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October 17, 2011

Malawi inputs subsidy scaled back

More than 200,000 Malawian farmers who depend on government subsidies to grow enough food to feed their families will have to go it alone when the agricultural subsidy programme is pruned.

President Bingu wa Mutharika introduced the Farm Input Subsidy Programme (FISP) in 2005 to improve national food security and lift the productivity of smallholder farmers after several years of drought brought poor harvests.

The scheme is widely seen as successful in achieving both goals, but expensive. During the 2010/11 farming season 1.6 million farmers received vouchers to buy heavily subsidised fertilizer and maize seed, costing the government and donors 23 billion kwacha (US$152.3 million).

Now, in the midst of a crippling economic crisis, the Ministry of Agriculture and Food Security has announced that only 1.4 million farmers are eligible to receive vouchers for the 2011/12 season, and only 140,000 metric tons of fertilizer have been purchased for distribution compared to the 170,000 tonnes it bought last year.

Florance Gusito, who lives in Nyenga village in Malawi's Southern Region, benefited from the subsidy programme in previous years and is among the more than 80 percent of the population who earn a living from subsistence farming.

"I didn't receive a subsidy because there was a shortage this year," she said. "I will buy what I can afford from the market, but buying fertilizer will be a problem because money is a problem. There is a possibility that the crop will fail."

The Village Development Committee in Ngomanjira, also in the Southern Region, had the difficult task of determining which 66 households should be registered to receive government vouchers - in 2010 there were enough vouchers for 199 households.

"The government gave us a small number of people who can benefit from the programme," said the committee treasurer, Harry Macheza. "And how can we assist those who are not registered? We don't know.”

Government officials have suggested that reducing the programme reflects its success in lifting the beneficiaries out of poverty, but Tamani Nkhono-Mvula, national coordinator of the Civil Society Agriculture Network (CISANET), is not convinced. "Most of the farmers who were benefiting from the programme, I don't think they've reached a point where they can afford to buy fertilizer themselves," he said.

The country's slowing economy means farmers are facing higher taxes, fuel shortages and falling prices for tobacco, their main cash crop.

Lizzie Shumba, who coordinates a project to improve food security and soil fertility in northern Malawi farming communities, said farmers who did not get government subsidies relied on the proceeds from their tobacco crop to buy fertilizer for growing maize, the main food crop. "The [tobacco] prices were so bad they can't afford to buy fertilizer," she said. "People had enough maize this year, but since they didn't get good prices for their tobacco, they had to sell their maize [to generate cash]. So I'm foreseeing that this season we might have some hunger, and if they don't get fertilizer it will be even worse next season."

Tobacco exports generate around 60 percent of Malawi's foreign currency reserves, but declining sales have contributed to a critical shortage of foreign exchange.

Charles Chanthunya, an economics professor at Blantyre International University, said the shortage negatively impacted the entire economy, including the FISP, which relies on foreign exchange to import fertilizer.

"There are people who won't receive a subsidy this year because the country will not be bringing in enough fertilizer," he said.

Malawi's dependence on maize as the staple food has implications for the food security of the entire population.

Concerns over poor governance and economic mismanagement by Mutharika's administration have seen international donors - including the US-based Millennium Challenge Corporation (MCC), the European Union and the World Bank - either freeze or terminate assistance to Malawi, which relies on foreign aid for up to 40 percent of its annual budget.

The largest donor, the UK's Department for International Development (DfID), suspended general budgetary support to Malawi in July 2011 - following a diplomatic spat between Britain, the former colonial power and Malawi's government - but agreed to assist the FISP by providing subsidised seeds to 350,000 farmers. According to the UN Food and Agricultural Organization (FAO), other international donors have also pledged their financial and technical support to the FISP for 2011/12.

However, most of the FISP funding will still need to come from the government and according to Nkhono-Mvula of CISANET, this will mean reduced spending on other areas such as infrastructure and development.

Farmers are now in the process of preparing their fields and planting will start as soon as the Department of Climate Change and Meteorological Services gives the green light.

Erica Maganga, Permanent Secretary for the Ministry of Agriculture and Food Security, on 2 October told The Nation, a national daily newspaper, that fertilizer was already being distributed to markets countrywide but Nkhono-Mvula said the government was still in the process of procuring fertilizer and distribution had yet to begin. "It's getting late, especially for the southern region," he noted.

Nkhono-Mvula also wondered how the fertilizer would be distributed in view of the fuel shortage. "As of now we don't have enough diesel in the country. I'm not sure how this is going to be solved, but the government is still saying everything will be done in time.


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