Africa Renewal (United Nations)
Michael Fleshman
4 November 2008
In a world still shaken by skyrocketing food prices and the sometimes violent street protests that have accompanied them (see Africa Renewal July 2008), the search is on for ways to increase food production in Africa and other chronically hungry regions. Tito Jestala, who farms a tiny plot of land in Chiseka, Malawi, thinks he has the answer.
In 2005, more than 30 of his neighbours died of malnutrition in one of the periodic droughts that have swept Southern Africa. Even in a good year, he told the UK newspaper The Independent, he could coax barely 250 kilogrammes of maize from his exhausted land. But over the past two years his harvest has tripled, producing plenty of food for his family and leaving more than enough to sell at the local market.
The difference, Mr. Jestala says, is fertilizer. For years this basic input was simply beyond his means and those of millions of other African farmers. Costing the equivalent of about $50 a bag, fertilizer was just too expensive to use. And buying it on credit was too great a risk for farmers at the mercy of unreliable rains and poor-quality seeds. But in 2005 the government of President Bingu wa Mutharika began subsidizing fertilizers and high-yielding seeds for Malawi's smallholders. The action cut fertilizer prices by 80 per cent and slashed the cost of hybrid maize seeds from 600 kwacha per bag to 30.
The impact was dramatic. The following year Malawi's maize harvest more than doubled, to 2.7 mn tonnes. It rose again in 2007 to 3.4 mn tonnes - enough to feed the nation and sell 400,000 tonnes to the UN's World Food Programme (WFP) and hundreds of thousands of tonnes more to neighbouring countries, generating $120 mn in sales. The formerly aid-dependent country even donated 10,000 tonnes of maize to the WFP's nutrition programme for people living with HIV/AIDS.
This year the government plans to spend $170 mn to expand the programme in the hope of reaching more farmers and capitalizing on higher world maize prices. "As long as I am president," Mr. Mutharika was reported to have told his cabinet in 2007, "I don't want to be going to other capitals begging for food."
'A very bold decision'
In fact, say experts at the UN Food and Agriculture Organization (FAO), Malawi's turnaround is the result of a combination of factors, including the return of sufficient rain, the incentives offered by higher world food prices and increased government investments in other parts of the country's rural economy.
Malawian farmers queue up to purchase subsidized fertilizer: Although other African countries are showing interest in Malawi's example, some donor institutions remain wary.
Yet there is little doubt that the decision to make high-quality seeds and fertilizers affordable for smallholders like Mr. Jestala has been the key to Malawi's success. The subsidy programme is already being seen as a model by a growing number of African governments and international development and agriculture agencies.
But the programme has encountered difficulties in gaining acceptance from donors. In 1999 the government had introduced a more modest programme of free "starter packs" of fertilizer and seeds for family farmers in an effort to boost production. The results were impressive, but the subsidies ran afoul of the pro-market policies of the World Bank and International Monetary Fund (IMF), which argued that subsidies were "crowding out" commercial sales and constituted undue government interference in the economy. Under considerable pressure from these financing institutions, the programme was phased out. The IMF also insisted that Malawi sell much of its national grain reserve to pay off the debts of the state-owned maize marketing agency.
Most Malawian farmers, however, were too poor to pay commercial rates for fertilizer and seeds. As a result, maize yields plunged. When drought struck in 2001 neither farmers nor the government had adequate grain stores to see them through, and more than a thousand people are estimated to have died. Then after the failed 2005 harvest left 5 million of Malawi's 13 million people on the brink of starvation, the newly elected government of President Mutharika defied the donors and launched the subsidy scheme with its own funds.
That move proved decisive, Kanayo Nwanze, vice-president of the UN's International Fund for Agricultural Development (IFAD), told Africa Renewal. "It was a very bold decision to provide subsidies for seeds and fertilizers over the objections of the development partners," he said, noting that during one meeting with senior Malawian officials a furious representative of a donor country had stormed out of the room. "But the government stood its ground and said 'We're going to do it. It is our programme and we're going to do it.'"
With success literally growing all around them, "the next year the donors supported it," Mr. Nwanze noted. It also made good economic sense, he continued, since the savings from reduced imports and increased export sales generated three to four times more revenue than the subsidies cost.
The importance of the Malawi subsidy programme for the rest of Africa, Mr. Nwanze observed, is that "it is a story that can easily be repeated in other parts of Africa" and has the potential to produce big gains in a short time at relatively modest expense. A growing number of countries, including Zambia, Ghana, Senegal and Kenya, have announced plans for similar subsidies and more governments are expected to follow suit.
The African Development Bank (ADB), often a critic of state interventions in economic affairs, announced in May that it had established a special fund to mobilize financial resources for greater fertilizer production and use, including subsidized sales to family farmers. The move was part of a $1 bn increase in the ADB's farm lending portfolio.
Failed policies
The new emphasis on smallholder farming and food self-sufficiency represents a sharp break with past policy by donors, international financial institutions and African governments alike. Since at least the 1980s, African governments have pursued structural adjustment policies mandated by the World Bank and IMF. These included focusing on high-value commercial and export crops and developing non-agricultural pursuits for those displaced by such activities. Government subsidies and marketing programmes were said to be too costly, to impede private business involvement and to be prone to mismanagement and corruption. Government withdrawal from agriculture, donors insisted, would allow the private sector to move in.
But as FAO and World Bank data show, investment in African agriculture instead went into a steep decline. This was reflected in reduced use of fertilizers and improved seed varieties, fewer agricultural extension and marketing services and a steady drop in crop yields, soil fertility and rural incomes.
A 2007 analysis of agricultural lending to Africa by the World Bank's Internal Evaluation Group confirmed that countries had been pressured into privatizing marketing and extension services and ending farm subsidy programmes to make room for private entrepreneurs and investors. But, the analysis added, such businesses too often failed to materialize.
In addition, FAO Director-General Jacques Diouf noted at a June 2008 food summit in Rome, the percentage of official development assistance devoted to agriculture dropped from 17 per cent to 3 per cent between 1980 and 2005.
The shift in emphasis away from agriculture, in particular smallholder food production, was no oversight. Under the pro-market, trade liberalization policies pursued by international financial institutions and many bilateral donor agencies, governments were advised to stay out of farming and allow commercial growers to produce niche-market products like flowers and seasonal fruits instead of low-value food items.
The view of these groups was expressed succinctly by then US Agriculture Secretary John Block, who, according to journalist and activist Martin Khor, told a world trade conference in 1986 that "the idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on US agricultural products, which are available in most cases at lower cost."
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