AGRICULTURAL INVESTMENT PAY-OFFS THE MALAWI CASE Idrissa

AGRICULTURAL INVESTMENT PAY-OFFS – THE MALAWI CASE Idrissa M. Mwale idrissa 08@gmail. com Ministry of Agriculture – MALAWI. Presentation made at Partnership to cut hunger and poverty in Africa Capital Street, Washnigton DC 12 May 2009 Chaired by: Dr. Derek Byerlee – Author, 2008 World Development Report 1

OVERVIEW OF MALAWI n n Malawi’ population – 13. 1 million Land area - 118, 484 km 2 Per capita income: US$170 (2006) – one of the lowest Agriculture – economy agro-based n Over 80% of export earnings Contributes 38% GDP n Supports 85% the population Smallholder farming (3. 4 million) – 75% of agricultural production Dominated by rain-fed maize farming. n n n 2

SECTORAL POLICIES n Mandate of the Ministry of Agriculture: to promote and accelerate broad-based, sustainable agricultural development policies to enhance economic growth and contribute to poverty reduction n Farm Input Subsidy Programme is one of them. 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 FISP n n n Dry prolonged spells 2004/2005 season - January and February 2005. Reduced maize production – average yield dropping to 0. 8 tons per ha. Total maize production reduced to 1. 22 million tons, approx 60% of the estimated national maize food requirement. 5

BACKGROUND TO FISP - cont n n Government decision – improve smallholder farmers’ access to inputs Fertilizer and improved hybrid and OPV maize seed – to improve food security Tobacco farmers to improve rural economies Legume (Groundnuts, soya, beans) for household nutrition and economic empowerment 6

VOLUME AND TARGETS YEAR INPUT PACKAGE TARGETS 2005/2006 120, 000 MT maize fert 20, 000 MT tobacco fert 2 x 50 kg bag 1. 2 million 0. 2 million 2006/2007 150, 000 MT maize fert 20, 000 MT tobacco fert 4, 000 MT maize seed 2 x 50 kg bag 1 x 2 kg pack 1. 5 million 0. 2 million 2007/2008 150, 000 MT maize fert 20, 000 MT tobacco fert 4, 000 MT maize seed 1, 000 MT legume seed 400 MT cotton seed 400 MT pesticides 2 x 50 kg bag 1 x 2 kg pack 1. 5 million 0. 2 million 1. 5 million 1 x 2 kg pack 0. 2 million 2008/2009 7

BENEFICIARY IDENTIFICATION Criteria for beneficiary identification include: n 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 Hard working household 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 will registered 8

BENEFICIARY MATRIX n n Compilation of all farm families n Village data n District data n National database Two factors are used: n Number of farm families n Land area n n n (Previous demand for a particular inputs) Develop beneficiary matrix Multi-sectoral teams established – process done in open forum 9

TARGETING BENEFICIARIES n n Use coupons to reach out to the beneficiaries n Promotes transparency and accountability n As a control measures n Minimises parallel markets of the subsidised inputs International standard tendering process Coupon printing based on beneficiary matrix Coupon have serial numbers and non-transferable 10

PROCUREMENT OF INPUTS AND TRANSPORT SERVICES n n Fertiliser procured under the International Competitive Bidding process – follow standard procedures Transport services sourced locally 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 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 80%

COUPON REDEMPTION n n Farmers free to use the coupons in any recognised retail shop The Traders collects the top-up from the farmer and the coupon Submit the coupons together with an invoice to the Ministry Payment based on submitted coupons only

COUPON VALUE YEAR FARMER CONTRIBUTION – US $ GOVERNMENT CONTRIBUTION – US $ 2005/2006 10 14 2006/2007 7 18 2007/2008 6 29 2008/2009 6 57 14

PVT SECTOR PARTICIPATION n n n Not involved in distribution in 2005/2006 season In 2006/2007 and 2007/2008 private Sector participation was about 30% Seed was 100% supplied by the Private Sector Agro-dealers allowed to participate as long as they link up with the Trader Increased input uptake among smallholder farmers 15

PVT SECTOR – CHALLENGES n n n Did not cover rural areas – concentrated in towns Demanded an upfront payments In efficiency Exploited the smallholder farmes – exchange coupons for something else Were left out in 2008/2009 16

2007/2008 PROGRAM EXPENDITURES Description Actual Expenditure As a % of total US $ Suppliers of fertilizer 76, 428, 571 64 Transporters 6, 135, 714 5 Redemption of fert. coupons 22, 857, 143 Redemption of seed Coupon 7, 500, 000 Operational costs 2, 171, 429 2 Other Costs 4, 671, 429 4 Total 119, 764, 286 19 6 100

