This paper considers potential strategic options for agriculture and development in Malawi in the context of the country’s current situation and the prospects the country faces. After briefly reviewing current national and sectoral policy and potential roles of agriculture in economic growth, we set out the current situation in order to consider strengths, weaknesses, opportunities and threats. We conclude that a major emphasis is needed on supporting changes that reduce the rate of population growth and promote capacity for adaptation and resilience to climate change. Rapid increases in the productivity of agricultural land and labor and rural incomes will be critical to this (alongside increased education and empowerment of girls and women). There are, however, difficult potential trade-offs to negotiate (for example between increased irrigation and reduced inflows into Lake Malawi) and these need further consideration. From this analysis we derive a set of nine strategic principles and two operational principles that we suggest could helpfully stimulate and guide strategy development that addresses the opportunities and threats facing Malawian agriculture. The application of these principles is illustrated by indicative consideration of policy and investment options focusing on development of different commodities and (broadly defined) resources. Consistent implementation of coordinated and consistent sectoral and inter-sectoral policies is critical for achievement of the desired growth and diversification impacts.

1. 1
­­INAUGURAL
ECAMA RESEARCH SYMPOSIUM, 8 – 10
OCTOBER 2014, LILONGWE, MALAWI
STRATEGIC OPTIONS FOR
AGRICULTURE AND
DEVELOPMENT IN MALAWI
Andrew Dorward & Ephraim Chirwa,
School of Oriental and African Studies, University of
London
Wadonda Consult
WACOL

2. Outline
 Current policy
 Roles of agriculture in economic growth
 Current situation & prospects
 Policy objectives & principles
 Policy & investment options
October 2014 2

3. Current policy: MDGSII
 Reduction of poverty “through sustainable economic growth &
infrastructure development”
 Agriculture & Food Security a key priority area.
 Sector goals:
 “to increase agriculture productivity & diversification”
 “to ensure sustained availability & accessibility of food to all
Malawians at all times at affordable prices”.
 Sector challenges:
 over dependence on rain-fed farming
 low uptake of improved farm inputs
 high transport costs; inadequate farmer organizations,
extension services, markets & market information, access to
agricultural credit; inefficient input & output markets; low
technology development & transfer”.
October 2014 3
 low productivity
 low mechanization
 weak private sector participation

4. Current policy: MDGS II
 Green Belt Irrigation & Water Development.
 Challenge of over dependence on rain-fed farming with
limited irrigation development
 Increase agricultural (including fisheries) productivity
through
irrigation infrastructure development,
potential groundwater resources development
technical & administrative capacities development
rehabilitation of irrigation schemes & dams
research in irrigation technology.
increase the area under irrigation from 90, 000 to
400,000 hectares.
October 2014 4

5. Agricultural Sector Wide
Approach (ASWAp)
 Aim: increase agricultural productivity, 6% agricultural
growth p.a., improve food security, diversify food
production to improve nutrition at household level,
increase agricultural incomes of rural people
 Focus areas:
Food Security & Risk Management;
Commercial Agriculture, Agro-processing & Market
Development;
Sustainable Agricultural Land & Water management.
 Key support services:
Technology Generation & Dissemination;
Institutional Strengthening & Capacity Building
 Cross-cutting issues:
HIV Prevention & AIDS Impact Mitigation;
Gender Equity & Empowerment
October 2014 5

6. ASWAp consistent with
 Four pillars of the Comprehensive African Agriculture
Development Programme (CAADP)
basis for & focus of the Malawi CAADP Compact.
 G8 New Alliance for Agriculture & Food Security
Malawi Government, G8 Development Partners &
national & international companies
promotes the development of smallholder farmers’
access to markets.
support implementation of parts of the ASWAp which
both involve partnership with the private sector &
promote smallholder agricultural development &
improved nutrition for the nation
October 2014 6

7. Importance of smallholder
agriculture in economic growth
 Strong cross country empirical evidence & theoretical
arguments
growth in smallholder agriculture has had major &
dominant impact on growth & poverty reduction in low
income countries in the past
smallholder agriculture is not always the best or only
basis for broad based or inclusive & poverty reducing
growth,
its effectiveness depends upon both context & the
effectiveness of policy in stimulating agricultural as
compared with other types of growth
 Particularly important & effective where large numbers of
(particularly poor) people & large amounts of land &
capital are involved in their production.
 Double benefit for ‘deficit food producers’ from staple
food crop productivity increases, as both producers &
consumers. October 2014 7

