How Malawi went from a nation of famine to a nation of feast

Something is missing in Malawi these days: anxiety. The sense of tension and strain that underlay nearly every conversation and interaction in the past few years, hungry years, is absent. There is a lightness in most parts of the country, an expansiveness, a certain sense of peace.

It has to do with the nkhokwe, the woven twig corn cribs that stand in the yards of every house. They're full. They're full to overflowing at many houses, two-thirds full with plenty of corn at others. Certainly so full that no one bothers to guard them. Who would steal, when the country has a grain surplus of more than a million tonnes?

A record harvest, a massive surplus of the staple crop, would be good news anywhere in the developing world. But it's particularly gratifying in Malawi, a country that has been plagued with critical food shortages several times in the past decade. In 2002, an estimated 1,500 people starved to death in the worst food shortage since independence. In 2005, the United Nations World Food Program scrambled to supply emergency rations to more than five million people, nearly half the country.

This year, Malawi is itself supplying the WFP, selling 400,000 tonnes of maize for use in emergency operations in neighbouring Zimbabwe.

The key question is, What happened? How did Malawi go from famine-plagued to food exporter?

While steady rains have undoubtedly helped, that's not the whole answer. Over the past couple of years, Malawi has broken with an orthodoxy long advocated by Canada and other Western donor nations: The impoverished country has gone back to subsidizing poor farmers. Condemned by donors as an impediment to the development of a sustainable agricultural sector, the subsidies have been a raging success.

"What is different [this year] is the access to inputs," explained Patrick Kabambe, permanent secretary in the Ministry of Agriculture and Food Security. "People are so poor they use recycled seed and no fertilizer. They can't meet their needs that way and they grow no surplus. People sink deeper and deeper into poverty. It's a vicious cycle. We had to do something."

Starting in 2006, and on a larger scale this year, the government distributed coupons to low-income farmers to allow them to purchase 50-kilogram sacks of fertilizer for 950 kwacha($7) rather than the market price of 4,500 kwacha. As a result, the average farmer's yield jumped to two tonnes a hectare from 800 kilograms.

The fertilizer subsidy cost the government $62-million - 6.5 per cent of the total government budget, a "whack of cash" in the words of one top economist - but that pales in comparison to the $120-million the government spent importing food aid in the 2005 famine. And the sale of maize to Zimbabwe and other countries will inject an additional $120-million into the national economy, a sizable figure here.

Mary Kalika certainly thinks the subsidy policy makes sense. Ms. Kalika and her five children farm a little less than a hectare of land in this nine-house village in central Malawi. "We harvested 42 oxcarts of maize this year; that is the most ever for this land," she said. "It's very good news, and it's because of the subsidized fertilizer."

Ms. Kalika has already sold some of her surplus to buy seeds and tools to plant tomatoes to sell in town for cash. She may put a new roof on their house, and buy the children school uniforms if the tomato crop does well.

That's Mr. Kabambe's goal, his vision for helping people out of the cycle of poverty. That seems straightforward enough, but the history of subsidizing agriculture here is a lesson in the competing interests and influences that go into the politics of food and aid.

Back in the 1990s, the Malawi government gave the poorest farmers a package of fertilizer and seeds every year. The program was so popular that in 1999, they made it universal, for all farmers, and posted a large national surplus. But starting in 2000, the donor nations on whom this country depends for nearly half its budget forced the government to scale back and then finally to scrap the policy, saying it "distorted the market" and would prevent a sustainable agricultural base.

The result? Smaller and smaller harvests and two years of famine.

Some blame fell on poor rains, but it was also true that the 75 per cent of the population who are subsistence farmers could not afford either fertilizer or seeds.

That left them vulnerable to what the development industry calls "shocks" - such as one household member contracting HIV or malaria and being too sick to farm - leaving them with too little to eat and forced to sell items of value to survive. At the same time, larger farmers and traders capitalized on the poor harvest by stockpiling, while the government made decisions that were both ill-advised and corrupt, and mishandled the national strategic grain reserve. The next few years were a disaster.

