase agricultural inputs at the local market at a subsidized rate.

Maganga said the programme would continue alongside the agricultural department's efforts to promote new farming methods, such as conservation agriculture and the use of organic fertilizers.

Alick Nkhoma, assistant representative in Malawi of the UN
Food and Agricultural Organization (FAO), said that "the fairly good rains and the subsidy input programme contributed a lot [to the maize harvest], especially as the inputs were very expensive [because planting occurred when oil prices were near record highs].

Unsustainable costs

Small-scale farmers were able to access inputs at one-tenth of their price, the costs being borne by both donors and government, and do not have to
repay the balance of the subsidy after the harvest.

The donor community is scheduled to meet with the Malawian government in the next few days to discuss the subsidized agricultural input programme. "The cost is not sustainable, which is becoming a major issue," Nkhoma said.

A food security specialist, who declined to be identified, said that the issue was: what does the input subsidy programme want to achieve? If it was to produce a maize surplus, then targeting the subsidies at "mid-level farmers" [agricultural producers between smallholder farmers and commercial farmers], would increase yields per hectare and produce a surplus.

The yields of small-scale farmers average about three tons a hectare, while commercial farmers achieve six tons a hectare. However, if the aim of the subsidy was an economic safety net, than there were other more cost-effective measures to achieve that end.

The surpluses have yet to translate into cheaper maize-meal, which retails for about 50 Malawian kwacha (US$0.40) per kilogram. According to an analyst, the high price is a consequence of the bumper 2007/08 harvest, when government and private concerns stockpiled maize against global food shortages, and both parties were now recovering the costs.

Economic growth

The 2009/09 maize surplus, however, is expected to contribute to Malawi's economic growth rate, which last year hit 8.3 percent, reportedly second only to Qatar's.

Finance Minister Goodall Gondwe referred to Malawi's growth in 2008 as "extraordinary", and about three times the average rate of around three percent in the southern African region.

"We have also reduced the number of people living below the poverty line," Gondwe said. "It used to be 60 percent in 2004; it is now below 45 percent."

World Food Programme spokesman Richard Lee said that the harvest was "very good for food security in the region, and it might mean we will be able to procure food from Malawi."


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