AGRICULTURAL INVESTMENT PAY-OFFS THE MALAWI CASE

Idrissa M. Mwale idrissa08@gmail.com Ministry of Agriculture MALAWI.

Presentation made at Partnership to cut hunger and poverty in Africa Capital Street, Washnigton DC 12 May 2009 Chaired by: Dr. Derek Byerlee Author, 2008 World Development Report

OVERVIEW OF MALAWI
Malawi population 13.1 million Land area - 118,484 km2 Per capita income: US$170 (2006) one of the lowest Agriculture economy agro-based
Over 80% of export earnings

Contributes 38% GDP Supports 85% the population Smallholder farming (3.4 million) 75% of agricultural production Dominated by rain-fed maize farming.
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SECTORAL POLICIES
Mandate of the Ministry of Agriculture:

to promote and accelerate broad-based, sustainable agricultural development policies to enhance economic growth and contribute to poverty reduction
Farm Input Subsidy Programme is one of them.

Main Goal for ISP

The main objective of ISP
Improve national food security

The immediate objective

Improve accessibility and affordability of agricultural inputs among the most vulnerable farmers in the country

BACKGROUND TO FISP
Dry prolonged spells 2004/2005 season January and February 2005. Reduced maize production average yield dropping to 0.8 tons per ha. Total maize production reduced to 1.22 million tons, approx 60% of the estimated national maize food requirement.

BACKGROUND TO FISP - cont

Government decision improve smallholder farmers access to inputs Fertilizer and improved hybrid and OPV maize seed to improve food security Tobacco farmers to improve rural economies Legume (Groundnuts, soya, beans) for household nutrition and economic empowerment
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VOLUME AND TARGETS

YEAR 2005/2006 2006/2007 INPUT 120,000 MT maize fert 20,000 MT tobacco fert 150,000 MT maize fert 20,000 MT tobacco fert 4,000 MT maize seed 150,000 MT maize fert 20,000 MT tobacco fert 4,000 MT maize seed 1,000 MT legume seed 400 MT cotton seed 400 MT pesticides 150,000 MT maize fert 20,000 MT tobacco fert 4,000 MT maize seed 1,000 MT legume seed 400 MT cotton seed 400 MT pesticides PACKAGE 2 x 50 kg bag 2 x 50 kg bag 2 x 50 kg bag 2 x 50 kg bag 1 x 2 kg pack 2 x 50 kg bag 2 x 50 kg bag 1 x 2 kg pack 1 x 2 kg pack TARGETS 1.2 million 0.2 million 1.5 million 0.2 million 1.5 million 0.2 million 1.5 million 0.2 million

2007/2008

2008/2009

2 x 50 kg bag 2 x 50 kg bag 1 x 2 kg pack 1 x 2 kg pack

1.5 million 0.2 million 1.5 million 0.2 million 7

BENEFICIARY IDENTIFICATION
Criteria for beneficiary identification include:A Malawian that owns a piece of land Vulnerable household, with low purchasing power Guardian looking after physically challenged persons who are unable to farm Hard working household Adopter of new technologies Resident of the village The vulnerable group child headed household, female headed household, elderly but hard working household A combination of this is used in identifying the beneficiaries One beneficiary per household will registered

BENEFICIARY MATRIX
Compilation of all farm families Village data District data National database Two factors are used: Number of farm families Land area

(Previous demand for a particular inputs)

Develop beneficiary matrix Multi-sectoral teams established process done in open forum
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TARGETING BENEFICIARIES
Use coupons to reach out to the beneficiaries Promotes transparency and accountability As a control measures Minimises parallel markets of the subsidised inputs International standard tendering process Coupon printing based on beneficiary matrix Coupon have serial numbers and non-transferable

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PROCUREMENT OF INPUTS AND TRANSPORT SERVICES

Fertiliser procured under the International Competitive Bidding process follow standard procedures Transport services sourced locally Internal Procurement Committee evaluate the tender documents Successful bidder sign a contract with Government

DELIVERY & DISTRIBUTION OF INPUTS

Three channels are used as follows:
Deliver the fertiliser to designated warehouses in three main regions Deliver some contracted fertiliser and retail part through the existing outlets Retail all the contract through the existing retail outlets

Most of the fertiliser is imported by the private sector over 80%

COUPON REDEMPTION
Farmers free to use the coupons in any recognised retail shop The Traders collects the top-up from the farmer and the coupon Submit the coupons together with an invoice to the Ministry Payment based on submitted coupons only

COUPON VALUE
YEAR FARMER CONTRIBUTION US $ GOVERNMENT CONTRIBUTION US $

2005/2006 2006/2007 2007/2008 2008/2009

10 7 6 6

14 18 29 57

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PVT SECTOR PARTICIPATION

Not involved in distribution in 2005/2006 season In 2006/2007 and 2007/2008 private Sector participation was about 30% Seed was 100% supplied by the Private Sector Agro-dealers allowed to participate as long as they link up with the Trader Increased input uptake among smallholder farmers
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PVT SECTOR CHALLENGES

