Researchers have recommended adoption of a hybrid farm inputs subsidy model to include conditional subsidies for productive smallholders and one for unconditional subsidies for vulnerable households during food shortages.
Titled ‘Leaving no farmer behind: Towards a more inclusive and sustainable extended-affordable input programme for Malawi’, the study findings were published by the Centre for Agriculture Research and Development (Card) at the Lilongwe University of Agriculture and Natural Resources (Luanar).
Reads the report: “A more viable pathway involves targeting 40 percent to 60 percent of productive farmers. Using an assumed cost of USD 842 per metric ton of fertiliser, plus 10 percent for transport, 10 percent administration and 20 percent profit, the estimated market price is USD 59 per 50kg [killogramme] bag of inorganic fertiliser.
“Farmers in Malawi would contribute 70 percent of the price of a 50kg bag [i.e. USD 41] while government covers 30 percent [i.e. USD 18]. Likewise, lessons from Tanzania and Rwanda show that farmers contribute about 65 to 85 percent of the market price of a 50kg bag.”
The report further said targeting only productive farmers ensures greater return on investment and that the government can sustainably support about 50 to 60 percent of smallholder farmers under current Affordable Inputs Programme (AIP) budget constraints.
Using inorganic fertilisers, the paper evaluated a viable, targeted input subsidy scheme for beneficiaries ranging from 40 percent or 1.4 million to 90 percent or about 3.15 million of smallholder farmers.
The new model also assumes that government would procure fertiliser in bulk, enabling private sector entities to purchase for distribution within the country.
Further reads the report: “To ensure cost-effectiveness and maximise impact, the subsidy should target only productive and commercially oriented farmers. Government can sustainably support up to 55 percent of the targeted farmers given the current resource allocations towards AIP.
“A conditional and targeted subsidy approach is, therefore, recommended—linking support to measurable productivity outcomes to promote efficiency and long-term transformation in Malawi’s agricultural sector.”
Minister of Agriculture Sam Kawale said yesterday that his ministry will keep on reforming the programme so that its efficiency and effectiveness are improved.
He said government is reforming the AIP to target households with land and labour while farmers without land are being moved to social cash transfer and public works programmes.
On alternatives to AIP, Kawale said the National Economic Empowerment Fund is reaching out to farmers in clubs with input loans.
Since 1998, Malawi has been implementing different models of the subsidies, but the country continues to grapple with persistent food insecurity and remains reliant on maize imports to meet national demand.
For years, the government has invested billions of kwacha in AIP and its predecessor Farm Inputs Subsidy Programme (Fisp) with the aim of promoting food security, but millions of Malawians remain food insecure annually.
In August last year, the World Bank said AIP has done little to enhance food security, climate resilience, or productivity and has instead trapped many rural households in poverty by perpetuating a maize-based agricultural system.
When the Tonse Alliance administration ascended to power through the court-sanctioned fresh presidential election in June 2020, about 3.7 million farmers were on AIP in the 2021/22 financial year but the number of beneficiaries was reduced to 2.5 million in 2022/23 before being trimmed to 1.5 million in 2023/24. AIP’s predecessor Fisp was targeting at least one million beneficiaries.
