AGRICULTURAL INPUT SUBSIDY PROGRAMME By Idrissa Mwale Ministry

AGRICULTURAL INPUT SUBSIDY PROGRAMME By Idrissa Mwale Ministry of Agriculture and Food Security P. O. Box 30134 Lilongwe 3 September 2008 Email: idrissa 08@gmail. com 1

BACKGROUND n n n Malawi’s economy - agro based with 85% depending and surviving on subsistence farming. Agriculture sector generates over 90% of the country’s export earnings. Contributes 40% of the GDP. Smallholder sector with 3. 2 million households – less than 1 ha of land. Smallholder sub-sector dominates with a contribution of 75% of the food crop production in the country. Since Malawi got independence in 1964, the agricultural sector has undergone through several policy reforms. 2

BACKGROUND n n Bad weather impacted the production Prolonged food shortage – between 2000 and 2004 National yields were as low as 0. 81 MT per ha in 2004/2005 Political commitment to implement the Input Subsidy Programme 3

Main Goal for ISP n The main objective of ISP n n Improve national food security The immediate objective n Improve accessibility and affordability of agricultural inputs among the most vulnerable farmers in the country 4

BACKGROUND TO ISP n n 2005/2006 ISP n 147, 000 mt of fertiliser for both maize and tobacco production n A surplus of approximately 500, 000 mt of maize 2006/2007 ISP n 176, 000 mt of fertiliser n 156, 000 mt for maize growers n 20, 000 mt for tobacco growers n A surplus of about approximately 1. 1 million mt of maize 2007/2008 ISP n 216, 500 mt of fertiliser n 193, 000 mt n 23, 500 mt n A surplus of about approximately 500, 000 mt of maize has been produced Current food requirement – 2. 4 million metric tonnes 5

Maize production VS national requirement 4, 000 3, 500, 000 3, 000 2, 500, 000 Maize production 2, 000 National Requirement 1, 500, 000 1, 000 500, 000 2001 2002 2003 2004 2005 2006 2007 2008 6

OTHER CROPS Production (Metric Tonnes) Rice Groundnuts Pulses Cotton Cassava Sweet Potato Wheat Millet Sorghum - 101, 633 242, 628 352, 665 76, 861 3, 491, 183 1, 711, 864 353, 855 2, 278 31, 868 61, 999 7

BENEFICIARY IDENTIFICATION n n n Farm family verification Update farm family registers Pre-registration of beneficiaries Village Development Committee oversees the pre-registration of beneficiaries Dates and places are announced in advance A Beneficiaries register be kept in the Village, Extension Planning Area, District and Agriculture Development Division. 8

BENEFICIARY IDENTIFICATION Criteria for beneficiary identification include: n n n A Malawian that owns a piece of land Vulnerable household, with low purchasing power Guardian looking after physically challenged persons who are unable to farm Adopter of new technologies Resident of the village The vulnerable group-Child headed household, Female headed household, Elderly but hard working household A combination of this is used in identifying the beneficiaries One beneficiary per household is registered 9

BENEFICIARY IDENTIFICATION - CONT n Verification Team: the team verifies registers of beneficiaries and constitutes the following: n Village Development Committee n Agricultural staff n Community police and n District Assembly To ensure that the final figures match with the coupon allocation. 10

DISTRICT BENEFICIARY MATRIX n n n Compilation of all farm families n Village data n District data n ADD data n National database Develop beneficiary matrix Two factors are used: n n n Number of farm families Land area Previous demand for a particular inputs 11

MODE OF DISTRIBUTING INPUTS TO BENEFICIARIES n n Use of coupons being the best approach in reaching out to the beneficiaries Printing services are advertised Internal Procurement Committee evaluate the tender and award the contract Coupons printed basing on the district beneficiary matrix

COUPON DISTRIBUTION n n Dates are announced in advance for the beneficiaries to gather at an open fora Those registered receives the coupons as follows: n Maize growing – NPK (23: 21: 0 + 4 S), Urea & Maize seed coupons n Tobacco – D Compound (8: 15) & CAN n Others – flexible coupons (cotton, ground nuts, common beans, soya beans, pigeons peas). 13

