strategic options for agriculture and development in malawi by andrew dorward
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1
INAUGURALECAMARESEARCHSYMPOSIUM,8–10OCTOBER2014,LILONGWE,MALAWI
STRATEGICOPTIONSFORAGRICULTUREAND
DEVELOPMENTINMALAWI
Andrew Dorward & Ephraim Chirwa,
School of Oriental and African Studies, University of LondonWadonda Consult
WACOL
Outline
Current policy Roles of agriculture in economic growth Current situation & prospects Policy objectives & principles Policy & investment options
2October 2014
Current policy: MDGSII
Reduction of poverty “through sustainable economic growth & infrastructure development”
Agriculture & Food Security a key priority area. Sector goals:
“to increase agriculture productivity & diversification” “to ensure sustained availability & accessibility of food to all
Malawians at all times at affordable prices”. Sector challenges:
high transport costs; inadequate farmer organizations, extension services, markets & market information, access to agricultural credit; inefficient input & output markets; low technology development & transfer”.
3October 2014
over dependence on rain-fed farming low uptake of improved farm inputs
low productivity low mechanization weak private sector participation
Current policy: MDGS II
Green Belt Irrigation & Water Development. Challenge of over dependence on rain-fed farming with
limited irrigation development Increase agricultural (including fisheries) productivity
through irrigation infrastructure development, potential groundwater resources development technical & administrative capacities development rehabilitation of irrigation schemes & dams research in irrigation technology. increase the area under irrigation from 90, 000 to
400,000 hectares.
4October 2014
AgriculturalSectorWideApproach(ASWAp) Aim: increase agricultural productivity, 6% agricultural
growth p.a., improve food security, diversify food production to improve nutrition at household level, increase agricultural incomes of rural people
Focus areas: Food Security & Risk Management; Commercial Agriculture, Agro-processing & Market
Development; Sustainable Agricultural Land & Water management.
Key support services: Technology Generation & Dissemination; Institutional Strengthening & Capacity Building
Cross-cutting issues: HIV Prevention & AIDS Impact Mitigation; Gender Equity & Empowerment
5October 2014
ASWApconsistentwith
Four pillars of the Comprehensive African Agriculture Development Programme (CAADP)
basis for & focus of the Malawi CAADP Compact. G8 New Alliance for Agriculture & Food Security
Malawi Government, G8 Development Partners & national & international companies
promotes the development of smallholder farmers’ access to markets.
support implementation of parts of the ASWAp which both involve partnership with the private sector & promote smallholder agricultural development & improved nutrition for the nation
6October 2014
Importanceofsmallholderagricultureineconomicgrowth Strong cross country empirical evidence & theoretical
arguments growth in smallholder agriculture has had major &
dominant impact on growth & poverty reduction in low income countries in the past
smallholder agriculture is not always the best or only basis for broad based or inclusive & poverty reducing growth,
its effectiveness depends upon both context & the effectiveness of policy in stimulating agricultural as compared with other types of growth
Particularly important & effective where large numbers of (particularly poor) people & large amounts of land & capital are involved in their production.
Double benefit for ‘deficit food producers’ from staple food crop productivity increases, as both producers & consumers.
7October 2014
Rolesofsmallholderagricultureineconomicgrowth Driving growth (fundamental increases in productivity &
earnings) Growth in production of tradables (imported or
exported commodities) raises incomes of domestic producers.
increased production of non-tradable or semi-tradable staple foods important in people’s expenditure (with high average budget shares) through increases in consumer incomes (reduced prices & expenditure release funds for other expenditures)
Supporting growth processes (multiplying & spreading the benefits of primary growth drivers through an economy
releasing resources for other productive resources to respond to increased demand
8October 2014
Furthersmallholderstaplecropgrowthbenefits
High growth linkages or multipliers (income gains circulate in local economy)
tend to be high because consumption patterns of the rural poor have a high non-tradable content
Further benefits from low & stable food prices: increased real incomes for large numbers of
producers and/or consumers. stimulate demand for non-staple & non-farm products resources for investment in supply to meet demand allow shift out of low return food production (a ‘lock-in’
to subsistence production if high & variable food prices) into high return non-staple /non-farm activities.
environmental benefits if reduced cultivation pressures on marginal or forested lands, &/or improved soil management (with reduced run-off, & soil erosion).
9October 2014
Rolesofsmallholderagriculture:context
Countries with well managed minerals: High response potential staples critical to supporting
(spreading) growth Domestically consumed horticulture & livestock
critical for supporting (spreading) growth Land locked countries without minerals:
High response potential staples critical to driving growth
Traditional / non-traditional exports can also drive growth if widespread production
Domestically consumed horticulture & livestock critical for supporting (spreading) growth
10October 2014
Povertyreducingagriculturegrowth
Raises both labour & land productivity, Raises land productivity more than labour productivity
pushes up wages for unskilled labour.
Important implications for policy (eg mechanisation & herbicide use)
increased labour productivity & drudgery reduction must not lead to unemployment of the poor &
vulnerable without safety nets to support them. labour intensive organic manures will not address
poverty if they do not raise labour productivity as well as yields.
difficult trade-offs change over time & vary with specific farming systems & technologies.
11October 2014
Currentsituation
Rapid increases in population, large proportion under 15 High (slowly declining) proportion in rural areas Falling per capita land availability Conflicting poverty information (falling or roughly constant
incidence), increasing numbers of poor & inequality Dramatic falls in the under-five mortality rate, rising life
expectancy, falling but still high HIV prevalence High but falling rates of stunting Variable national maize production surpluses (increasing
nominal & real maize prices (high inter- & intra- season year variability), major food security problems.
