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Fertiliser success stuns western donors: fed up with having to beg for food aid, Malawi's president Mutharika defied donor conditionalities and provided the country's struggling farmers with subsidised fertilisers. the result was stunning. Malawi changed overnight from a food aid importer to an exporter.

Over the last two decades the World Bank and donor countries have been pressing Malawi to adhere to free market policies even though both the US and EU continue to subsidise their agricultural sectors. USAid, for example, has urged promotion of the role of the private sector in delivering farming inputs, and subsidies are seen as undermining that effort.

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Tired of being subjected to the humiliation of pleading for aid, in 2005 President Bingu wa Mutharika decided to defy the international donor community and reinstate fertiliser subsidies.

The US, which had been shipping $147m worth of food to Malawi as emergency relief since 2002 (by comparison, it is only supporting Malawi's indigenous agricultural sector by $53m) did not provide any financial support for the subsidy programme except to help fund an evaluation study.

President Mutharika was determined to reinstate fertiliser subsidies. "Our people are poor because they lack the resources to use the soil and the water we have. As long as I am the president, I don't want to be going to other countries begging for food," he said at the launch of the programme in 2005.

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His statement echoed observations made by the Food and Agriculture Organisation (FAO) which warned that Malawi's soil, like that across much of sub-Saharan Africa, was gravely depleted. The FAO also said that many African farmers could not afford fertilisers at the market price.

The UN body argued that the subsidy programme contributed to the crucial role agriculture played in alleviating poverty in Africa and to research, training, improved seeds, and providing financial credits. The FAO also said that unless nearly 70m smallholder families in sub-Saharan Africa began to apply fertilisers and started practising sustainable land and water management within the next decade, they would "seriously jeopardise their long-term food security, productivity and incomes, while environmental degradation will accelerate".

In Malawi the subsidy reduced the price of a 50kg bag of fertilisers from around Mkw4,000 ($27) to Mkw950 ($6.50). As a result, maize production leapt from 1.2m metric tonnes (m/t) in 2005 to 2.7m m/t in 2006 and 3.4m m/t in 2007, creating a surplus of 1.5m m/t. The better harvest did not just benefit Malawi but also 'needy' neighbouring countries.

According to the USAid-funded Famine Early Warning System Network, Malawi officially exported 286,589t of maize to Zimbabwe by the end of December 2007. The World Food Programme also sent 32,363t of Malawian maize to Zimbabwe, bringing total official exports from Malawi to 321,406t. The country also donated 5,000t of maize to drought-hit Lesotho and Swaziland.

Malawi's exports benefited from rapidly rising world food prices. The World Bank's Annual Global Economic Prospects 2008 indicates that global food prices have risen by nearly 75% within a decade and that trend is likely to continue.

"We are looking to expand our exports regionally. High food prices have come as and added incentive and it is a good opportunity for our farmers. We have to invest in agriculture," insists Patrick Kabambe, principal secretary at the Ministry of Agriculture.

Despite the success of Malawi's fertiliser subsidy programme, skeptics continue to raise doubts.

But economists Jeffery Sachs and Glenn Denning of the Earth Institute at Columbia University in the US said: "The impact [of Malawi's subsidy programme] has stunned the doomsayers; it seems that an African green revolution is possible after all."

Researchers at Imperial College London and Michigan State University concluded in a preliminary report that a well run subsidy programme in a sensibly managed economy "has the potential to drive growth forward and out of the poverty trap in which many Malawians and the Malawian economy are currently caught".

Malawi's determination to heavily subsidise fertiliser has slowly begun to change the attitude of donors. In 2006 the UK's DfID contributed $8m to the subsidy programme.

In its evaluation of its role on African agriculture, the World Bank concluded in October 2007 that not only had the removal of subsidies led to exorbitant fertiliser prices in African countries, but that the Bank itself often failed to recognise that improving Africa's declining soil quality was essential to lifting food production. The Bank's local officials hailed the Malawi's subsidies programme but still criticised the government for not having a strategy to eventually end subsidies.

Lameck Masina reports.
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Title Annotation:MALAWI
Comment:Fertiliser success stuns western donors: fed up with having to beg for food aid, Malawi's president Mutharika defied donor conditionalities and provided the country's struggling farmers with subsidised fertilisers. the result was stunning.
Author:Masina, Lameck
Publication:African Business
Geographic Code:60AFR
Date:May 1, 2008
Words:726
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