Did not cover rural areas concentrated in towns Demanded an upfront payments In efficiency Exploited the smallholder farmes exchange coupons for something else Were left out in 2008/2009
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2007/2008 PROGRAM EXPENDITURES

Description Suppliers of fertilizer Transporters Redemption of fert. coupons Redemption of seed Coupon Operational costs Other Costs Total Actual Expenditure US $ 76,428,571 6,135,714 22,857,143 7,500,000 2,171,429 4,671,429 119,764,286 As a % of total 64 5 19 6 2 4 100

SUCCESSES OF THE PROGRAMME

Food security at both household and national level Technology transfer Increased input uptake and use among smallholder farmers Improved rural economy Promoted private sectors turn-over Improved the countrys foreign reserves
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SUCCESSES continued
Met and exceeded the CAADP target 14% of national budget Met and exceeded agriculture growth target 6% per annum Increased national productivity from 800 kg per ha to 2250 kg per ha

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AN OVERVIEW OF MALAWIS
FOOD SITUATION

Increased national productivity from 800 kg per ha to 2250 kg per ha

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AGRICULTURE GROWTH

Met and exceeded agriculture growth target 6% per annum

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AN EXTERNAL ASSESSMENT OF THE ISP FANRPAN, APRIL 2009

Who is FANRPAN
Regional policy research and advocacy network (farmers, government, private sector and researchers) www.fanrpan.org

Objectives: the need to evaluate progress, document & share African success stories
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Case Study Results

Distribution of the inputs Utilization of the inputs Impact of Govt. support to smallholder farmers Marketing of production

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DISTRIBUTION AND INPUTS AVAILABILITY

Community identification criteria

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BENEFICIARY IDENTIFICATION
70% 30% 68% 32% identified in an open forum reported external influence are repeat recipients are new beneficiaries

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TIMING OF COUPON DISTRIBUTION AND INPUTS AVAILABILITY 17% distributed in October 68% by November 15% distributed in December Inputs availability 85% markets stocked in time There were also commercial sales

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DISTANCE TO NEAREST MARKET

Walking distance < 1km 1 to 2km > 2km Total

Frequency 141 179 749 1069

Percent 13.2 16.7 70.1 100.0

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MAIZE FERTILISER USE: INTENDED VS ACTUAL

Fertiliser utilization Maize Tobacco Other Total

Number of respondents 923 11 90 1024

Percent 90 1 9 100.0

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COMPARATIVE ANALYSIS OF HOUSEHOLD PRODUCTION

Production (kg) 2008/2009 subsidy 2007/2008 subsidy per household programme programme n/a 21.4 26.2 <100 1.3 .5 100-200 7.0 6.5 201-300 6.7 8.0 301-400 7.6 7.1 401-500 8.1 7.6 501-1000 25.3 24.5 >1000 22.6 19.7 Total 100.0 100.0

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FARMER CASE STUDIES

Beneficiary Raphael Chirwa Grace Nkhata Weston Kawani Elliot Fika Martin Chiputula No of 2007/2008 people in production HH kg 4 5 5 8 5 in 2008/2009 production in kg Change 500 0 1700 0 100 1500 300 1850 750 250 1000 300 150 750 150
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FARMING FIRST
Safeguarding the environment Share knowledge Builds local access Protect harvest Enable access to markets Prioritize research imperatives
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IMPACT OF ISP ON HOUSEHOLD FOOD SECURITY

65% having adequate food for the whole year while 35% needed to buy during lean period 60% had three meals per day 34% had two meals per day & 3% had one meal per day. 75% of the households have been food secure for 7 consecutive days of study.
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FANRPAN Food Security Policy Leadership Award

FANRPAN PRIZE Sponsor

Mr. Mark Matunga of Microsoft Corporation announces his organisations prize

FANRPAN Food Security Policy Leadership Award

FANRPAN PRIZE Sponsor

Mr. Les Hillowitz of Croplife International announces his organisations prize

FANRPAN Food Security Policy Leadership Award

2008 FANRPAN POLICY LEADERSHIP PRIZE Winner

His Excellency Dr. Bingu wa Mutharika President of the Republic of Malawi

CONCLUSION
There is need to have right policies in place Investment in agriculture is the key to poverty alleviation Research Extension linkages should be strengthened Political leadership & commitment is necessary Collective action (private sector, govt., farmers and researchers) is essential for the success of programmes
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AFRICA AND ITS PARTNERS CAN DO IT!!

ZIKOMO THANK YOU.

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