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Fertilizer, seed subsidies bring bumper corn crop in Malawi

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Fertilizer, seed subsidies bring bumper corn crop in once-starving Malawi

Malawi hovered for years at the brink of famine. After a disastrous corn harvest in 2005, almost five millon of its 13 million people needed emergency food aid. But this year, Malawi is feeding its hungry neighbours, selling more corn to the UN's World Food Program than any other southern African country, and exporting hundreds of thousands of tons of corn to Zimbabwe. In Malawi itself, acute child hunger has dramatically decreased.

Farmers explain the extraordinary turnaround with one word: fertilizer. Malawi's soil is gravely depleted, and many, if not most, of its farmers cannot afford fertilizer at market prices. In the 1980s and 1990s, Malawi's leaders reluctantly accepted donor prescriptions to eliminate subsidies on fertilizer. But after the 2005 harvest, the worst in a decade, Malawi’s newly-elected president Bingu wa Mutharika decided to reinstate and increase fertilizer subsidies despite donor skepticism.

Last year, roughly half the country's farming families received coupons entitling them to buy two 110-pound bags of fertilizer, enough to nourish an acre of land, for around $15 — about a third the market price. The government also gave them coupons for enough seed to plant less than half an acre. Britain’s Department for International Development contributed $8 million to the $74 million subsidy program.

The fertilizer and seed subsidies, aided by good rains, helped farmers produce record-breaking corn harvests of 2.7 billion metric tons in 2006 and 3.4 billion in 2007, according to government crop estimates – dramatically up from 1.2 billion in 2005. The harvest also helped the poor by lowering food prices and increasing wages for farm workers. An independent evaluation, financed by the United States and Britain, found that the subsidy program accounted for a large share of this year's corn increase.

"The rest of the world is fed because of the use of good seed and inorganic fertilizer, full stop," said Stephen Carr, formerly the World Bank’s principal agriculturalist in sub-Saharan Africa, who has lived in Malawi since 1989. "This technology has not been used in most of Africa. The only way you can help farmers gain access to it is to give it away free or subsidize it heavily."

This story was heavily edited and abridged from a story entitled “Ending famine, simply by ignoring the experts”, written by Celia W. Dugger, and published Saturday December 1 2007 in the International Herald Tribune.


UPDATE: Malawi's strategy is now seen as model for increasing African food production

In a presentation to the European Parliament on May 5, 2008, American economist Jeffrey Sachs cited Malawi’s achievement as an important success story in helping countries become self-sufficient in food production. “Rather than just shipping expensive food aid, we should be helping the poorest of the poor to grow more food,” he said, arguing that the best way for the EU to address the global food crisis is to provide structural aid to increase the yields from peasant farmers in poor countries. The biggest success story of this sort, said Mr Sachs, has been the doubling of food production in Malawi in last three years. "This can be replicated in many places, and I urge the EU to follow this kind of logic." See Food aid alone will not solve global food crisis, economist tells EU, by Leigh Phillips, Brussels, EU Observer.

In a May 7, 2008 discussion on the global food crisis hosted by the International Herald Tribune in its Managing Globalization column, Sachs elaborated further on this point, as part of his analysis of factors and strategies:

"African farmers currently average around one ton of grain per hectare as opposed to roughly three tons of grain per hectare in other parts of the world. The overwhelming reason is that African farmers lack financing to buy critical inputs such as fertilizers and high-yield seeds. The donor countries would do Africa and the world a load of good by focusing less on shipping expensive food aid from Europe and the United States and focusing much more on helping African farmers to gain access to the inputs they need for higher productivity.

"A new Global Fund for African Agriculture could turn the situation around in just a few years. A good model is Malawi’s voucher program for smallholder farmers, which gives impoverished farmers in Malawi the access to a modest amount of fertilizer and improved seeds per household, at an affordable price. The result has been that Malawi, uniquely among Africa’s impoverished countries, has recently doubled its grain output in the past three harvests compared to the harvests before 2005."


New financial product will protect Malawi’s increasing food security

IRIN News reports that Malawi is hedging its bets against inclement weather by using a financial derivative to offset agricultural risk. Unlike insurance, weather derivatives are financial contracts based on an underlying weather index. In the case of Malawi the index will use a model that estimates maize production based on rainfall data. In June the World Bank agreed to create a new weather derivatives product, allowing Malawi to use the financial markets to offset risks from drought. The weather derivative market, which began in the US in 1997, is now a multibillion-dollar industry used by investors ranging from agricultural industries to sporting events organisers.

Malawi introduced a fertiliser subsidy program after the 2005 drought, and has since become increasingly food secure. The government estimated the 2007 maize crop at 73% higher than the average for the past five years. Around two million tonnes of maize are needed annually to feed the population of about 12 million, but the country has harvested a surplus of about 1.5 million tonnes.

According to the World Bank, Malawi's weather derivatives transaction will test the market with a small contract that is expected to pay out a maximum of about US$3 million if severe weather conditions prevail. The premium for the initiative will be paid by the United Kingdom's Department for International Development (DFID).

The World Bank Treasury will facilitate Malawi’s access to the international weather derivatives market, thereby reducing transaction costs. Malawi will pay the World Bank Treasury for the costs of the transaction and receive any payout generated. As the international weather derivatives market becomes accustomed to these transactions, the World Bank expects the Malawian government - and other governments - to begin pursuing such transactions independently. A similar transaction was completed in Ethiopia in 2006 under the auspices of the World Food Programme.

This story was abridged from a longer story entitled Malawi: Derivatives used to hedge against bad weather, datelined Lilongwe 18 July 2008, and written and distributed by IRIN News, the humanitarian news agency.




Green belts to boost food production

LILONGWE, 6 October 2008 (IRIN) - Malawian President Bingu wa Mutharika has pledged to embark on a "green belt" programme to enable the country, in the long run, to say goodbye to hunger and international food aid. "Malawi appeals to the G-8 countries to support us to create a green belt around our lakes and along our rivers to irrigate land up to 20 kilometres from the shores. The Malawi government plans to grow a lot of rice, wheat, maize, millet, cassava, potatoes and beans for the local and international market," he told the United Nations General Assembly recently.

Mutharika, who is also Malawi's minister of agriculture and food security, has been applauded for using a subsidy programme for fertiliser and seed to boost local production. In 2005/06 the full US $50 million price tag was met by the government as donors sat on the sidelines. "The green belts, if implemented, would help us harvest crops all year round, thereby curbing any food shortages that haunted the country in the past. We have been blessed with abundant water resources, which can be used to make the green belts programme work," Mutharika told reporters in the capital, Lilongwe, last month. The green belts would stretch from Karonga, a town in the extreme north, near the border with Tanzania, to Nsanje, a town on the Shire River on the southern border with Mozambique.




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