The Malawi Agricultural Input Subsidy Programme: Lessons

Background and Context Maize, the main staple crop remains the dominant crop among smallholder farmers in Malawi. Smallholder farmers devote almost 70 percent of their land to maize cultivation, and maize availability in the country de nes the food security situation of the country. Smallholder agriculture in Malawi has been characterized by low productivity, low technology and labour intensive, with maize mainly produced for subsistence consumption. The low productivity in smallholder agriculture has been attributed to loss in soil fertility, low application of inorganic fertilizers and traditional low technology rain-fed farming systems. The Malawi Agricultural Input Subsidy Programme (MAISP) was rst implemented in the 2005/06 agricultural season following a poor-harvest season and a high maize import bill to augment domestic supply in 2004/05 agricultural season. In 2008/09, the MAISP was in its fourth year of implementation, with changes in the scale, scope and ways of implementation. The MAISP is largely nanced by the government, with donor support being in form of overall budgetary support. The MAISP is designed as a targeted input subsidy programme, targeting smallholder farmers with land but who cannot a ord to purchase inputs at market rates. The target is 2.8 million farming households out of an estimated 3.4 farming households. The size of the MAISP has increased from 132,000 tonnes in 2005/06 to 216,000 tonnes in 2007/08. This has also meant that the cost of the subsidy has escalated from MK5.1 billion (2.1 percent of GDP) in 2005/6 to MK16.3 billion (3.4 percent of GDP) in 2007/08 and to MK31 billion (5.5 percent of GDP) in 2008/09. The fertilizer subsidy per farmer increased from 64 percent to 79 percent of the commercial price in 2005/06 and 2007/08, respectively. There have also been changes in the scope of the subsidy from targeting smallholder maize and tobacco farmers to inclusion of smallholder cotton, tea and co ee farmers, and to the focus on only maize farmers in 2008/09. The implementation has also varied with the inclusion and exclusion of the private sector in the redemption of fertilizer vouchers although private sector participation in seed voucher redemption has