8. Roles of smallholder agriculture in
economic growth
 Driving growth (fundamental increases in productivity &
earnings)
Growth in production of tradables (imported or
exported commodities) raises incomes of domestic
producers.
increased production of non-tradable or semi-tradable
staple foods important in people’s expenditure (with
high average budget shares) through increases in
consumer incomes (reduced prices & expenditure
release funds for other expenditures)
 Supporting growth processes (multiplying & spreading
the benefits of primary growth drivers through an
economy
releasing resources for other productive resources to
respond to increased demand
October 2014 8

9. Further smallholder staple crop
growth benefits
 High growth linkages or multipliers (income gains
circulate in local economy)
tend to be high because consumption patterns of the
rural poor have a high non-tradable content
 Further benefits from low & stable food prices:
increased real incomes for large numbers of
producers and/or consumers.
stimulate demand for non-staple & non-farm products
resources for investment in supply to meet demand
allow shift out of low return food production (a ‘lock-in’
to subsistence production if high & variable food
prices) into high return non-staple /non-farm activities.
 environmental benefits if reduced cultivation pressures
on marginal or forested lands, &/or improved soil
management (with reduced run-off, & soil erosion).
October 2014 9

10. Roles of smallholder agriculture: context
 Countries with well managed minerals:
High response potential staples critical to supporting
(spreading) growth
Domestically consumed horticulture & livestock
critical for supporting (spreading) growth
 Land locked countries without minerals:
 High response potential staples critical to driving
growth
 Traditional / non-traditional exports can also drive
growth if widespread production
 Domestically consumed horticulture & livestock
critical for supporting (spreading) growth
October 2014 10

11. Poverty reducing agriculture growth
 Raises both labour & land productivity,
 Raises land productivity more than labour productivity
pushes up wages for unskilled labour.
 Important implications for policy (eg mechanisation &
herbicide use)
increased labour productivity & drudgery reduction
must not lead to unemployment of the poor &
vulnerable without safety nets to support them.
labour intensive organic manures will not address
poverty if they do not raise labour productivity as well
as yields.
difficult trade-offs change over time & vary with
specific farming systems & technologies.
October 2014 11

12. Current situation
 Rapid increases in population, large proportion under 15
 High (slowly declining) proportion in rural areas
 Falling per capita land availability
 Conflicting poverty information (falling or roughly constant
incidence), increasing numbers of poor & inequality
 Dramatic falls in the under-five mortality rate, rising life
expectancy, falling but still high HIV prevalence
 High but falling rates of stunting
 Variable national maize production surpluses (increasing
nominal & real maize prices (high inter- & intra- season
year variability), major food security problems.
 Low GNI per capita with highly variable annual GDP
growth, on average only a little above population growth
October 2014 12

13. Current situation (2)
 High variation in macroeconomic performance, periodic
high inflation & nominal interest rates, major devaluations
 Constraints & challenges on government expenditure & on
the economy as a whole, high dependence on grants,
 Persistent balance of payments deficits, imports growing
more than exports, large fuel & fertiliser import costs
 High roughly constant proportional agriculture contribution
to GDP, very high share of exports, high fertiliser imports
 High value share of tobacco exports, but major price &
volume fluctuations. Smaller values for tea, sugar, cotton,
nuts, & coffee also variable (pulses steady increase)
 Very small amount of cropland under irrigation, very high
proportion of land under maize
 Steady decline in fish catches & forest area (apparent
recent recovery in fish catches but not in catch per capita)
October 2014 13

14. SWOT Analysis of Malawi Agriculture
Strengths Weaknesses/challenges
Variety of different land &
soil types
Relatively favourable
rainfall & water sources
Commitment to agriculture
within society
Abundance of low cost
labour
Agriculture has performed
well, but still below
potential
Weak coordination with other
sectors
Inconsistent policies undermining
learning
Poor agricultural statistics
Poor extension services (big
programmes crowding out)
Roads and markets
Small land holdings &
fragmentation
Poverty & low maize productivity
trap
Limited agro-processing
Limited access to finance
14

15. SWOT Analysis of Malawi Agriculture
Opportunities Threats
Agro-processing investments
Improvements in crop & animal
husbandry & production
Greater production of non-traditional
food crops, such as
horticultural crops
Farmer organisations
Supporting development partners
New market opportunities (urban
pop & supermarkets)
Information technologies
Labour availability
Population growth & high
fertility rates
Land degradation
Forest, soil & fisheries
loss
Climate change
Regional markets and
food price variations
Corruption
Under-nutrition (over-nutrition?)
15

16. Threats : Population growth
50
45
40
35
30
25
20
15
10
5
0
Millions Most likely scenario
Rapid fertility decline
Very rapid fertility decline
Actual (smoothed)
2xcurrent pop
1970 1980 1990 2000 2010 2020 2030 2040 2050
October 2014 16
1.5xcurrent pop
3xcurrent pop
Current pop
Current population 3x
1975 population
Source: calculated from NSO 2008 census projection

