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September 24, 2012

Malawi farm inputs subsidy under strain over currency devaluation, dependence on donors

Malawi has had a much-lauded farm inputs (fertilizer, seed, chemicals) subsidy scheme for its farmers for some years now. It has been extremely successful in raising the yields of several crops. Most significantly including making the country (agriculturally, economically, politically), once famine-plagued Malawi has for several years in a row now enjoy surpluses of its staple crop, maize.

But from the beginning, there were always concerns about how long the subsidy could be sustained. It took a big chunk from Malawi's annual budget and was increasingly dependent on international donors. Then there has been the perennial debate about how subsidies distort the development of free, strong markets and how they may create a culture of expectation which could be damaging to the creation of a competitive farming sector.

In the understandable euphoria of Malawi's 'bumper harvests,' all these worries were pushed aside. But recent events have forced renewed focus on the long-term viability of the farm inputs subsidy.

Hyperinflation has significantly devalued the Malawian kwacha, meaning for the same amount of the currency, the country gets much less than before in imported goods like farm inputs. Reduced national purchasing power has reduced how many of Malawi's farmers can have access to subsidized inputs.

Then Malawi's late president Bingu Mutharika had a falling out with Britain and other major donors, causing them to show who is who by slashing their support to the country's budget. This caused Mutharika's government to scale back the reach of the subsidy scheme, while also graphically showing the inherent dangers of a programme so vulnerable to the feelings of foreign governments and institutions.

Activists who are ideologically opposed to the very idea of fertilizers might feel vindicated by the subsidy programme running out of steam in Malawi. But it is also far from obvious that the various agro-ecological  alternatives can be a direct replacement for Malawi's (or any country's) present inputs-based farming in the near-enough term to address the intersecting food security, soil fertility, political and other challenges.

There will be no quick or easy answers, but at least the discussion about the need for Malawi to look beyond its government/donor-funded inputs subsidy programme seems to have begun.

African Agriculture


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