COUPON REDEMPTION n n n Farmers free to use the coupons in any recognised retail shop across the country The trader collects the fee (Mk 900 for fertiliser last year) and the coupon Submit the coupons to the Ministry through the Logistics Unit for payment Payment based on submitted coupons only The Traders submits an invoice on the same

PROCUREMENT OF INPUTS n n n Fertiliser procured under the International Competitive Bidding process – follow standard procedures Internal Procurement Committee evaluate the tender documents Successful bidder sign a contract with Government

DELIVERY & DISTRIBUTION OF INPUTS n Three channels are used as follows: n n Deliver the fertiliser to designated warehouses in three main regions Deliver some of the contracted fertiliser and retail part through the existing outlets Retail all the contract through the existing retail outlets Most of the fertiliser is imported by the private sector – over 75%

TRANSPORTATION n n n Transport services are contracted out Tenders floated in the papers IPC evaluate and award contracted to transporters priority to those with a large fleet of vehicles Transport the inputs to assigned routes This is 100% private sector

LOGISTICS UNIT n n n Handles the movements of inputs to the retail markets Replenishes stock in all the markets Receives the coupons from the traders Compiles the coupons Reconciles the coupons together with the invoice Submits the invoice after verification to Ministry for payment 18

ISP TASK FORCE n Membership of the Task Force: n n n n n Ministry of Agriculture Ministry of Finance Malawi Police Service Donor Community Fertiliser Association Seed Traders Association of Malawi UN Agencies To review progress Address critical issues relating to the implementation of the programme Provide feedback to stakeholders on any issues raised

MANAGEMENT OF THE PROGRAMME n Institutional arrangement n n n Ministry’s Management provides overall policy guidance Secretariat oversee the implementation of the programme Logistics Unit provides logistical support Agricultural Development Divisions backstops the implementation The districts implement the programme 20

COUPON DISTRIBUTION n Beneficiary matrix developed on three levels n n Extension Planning Area District ADD Flow of coupon n Hand over to District Agriculture Officer in presence of District Assembly officials Hand over to agriculture official Distribution to beneficiaries by the frontline staff the VDC, village headmen and all village members: NGOs if present in the village 21

Management structure MINISTRY OF AGRICULTURE AND FOOD SECURITY MANAGEMENT INPUT SUBSIDY PROGRAMME SECRETARIAT LOGISTICS UNIT AGRICULTURE DEVELOPMENT DIVISION DISTRICT ASSEMBLIES DISTRICT AGRICULTURE OFFICE ADMARC, SFFRFM AND PRIVATE TRADERS AREA DEVELOPMENT COMMITTEE EXTENSION PLANNING AREA BENEFICIARIES VILLAGE DEVELOPMENT COMMITTEE Coupon Flow Communication and coordination Registration Process 22

IMPLEMENTATION OF ISP n Sensitization and Beneficiary Selection n The Ministry carries out sensitization campaign at all levels Mainly the beneficiaries and other stakeholders The sensitization mainly covers: n n n Technical messages, Beneficiary identification Beneficiary pre-registration Coupon distribution and redemption Availability of commercial inputs within the areas 23

Private Sector participation n n Private Sector participates in the programme in all the 2005/2006, 2006/2007, 2007/2008 Private sector participation was about 35% Seed was 100% supplied by the Private Sector Increased input uptake among smallholder farmers Agro-dealers are allowed to participate as long as they link up with any company having a contract with the Government. 24

SECURITY FEATURES n n Use of different security features in each programme Each coupon for one commodity 25

MONITORING & EVALUATION n n n Monitoring at all levels At district level – district teams ADD – Directors assigned to each Agriculture Development Division Ministry HQs supervision and backstopping support ISP Task Force meetings 26

COMMUNICATION n Technical and other important messages are disseminated through: n Print and Electronic media n Drama n Radio and TV debates 27

Financing arrangements n n n n Government of Malawi Df. ID Norway EU WB Irish aid UNDP 28

Program Expenditures Description Actual Expenditure As a Percentage Suppliers of fertilizer 10. 7 billion 64 Transporters 859 million 5 Redemption of fert. coupons 3. 2 billion 19 Redemption of seed Coupon 1. 05 billion 6 Operational costs 304 million 2 Other Costs 654 million 4 Total 16. 7 billion 100