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

15

0

5

10

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25

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35

40

45

50

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

-1000

-500

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40002001/2

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2013/14

'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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Current US$/kg Malawi Nampula

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