The Malawi Agricultural Input Subsidy Programme : 2005 - 6 to 2008 - 9 1

Malawi’s implementation of a large scale agricultural input subsidy programme in 2005/6 and subsequent years has attracted significant international interest. This paper reviews the background, processes, achievements and outcomes of the programme over the period 2005/6 to 2008/9. The very large scale disbursement of heavily subsidised fertilisers and (mainly hybrid and composite maize) seed to very large numbers of beneficiaries across the country represents a significant logistical achievement and led to significant increases in national maize production and productivity, and this has contributed to increased food availability, higher real wages and wider economic growth and poverty reduction. However the latter years of the programme have also been accompanied by very high international fertilizer prices and costs and by high maize prices, the latter undermining the programme’s food security, poverty reduction and growth benefits for the majority of Malawian farmers, who are very poor and rely on purchased maize for significant amounts of their staple food requirements. Estimated economic returns to the programme have been satisfactory, given other benefits of the programme not captured in cost benefit analysis. With substantial reductions in both prices and subsidised volumes of fertilisers in subsequent years, there is considerable scope for building on achievements to substantially raise programme effectiveness, efficiency and benefits. Any application of Malawi’s subsidy experience to other countries needs to take account of special characteristics of the Malawian maize economy and of measures needed to raise such programmes’ effectiveness and efficiency and ensure their best fit with and contribution to sustainable development policies.