"We didn't advise the government to stop starter packs [of free seed and fertilizer]. We said if you want to subsidize, it has to be targeted," World Bank country director Tim Gilbo said. "It doesn't make sense to subsidize those who can afford to buy. We didn't have a problem with it, our only advice was that it should be targeted."

But in fact, in 2002, World Bank staff told The Globe and Mail that the subsidies were a vote-buying scheme that made it virtually impossible for any solid agricultural market to develop in the country, and that they were pushing the government to scrap it.

"Over time we have softened our stance a little," acknowledged Mr. Gilbo, who was not in Malawi then.

But the market-distortion sentiment was echoed at the time by many donors, including Canada and Britain, who funded the subsidies - this was the era of total dominance of the idea that private sector investment and development was the fastest way to end poverty - and the government was forced to abandon the program.

Eventually, the Malawi government took a stand, quite out of character in Africa where donor countries dictate domestic policy. "The president said [to civil servants] that he would never go begging for food for his people again," Mr. Kabambe recalled. Stuff the donor countries, they said, in essence: Bring back the subsidies. Hence the low-cost fertilizer. And a 370,000-tonne surplus last year. And the record-smashing 1.2 million tonnes this year.

"The subsidy is the best thing to happen in the agricultural sector in years," said Richard Petautchere of the Malawi Economic Justice Network, an organization that advocates for the poor. "We have the land, we have the water, we have everything, but that doesn't matter if you just can't buy seeds or fertilizer."

Mr. Kabambe said donors have also come to see the wisdom in the subsidies - "they've all come back around to say we want to support this" - and Britain and the EU have pledged to underwrite the fertilizer coupons for four years.

Mr. Gilbo said that of course it was positive that Malawi has a food surplus this year, but he argued that this national surplus will drive the price of maize low, which means farmers earn less for any surplus they grow and also remove any incentive to grow more than they will eat the next year.

"All those farmers who begged, borrowed and stole to buy extra fertilizer last year are now looking at that decision and rethinking it," he said. "The lower the maize price, the better it is for food security but worse for market development."

Only getting more people out of subsistence agriculture and into the larger economy will ultimately end poverty, Mr. Gilbo said. He noted that there is an "opportunity cost" to Malawi spending so much on subsidies - money that otherwise might have been spent on anti-malarial bed nets or roads to the most isolated villages - and subsidies, a blunt instrument, may not be the best way to get the poor what they need most.

And, he said, there is a risk of "silver bullet syndrome," with people overconfident that Malawi is now food-secure. "What concerns me is this feeling that Malawi has changed from an import nation to an export nation," Mr. Gilbo said. "This year you had good conditions, subsidies, lots of rainfall and the neighbours are short. If next year there is no rain and South Africa has a huge surplus - then what? It's just not true to say that the fertilizer subsidy has overcome all the problems."

Mr. Kabambe said he understands the need to develop the market, but the World Bank and others are not always realistic. "There are parts of this country where the 'market' doesn't exist. We can't say the market will take care of it," he said. "The government has a responsibility."

His emphasis, instead, is to try to persuade farmers to grow crops other than maize - high-value items such as Ms. Kalika's tomatoes, that can be sold for cash - and to promote small-scale irrigation so farmers are less vulnerable to fluctuations in rainfall.

But in the meantime, the fertilizer coupons stay. "We have no time-frame for ending subsidies; over the medium term they're going to be there," he said. "They will be phased out as income levels of farmers rise. We see it as a worthwhile investment. Look at the cost of doing nothing."

Facts on Malawi

52%

Population living below the poverty line in 2005, almost half of them in ultra-poverty.

90%

Population living in rural areas, mostly engaged in smallholder, rain-fed agriculture, and therefore highly vulnerable to annual rainfall volatility.