SUCCESSES OF THE PROGRAMME n n n Food security at both household and national level Technology transfer Increased input uptake and use among smallholder farmers Improved rural economy Promoted private sectors turn-over Improved the country’s foreign reserves 18

SUCCESSES continued n n n Met and exceeded the CAADP target – 14% of national budget Met and exceeded agriculture growth target 6% per annum Increased national productivity from 800 kg per ha to 2250 kg per ha 19

AN OVERVIEW OF MALAWI’S FOOD SITUATION National maize production Vs requirement 4, 000 3, 500, 000 2, 500, 000 2, 000 Total Food Requirement 1, 500, 000 1, 000 Domestic production 500, 000 9 08 /2 00 8 20 07 /2 00 7 20 /2 06 20 00 /2 05 00 6 5 20 04 /2 00 4 20 20 03 /2 00 3 02 /2 00 2 20 01 /2 00 1 20 00 /2 00 20 99 /2 00 0 - 19 Metric tonnes 3, 000 20

AGRICULTURE GROWTH 21

AN EXTERNAL ASSESSMENT OF THE ISP – FANRPAN, APRIL 2009 n Who is FANRPAN n n Regional policy research and advocacy network (farmers, government, private sector and researchers) www. fanrpan. org Objectives: the need to evaluate progress, document & share African success stories 22

Case Study Results n n Distribution of the inputs Utilization of the inputs Impact of Govt. support to smallholder farmers Marketing of production 23

DISTRIBUTION AND INPUTS AVAILABILITY Community identification criteria 24

BENEFICIARY IDENTIFICATION n n 70% identified in an open forum 30% reported external influence 68% are repeat recipients 32% are new beneficiaries 25

TIMING OF COUPON DISTRIBUTION AND INPUTS AVAILABILITY n n n 17% distributed in October 68% by November 15% distributed in December Inputs availability – 85% markets stocked in time There were also commercial sales 26

DISTANCE TO NEAREST MARKET Walking distance < 1 km 1 to 2 km > 2 km Total Frequency 141 179 749 1069 Percent 13. 2 16. 7 70. 1 100. 0 27

MAIZE FERTILISER USE: INTENDED VS ACTUAL Fertiliser utilization Maize Tobacco Other Total Number of respondents 923 11 90 1024 Percent 90 1 9 100. 0 28

COMPARATIVE ANALYSIS OF HOUSEHOLD PRODUCTION Production (kg) 2008/2009 subsidy 2007/2008 subsidy per household programme n/a 21. 4 26. 2 <100 1. 3. 5 100 -200 7. 0 6. 5 201 -300 6. 7 8. 0 301 -400 7. 6 7. 1 401 -500 8. 1 7. 6 501 -1000 25. 3 24. 5 >1000 22. 6 19. 7 Total 100. 0 29

FARMER CASE STUDIES Beneficiary No of 2007/2008 people in production in 2008/2009 HH kg production in kg Change Raphael Chirwa 4 500 1000 Grace Nkhata 5 0 300 Weston Kawani 5 1700 1850 150 Elliot Fika 8 0 750 Martin Chiputula 5 100 250 150 30

FARMING FIRST n n n Safeguarding the environment Share knowledge Builds local access Protect harvest Enable access to markets Prioritize research imperatives 31

IMPACT OF ISP ON HOUSEHOLD FOOD SECURITY n n 65% having adequate food for the whole year while 35% needed to buy during lean period 60% had three meals per day 34% had two meals per day & 3% had one meal per day. 75% of the households have been food secure for 7 consecutive days of study. 32

FANRPAN Food Security Policy Leadership Award FANRPAN PRIZE Sponsor Mr. Mark Matunga of Microsoft Corporation announces his organisation’s prize

FANRPAN Food Security Policy Leadership Award FANRPAN PRIZE Sponsor Mr. Les Hillowitz of Croplife International announces his organisation’s prize

FANRPAN Food Security Policy Leadership Award 2008 FANRPAN POLICY LEADERSHIP PRIZE Winner His Excellency Dr. Bingu wa Mutharika – President of the Republic of Malawi

CONCLUSION n n n There is need to have right policies in place Investment in agriculture is the key to poverty alleviation Research Extension linkages should be strengthened Political leadership & commitment is necessary Collective action (private sector, govt. , farmers and researchers) is essential for the success of programmes 36

AFRICA AND ITS PARTNERS CAN DO IT!! ZIKOMO – THANK YOU. 37