In recent years, Malawi managed to transform itself from a nation plagued by famine into a local breadbasket. The success of its controversial subsidy program for poor farmers is a testament to the power of homegrown solutions in the fight against hunger.
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When I first visited Malawi in 2006, there was a palpable sense of optimism in the air. Wondering what explained the extraordinary atmosphere of hope in this extremely impoverished country, I began to ask local farmers. Unexpectedly, I stumbled upon a fascinating story – a modern-day miracle containing some crucial lessons for the global fight against hunger.
Just a year before, Malawi had found itself facing a difficult question: should the government continue to appease international donors by withdrawing state support for its smallholder farmers – or should it defy free-market doctrine and step in to directly support its starving population?
When six successive years of maize shortages culminated into the 2005 food crisis, president Bingu wa Mutharika decided he had had enough. Maize production had fallen to 1.2 million metric tons and over a third of the country’s population of 13 million was going hungry.
The following year, Mutharika’s government, ignoring the objections of the donor community, rolled out an ambitious $74 million subsidy program for Malawi’s subsistence farmers. Maize yields instantly shot up to 2.7 million metric tons. For the first time in decades, Malawi began to export maize again and even provided food aid to Zimbabwe and Lesotho.
In 2006-‘07, the program was scaled up and further improved. Maize harvests boomed to a record 3.4 million metric tons, turning a 43 percent deficit into a 57 percent surplus. Ever since, Malawi has registered one bumper harvest after another. Dispelling donor fears about the fiscal sustainability of the program, the government now proudly funds the program from its own coffers.
What is the secret behind this remarkable success story? And why were donors initially so opposed to it?
In the wake of the 2005 famine, President Mutharika decided to double the agricultural budget to over 16 percent of total expenditures. With this extra money, the government began an unprecedented campaign to distribute millions of coupons to the poorest households in the country, enabling farmers to acquire crucial agricultural inputs, like fertilizers and seeds, at greatly discounted prices.
In order to ensure that the subsidy would really benefit the poor and not the large estates, the program limited each recipient to two 50kg bags of fertilizer – enough for 0.4 hectares of land, roughly the size of the average Malawian smallholder farm. With an annual income of just $134 per capita, Malawi’s farmers would never have been able to obtain these inputs without government support.
At first sight, such a relatively modest subsidy to help some of the poorest people in the world feed themselves does not look like a very radical policy proposal. After all, the U.S., Europe and Japan subsidize their wealthy industrial farmers to the tune of $1 billion per day.
Yet, ironically, international donors – in particular the World Bank and International Monetary Fund – were strongly opposed to the program. To put it bluntly, donor concerns about inefficiency, market distortion and budgetary pressures took priority over Malawi’s concerns with starvation.
These technocratic fears turned out to be entirely unfounded. By feeding into spectacular economic growth rates of 7.5 to 10 percent, Malawi’s agricultural miracle actually created a thriving new market for inputs and expanded the government budget through increased tax revenues and export earnings.
Luckily, the donors had little chance of stopping the program. Malawi’s debt was cancelled in 2006, freeing the country from its reliance on IMF loans for long-term interest payments. As a result, the government was no longer shackled to the Fund’s strict aid conditionality, allowing it to begin experimenting with agricultural subsidies despite donor opposition.
This, I believe, is the true reason behind Malawi’s success: country ownership. Malawi’s subsidy program was entirely homegrown – designed for and by Malawians, without interference or imposition from abroad. As such, it caters to the needs of Malawian farmers and is adapted to the local institutional and geographic context.
Clearly, Malawi’s input subsidies are by no means enough to ensure long-term food security and agro-ecological sustainability. This is why the government is looking at a ‘green belt’ irrigation initiative, as well as the spread of organic fertilizers and more sustainable farming techniques. Income and crop diversification are also high priorities.
Despite some of these – and other – serious challenges, no one can deny the spectacular initial success of Malawi’s subsidy program. It is for good reason that Zambia, Ghana, Senegal, Kenya and Tanzania have all expressed interest in spearheading their own homegrown solutions inspired by the ‘Malawi miracle’. Five years into its spectacular transformation, Malawi continues to be a beacon of hope in the fight against hunger.