Has the subsidy programme really been a success?

Agness Maonga has nothing but praise for the Farm Inputs Subsidy Programme (Fisp). Being a beneficiary, from the time it was started in the 2005/2006 growing season, she has seen her family transform from a food-scarce family to one that has surplus for sale.

According to her, before the introduction of the subsidy programme, her family of four children would only harvest 10 bags of maize at most. But the figures have since tripled to about 30 bags per season.

“My husband and I both do not work. We rely solely on agriculture. So, from our harvests, we are able to educate the children, feed ourselves and cover other costs. Before the subsidy programme, this was not possible. Now we have surplus. As a result, we have managed to buy goats and chickens. And at times, we have a surplus to the next growing season,” says Maonga.

Clearly, Maonga has the potential to graduate from the subsidy programme. From sales in one year, the woman from Pemba Village in T/A Somba, Blantyre can afford to buy fertilisers for the next season.

But she refuses to conceive the idea, saying she would not vote for the government that would remove her from the list of beneficiaries.

Maonga says she has become so accustomed to the programme that her life depends on it.

“It would not make sense for government not to allow some people to receive the subsidy. It is our right and that is why we vote for them. Just because we produce enough does not mean it will happen yearly. I have been a beneficiary of the subsidy programme from the time we were getting a bag of fertiliser at K1 500 ($6), until now when it is K500 ($2). If government were to give out the subsidy in phases to allow others to develop, what would happen to the thousands that do not receive in that year,” asked Maonga.

It is a fact that the Fisp transformed Malawi into a food basket. Through the national input subsidy programme, maize production doubled in 2006 and almost tripled in 2007. From a 43 percent national food deficit in 2005, Malawi achieved a 53 percent surplus in 2007, some of which was exported to neighbouring countries.

But the subsidy came with a cost. In the 2005/06 growing season, the subsidy programmes received an allocation of K2.2 billion (about $8.8m) and the figure went up to K5.5 billion (about $22m) in 2006. It nearly doubled to K10.7 billion (about $42.8m) in the following year.

In 2008, government integrated other crops into the programme such as tobacco, tea, cotton and coffee, which pushed the allocation further to K19.4 (about $77.6m) and was later revised to K29.4 billion (about $111m) due to the increase in fertiliser prices on the international market.

The following year, the allocation was reduced to K17.8 billion because it was revised to cater only for maize farmers, only to go up again in the last growing season to K19.7. In total, the government has since pumped K85.7 billion into the programme.

With the recent devaluation of the kwacha, the moneys invested into the programme is expected to go up again.

It is no wonder that while appreciating the programme’s benefits, donors and other stakeholders have questioned the sustainability of Fisp.

In a question-and-answer article posted on the World Bank website, there is need that in the long run, some farmers, especially commercialising farmers, graduate from the programme to stand alone.

The response to the banks position on the programme in part reads: “Over time, commercialising farmers should no longer need subsidies to encourage the continuing adoption of improved technologies and farm profitably. There may be a continuing justification for input subsidies to improve the welfare of the poorest of the poor who would otherwise continue to depend on food aid.

“….Money allocated to an extra bag of fertiliser may be money taken away from the vaccination of chickens for Newcastle disease. Or this may reduce the funds available for developing a new, disease-resistant, bean variety. Or the subsidies may reduce the resources necessary to build rural roads in order to lower the costs of future agricultural inputs.”

Ministry of Agriculture public relations officer Sarah Tione says Fisp cannot be changed because it was primarily introduced to help poor Malawian farmers who cannot afford modern technologies such as fertilisers and high quality seeds, necessary for increased productivity.

She says having nutritious food is the first step to development.

“In response to a severe food shortage that left about five million people in dire need of food aid in 2004/05, government embarked on the Farm Inputs Subsidy Programme in 2005/06 [growing season].

“Government is implementing the Fisp in order to increase smallholder agricultural productivity and therefore, achieve food security at both household and national levels. Specifically, the programme is helping resource poor smallholder farmers to access affordable fertilisers and quality maize and legume seeds. It is envisaged the programme will, in the long run, help to promote adoption of these improved technologies,” Tione says.

Market development specialist and managing director of Kingsway Trust Agro Systems Dr David Kamchacha says there is need to look at a mechanism that would track those benefiting from the subsidy programme and see their improvement and how they can be graduated from it.

In 2009, Kamchacha and a team of others did a study on the impact of subsidy on people’s livelihoods.

The study looked at 1 087 farmers and it was discovered that most of them had developed their lives enough to graduate from the subsidy, but refuse to do so because fertiliser subsidy had become a politicised commodity.

“The whole idea of a subsidy is to empower small holder farmers so that in the next season, if they were receiving two bags, they receive one and they purchase the extra one on their own. It means that in the long run, a farmer can become independent. When they graduate, it is supposed to allow other vulnerable citizens to benefit from the same.

“In the study that we did, we saw that it was possible, but it would be a big challenge because it has become too political,” Kamchacha says.