Malawi: 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 farmer's 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 Malawi's 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 Malawi's 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. sardc.net