Malawi: How the Government Defied Donors On Subsidies

In a development that could lead poor countries to start questioning the wisdom of donor-imposed policies, funding partners are lining up to support Malawi's farmer subsidy programme after pulling out of the country three years ago when the government ignored their advice.

Speaking to The EastAfrican in Malawi, the country's controller of agricultural extension services, Jeff Luanga, said that the state -- one of the poorest in Africa -- took a rare position and told the donors they were wrong on agricultural subsidies.

"We told them they were wrong and we were right, and they pulled out when we went ahead with the programme."

A year after the subsidies started, the country had doubled its maize production, but the donors were not impressed.

"They told us the programme was not sustainable; we told them we would push ahead," Dr Luhanga said.

When the decision to introduce the subsidies was made in 2005, Malawi was grappling with its worst drought ever as harvests hit record low, forcing the country to import 400,000 tonnes of maize.

Dr Luhanga said the imports came in slowly because being a landlocked country, Malawi had to rely on South Africa's road network, which is also used by Zimbabwe and Zambia.

Malawians would queue for hours to get food rations, creating what Dr Luhanga described as a "pathetic" situation for people who had the potential to grow their own food.

"Our people are hardworking. They have plenty of land, but they lacked access to inputs such as seeds and fertilisers," he said.

The Minister for Agriculture, President Mbingu wa Mutharika, decided that nothing was more important than giving farmers the support they needed to grow their own food.

Village Development Committees were formed to determine who should be included in the initial programme targeting about 1.5 million poor farmers who would be supported to grow at least a quarter hectare of maize.

It cost the government some Malawi Kwacha 10 billion ($70 million) and the yield was 3.6 million tonnes of maize, double the country's requirement of 1.6 million tonnes.

The results, according to Dr Luhanga, "were shocking."

"Suddenly, there was plenty of maize, the food queues disappeared, there were plenty of stocks, prices stabilised and the question now was, what do we do with the excess food?" he said.

These government mobilised the national Agriculture Development and Marketing Company (Admarc) to buy the maize from farmers and store it for future use and for the national strategic reserves.

The 12 Admarc depots spread around the country, which had not handled any stocks for 15 years, were full to capacity. This has been the case since the first government-supported harvest in 2005.

Malawi's economy has registered positive growth since 2006, which this year was at an impressive 7 per cent, a development attributed to the agricultural sector.

"Before 2005, we were on negative growth but after the first bumper harvest we have continued on a positive growth path," Dr Luhanga said.

After producing enough food, the government has now shifted to enhanced agricultural production by training farmers to apply modern growing techniques such as irrigation, using hybrid seeds, and basic business management courses.

Malawi is among the few countries in Africa that are giving priority to agriculture. It allocates 14 per cent of its budget to the sector and has placed it under the Office of the President, with the president as its minister.

Due to the success of its farmer subsidy programme, Malawi is grabbing the international limelight, with the governments of Kenya, Uganda, Tanzania and Swaziland having sent delegations to the country within the past three months to assess its implementation with a view to introducing the same measures in their countries.

Dr Luhanga said that Malawi is ready to share its experience with the rest of the continent because it believes that the solution to Africa's food problems lies within the continent.

Although this year the government's subsidy budget has doubled, to Malawi Kwacha 20 billion, because of the global rise in fertliser prices, Dr Luhanga said it is saving substantially on the money it would have spent on imports. "It is cheaper to subsidize farmers than spend billions importing food," he said adding that it would cost about 40 billion to import.

Dr Luhanga urges Africa to move fast to grow its food because with the growing production of biofuels, there may not be enough grains in the world therefore, food shortages are set to get worse.