Southern African News Features                                           SANF 09 No 02, January 2009
Malawiís grain subsidy programme bears fruit

The turnaround in Malawi, from being a food deficit country to one producing surplus grain and overcoming food shortages has demonstrated that regional countries have the capacity to be food secure if they apply the right policies.

The grain subsidy programme that was introduced in 2005 has seen the government increasing the provision of maize seed and fertiliser to the smallholder farmers by more than 75 percent.

As a result, Malawi has since 2005 trebled maize production from 1.2 million tonnes to 3.4 million tonnes in the 2007/2008 agricultural season.

The government policy intervention -- a reintroduction of fertiliser and seed subsidies that began in 1999 -- is profoundly supported by the Malawian President Bingu wa Mutharika, who doubles as Minister of Agriculture.

Starting in 2005, the government distributed coupons to low-income farmers to allow them to purchase two 50kg bags of fertiliser equivalent to US$7, one-fifth the market price.

In addition, the government provided vouchers to buy seeds enough for planting half an acre each. As a result, the average farmerís yield increased to two tonnes per hectare from 0.8 tonnes in 2005.

In the 2007/2008 agricultural season, the subsidy programme cost the government US$62 million or 6.5 percent of its total budget.

The programme was initially criticised by economists and multilateral agencies who argued that the expansion of subsidies would worsen the budget deficit and create distortions in the market.

But Malawiís recent successes in turning around the agriculture sector and ensuring food security for the country has confounded critics. In fact, the phenomenal increase in maize production has saved the country a yearly budget of US$120 million that it had spent in 2005 importing food aid.

As highlighted by Malawiís Deputy Minister of Agriculture, Frank Mwendifumbo, the important lesson for policy makers in the region is that government subsidies are necessary for growth in agriculture. Such an intervention is in line with the SADC Declaration on Agriculture and Food Security that was adopted by SADC Member States in Tanzania.

Among the medium to long term targets, the SADC leaders agreed to ensure that all Member States progressively increase agricultural finance allocation to at least 10 percent of national budgets within a period of five years.

In the 2008/2009 agriculture season, Malawi plans to spend US$186 million in an ambitious farm input subsidy programme for 1.7 million peasant farmers, agriculture authorities recently announced.

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