Low GNI per capita with highly variable annual GDP growth, on average only a little above population growth
12October 2014
Currentsituation(2)
High variation in macroeconomic performance, periodic high inflation & nominal interest rates, major devaluations
Constraints & challenges on government expenditure & on the economy as a whole, high dependence on grants,
Persistent balance of payments deficits, imports growing more than exports, large fuel & fertiliser import costs
High roughly constant proportional agriculture contribution to GDP, very high share of exports, high fertiliser imports
High value share of tobacco exports, but major price & volume fluctuations. Smaller values for tea, sugar, cotton, nuts, & coffee also variable (pulses steady increase)
Very small amount of cropland under irrigation, very high proportion of land under maize
Steady decline in fish catches & forest area (apparent recent recovery in fish catches but not in catch per capita)
13October 2014
Strengths Weaknesses/challenges
Variety of different land & soil \types
Relatively favourable rainfall & water sources
Commitment to agriculture within society
Abundance of low cost labour
Agriculture has performed well, but still below potential
Weak coordination with other sectors
Inconsistent policies undermining learning
Poor agricultural statisticsPoor extension services (big
programmes crowding out)Roads and marketsSmall land holdings &
fragmentationPoverty & low maize
productivity trapLimited agro-processingLimited access to finance
SWOTAnalysisofMalawiAgriculture
14
Opportunities Threats
Agro-processing investments Improvements in crop & animal
husbandry & productionGreater production of non-
traditional food crops, such as horticultural crops
Farmer organisationsSupporting development
partnersNew market opportunities
(urban pop & supermarkets) Information technologiesLabour availability
Population growth & high fertility rates
Land degradationForest, soil & fisheries
lossClimate changeRegional markets and
food price variationsCorruptionUnder-nutrition (over-
nutrition?)
SWOTAnalysisofMalawiAgriculture
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1970 1980 1990 2000 2010 2020 2030 2040 2050
Millions Most likely scenarioRapid fertility declineVery rapid fertility declineActual (smoothed)
Threats:Populationgrowth
16October 2014
1.5xcurrent pop
2xcurrent pop
3xcurrent pop
Current popCurrentpopulation3x1975population
Source: calculated from NSO 2008 census projection
17October 2014-1500
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'000MT Domestic surplus (deficit) before subsidy (MT)Domestic surplus (deficit) with subsidy (MT)Domestic surplus (deficit) without subsidy (MT)Total consumption (MT)Production with subsidy (MT)Production without subsidy
Threats:Populationgrowth–threattofoodsecuritydespiteFISP?
Threats:Regionalmaizemarkets&prices
2011 -2013 changes in import/export flows & rising SAFEX & other regional maize prices
Malawi domestic prices falling below export parity price despite high domestic Malawi Kwacha prices
Increase seasonal price fluctuations with post-harvest exports leading to pre-harvest shortages & price increases?
18August 2014
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Lusaka Tete
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Current US$/kg)Malawi
SAFEX
SAFEX-0.1
Threats:Regionalmaizemarkets&prices
19October 2014
Policyobjectives
MGDS 2: the reduction of poverty “through sustainable economic growth & infrastructure development”
increase agriculture productivity & diversification & ensure sustained availability & accessibility of food to
all Malawians at all times at affordable prices ASWAp objectives
increase agricultural productivity, contribute to agricultural growth, improve food security, diversify food production to improve household
nutrition, & increase agricultural incomes of rural people.
20October 2014
Strategic&operationalpolicyprinciples
1. Sustainable investments & activities: viable & acceptable for all & for as long as necessary
2. Land & wider labour productivity3. Integration of complementary agricultural & non-agricultural
strategies, policies & investment4. Broad based & inclusive growth5. Increased quality & diversity in food production 6. Food access & affordability for all, particularly the poor7. Promotion of sustainable practices with natural resources
accumulation not depletion, despite current & future threats8. Rapid broad based growth to reduce population growth &
support climate change adaptation & resilience9. Agro-processing to promote value addition in local linkages10. Consistent coordinated vision11. Clear priorities & roles
21October 2014
Indicativescoring:commodityoptions
22October 2014
Commodities
Scoreagainstprinciples
1 2 4 4 5 6 78 9 Sum
Maize ** ** ** ** ** ** ** ** * 17
Cassava * *(*) ** *(*) * *(*) -- *(*) **10+
4Tobacco * * * ** * * * * * 10Legumes ** ** ** ** ** ** ** ** * 17Horticulture
** ** ** ** ** ** ** ** ** 18
Traditionalexportcrops
** *(*) ** * * * ** * **12+
1
Oilseedcrops
** ** ** * -- * * *(*) **12+
1Cattle * * * . * * . . ** 7Goats * * * * * * * * * 9Poultry ** * * ** ** * * * * 12
Indicativescoring:resources&services
23October 2014
Resources
Scoreagainstprinciples
1 2 3 4 5 6 78 9 Su
mRoads ** ** ** ** . ** . ** ** 14Soils ** ** ** ** ** ** ** ** ** 18Water ? ** ? ? ** ? ? * ** 7+?Markets&information
** ** ** ** ** ** ** ** ** 18
Technicalinformation&innovation
** ** ** ** ** ** ** ** ** 18
Farmerorganisation
** ** ** ** ** ** ** ** ** 18
Subsidies ** ** ** ** ** ** ** ** * 18
24
INAUGURALECAMARESEARCHSYMPOSIUM,8–10OCTOBER2014,LILONGWE,MALAWI
STRATEGICOPTIONSFORAGRICULTUREAND
DEVELOPMENTINMALAWI
Andrew Dorward & Ephraim Chirwa,
School of Oriental and African Studies, University of LondonWadonda Consult
WACOL
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