17. October 2014 17
Threats : Population growth – threat
to food security despite FISP?
4000
3500
3000
2500
2000
1500
1000
500
0
-500
-1000
-1500
201/2
202/3
203/4
204/5
205/6
206/7
207/8
208/9
209/10
2010/1
201/12
2012/13
2013/14
'000MT Domestic surplus (deficit) before subsidy (MT)
Domestic surplus (deficit) with subsidy (MT)
Domestic surplus (deficit) without subsidy (MT)
Total consumption (MT)
Production with subsidy (MT)
Production without subsidy

18. Threats: Regional maize markets &
prices
 2011 -2013 changes in import/export flows & rising
SAFEX & other regional maize prices
 Malawi domestic prices falling below export parity price
despite high domestic Malawi Kwacha prices
 Increase seasonal price fluctuations with post-harvest
exports leading to pre-harvest shortages & price
increases?
August 2014 18

19. 0
0.1
0.2
0.3
0.4
0.5
0.6
208Apr
208Jul
208Oct
209Jan
209Apr
209Jul
209Oct
2010Jan
2010Apr
2010Jul
2010Oct
201Jan
201Apr
201Jul
201Oct
2012Jan
2012Apr
2012Jul
2012Oct
2013Jan
2013Apr
Current US$/kg Malawi Nampula
0.5
Lusaka Tete
0
0.1
0.2
0.3
0.4
0.6
20Aug
201Apr
201Dec
202Aug
203Apr
203Dec
204Aug
205Apr
205Dec
206Aug
207Apr
207Dec
208Aug
209Apr
209Dec
2010Aug
201Apr
201Dec
2012Aug
2013Apr
Current US$/kg)
Malawi
SAFEX
SAFEX-0.1
Threats: Regional maize markets &
prices
October 2014 19

20. Policy objectives
 MGDS 2: the reduction of poverty “through sustainable
economic growth & infrastructure development”
increase agriculture productivity & diversification &
ensure sustained availability & accessibility of food to
all Malawians at all times at affordable prices
 ASWAp objectives
increase agricultural productivity,
contribute to agricultural growth,
improve food security,
diversify food production to improve household
nutrition, &
increase agricultural incomes of rural people.
October 2014 20

21. Strategic & operational policy
principles
1. Sustainable investments & activities: viable & acceptable for
all & for as long as necessary
2. Land & wider labour productivity
3. Integration of complementary agricultural & non-agricultural
strategies, policies & investment
4. Broad based & inclusive growth
5. Increased quality & diversity in food production
6. Food access & affordability for all, particularly the poor
7. Promotion of sustainable practices with natural resources
accumulation not depletion, despite current & future threats
8. Rapid broad based growth to reduce population growth &
support climate change adaptation & resilience
9. Agro-processing to promote value addition in local linkages
10. Consistent coordinated vision
11. Clear priorities & roles October 2014 21

22. Indicative scoring: commodity options
October 2014 22
Commoditie
s
Score against principles
1 2 4 4 5 6 7 8 9 Sum
Maize ** ** ** ** ** ** ** ** * 17
Cassava * *(*) ** *(*) * *(*) -- *(*) ** 10+4
Tobacco * * * ** * * * * * 10
Legumes ** ** ** ** ** ** ** ** * 17
Horticulture ** ** ** ** ** ** ** ** ** 18
Traditional
** *(*) ** * * * ** * ** 12+1
export crops
Oilseed
crops
** ** ** * -- * * *(*) ** 12+1
Cattle * * * . * * . . ** 7
Goats * * * * * * * * * 9
Poultry ** * * ** ** * * * * 12

23. Indicative scoring: resources & services
October 2014 23
Resources
Score against principles
1 2 3 4 5 6 7 8 9 Su
m
Roads ** ** ** ** . ** . ** ** 14
Soils ** ** ** ** ** ** ** ** ** 18
Water ? ** ? ? ** ? ? * ** 7+?
Markets &
** ** ** ** ** ** ** ** ** 18
information
Technical
information&
innovation
** ** ** ** ** ** ** ** ** 18
Farmer
organisation
** ** ** ** ** ** ** ** ** 18
Subsidies ** ** ** ** ** ** ** ** * 18

24. 24
INAUGURAL ECAMA RESEARCH SYMPOSIUM, 8 – 10
OCTOBER 2014, LILONGWE, MALAWI
STRATEGIC OPTIONS FOR
AGRICULTURE AND
DEVELOPMENT IN MALAWI
Andrew Dorward & Ephraim Chirwa,
School of Oriental and African Studies, University of
London
Wadonda Consult
WACOL