History of Malawi’s Input Subsidy Programme

Malawi’s smallholder farmers enjoyed subsidies on fertilizer and maize seed until the mid ’90s — international pressure notwithstanding — and could access credit and sell produce at supported prices to the state agricultural board (Admarc).

According to a 2007 New York Times article written by Celia W Dugger: “Malawi’s leaders have long favoured fertilizer subsidies, but they reluctantly acceded to donor prescriptions, often shaped by foreign-aid fashions in Washington, that featured a faith in private markets and an antipathy to government intervention.

Malawi is struggling to keep its prized fertilizer subsidy programme from failing, and to stave off the dreaded Four Fs: “No fuel, no forex, no fertilizer and, frankly, no f’all.”

“In the 1980s and again in the 1990s, the World Bank pushed Malawi to eliminate fertilizer subsidies entirely. Its theory both times was that Malawi’s farmers should shift to growing cash crops for export and use the foreign exchange earnings to import food,” said Dugger’s report.

However, by 1993, the smallholder agricultural credit system was facing collapse, according to the editor of Starter Pack: A Strategy to Fight Hunger in Developing Countries, Sarah Levy.

In 1994, Malawi became a democracy with the election of President Bakili Muluzi and the liberalisation of agriculture accelerated, said Levy.

The removal of all government subsidies coincided with market volatility, deteriorating terms of trade and credit scarcity and smallholder production began to tip downwards.

“It was here that the Farm Inputs Subsidy Programme (Fisp) had its roots,” said the logistics chief of the Malawian government’s current inputs subsidy programme Charlie Clarke. It followed “in the thinking of Charles Mann, a Harvard economist, and professor Malcolm Blackie of the Rockefeller Foundation, who were looking at new ways to develop agriculture”.

He said that Harry Potter, the agricultural adviser for the United Kingdom’s department of international development, worked with these ideas when in 1998 when he developed a programme called Starter Pack, aimed at distributing a small pack of farm inputs to every Malawian household.

After his election in 2004, President Bingu wa Mutharika and his government expanded the programme into something called the Targeted Inputs Programme, and then further expanded it into what is today called the Farm Inputs Subsidy Programme, which distributes bigger input amounts — 100kg of fertilizer, 5kg and 7.5kg bags of maize seed, and a 2kg bag of legume seed — to around 1.5-million beneficiaries, depending on the resources available in a particular year.

The major donor from the outset, and at times the only donor, has been the British government, as the US government took the view that subsidies were undermining their own efforts to promote the role of the private sector in delivering fertilizer and seed.

However, a source who was involved in the development of Starter Pack says that the objectives of the British government were not that different from those of the US.

“I’ve always thought Starter Pack had two objectives: one was certainly to develop smallholder farmers, but there was another slightly more suspect motive, and it concerned something called the smallholder farmer fertilizer revolving fund, which is the state entity responsible for bringing the bulk of fertilizer required for the current farm inputs programme into the country.

“The fund was established during the Mozambique war by the European Union because they were afraid that Malawi was going to become cut off from its nearest sea ports, and that fertilizer was going to run scarce. They built huge storage units in different parts of the country and set about stockpiling fertilizer.

The result was a massive rolling stock of fertilizer, which inhibited the growth of a private fertilizer industry, because private investors feared the release of the stock would be used to manipulate prices. Thus the deal struck between donors and the Malawi government at the start, and which is still reflected in the way that the programme is structured today, was that, while the donors would fund the project costs, the Malawi government would contribute fertilizer.

While many people involved had the noblest of motives, there’s no doubt that the donors were more interested in seeing Malawi empty out its fertilizer stores, thereby clearing the way for private industry, the source said.

Fisp is entering its seventh consecutive year, and is credited with major surges in the national maize crop.

In 2011, in spite of the fact that fuel and forex are scarce, resulting in late delivery of fertilizer and seed required for Fisp, many stakeholders anticipate another successful programme.

For more information check out our new site African8.

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