ActionAid Malawi (AAM) has proposed to Tonse Alliance government to considerincreasing the redemption contribution by farmers reasonably or trim the number of beneficiaries of the flagship program.
The international organisation suggests that it could be idea if Capital Hill raises the redemption contribution to K10,000 from the current K4,495.
AAM has made the proposal as part of its campaign under the four-year Partnership for Social Accountability (PAS) project which is helping the country improve in social accountability areas.
The project, which is being jointly implemented with other implementing partners, started in June 2019 and will wind up in July 2023.
In a written response, AAM social accountability project manager Wales Chigwenembe noted that any near-term response will require making difficult choices about how to distribute the burden of rising prices on the global market by either reducing the number of beneficiaries, reducing the value of the subsidy, or increasing the burden on the Treasury.
Chigwenembe said at this juncture, it is not easy to review the budget because of time-frame and currently the government does not have development funds due to collapse of the domestic economy which he said has been affected by covid-19.
In the maiden 2020/21 budget for Tonse Alliance, government allocated K160 billion to AIP but the budget was later revised to K142 billion at mid-year.
In the 2021/22 budget, government has maintained the K142 billion budget to cater for 3.7 million targeted beneficiaries.
He said: “Since 2021/22 budget, was already passed in parliament building, it will be difficult for the government to shoulder the deficit unless otherwise. As a result, the very same peasant farmer is going to shoulder the burden both directly and indirectly. The AIP program only provides an opportunity to peasant farmers to buy two bags of 50 kgs of NPK and Urea, respectively. This means that, the extra bags depending on the size of the farming land, the peasant farmer will have to dig deeper in their pockets or sales their assets and they are willing to pay for the higher costs.”
Chigwenembe noted that precedence has it that generally, farmers sell their agricultural produce at a giveaway prices to vendors so that they can secure sufficient kilograms of fertilizers to increase food production “and this is so dis-empowering and their returns becomes very low which increases poverty.”
Quizzed on the likely implication of increasing the value of the subsidy, Chigwenembe said in that case, Capital Hill would have to collect the more revenue from” the already overtaxed citizens” instead of collecting the funds from multinational companies.
He said that is why government has recently intensified the introduction of new tax revenue enhancing measures such as taxes on cooking oils, sugars, and introduction of new levies in different aspects of economic activities that are intended to help cover the shortfall in the AIP.
He added: “Secondly, government has always resorted through borrowing to finance the shortfall from local and international lending institutional for example IMF, World Bank, African Development Bank and other reliable vibrant monetary institutions. This will automatically increase the debt burden and mortgaging the future of this country as this kind of borrowing is purely for consumption not investment and savings”
Moving forward, Chigwenembe also suggested that government must seriously consider limiting borrowing for consumption and start investing in industrialization and production of fertilizers locally.
He also recommended that government, through the agriculture public extension services, must promote agroecology practices that can build resilience of the farming communities’ to respond to the prevailing environmental challenges and effects of climate change such as droughts, floods, cyclones, soil fertility depletion, biodiversity loss, and chemical pollution.
Chigwenembe reasoned that heavy investment in chemical fertilizers have proven to be very expensive and not sustainable since the fertilizers have overtime depleted the soil fertility.
AAM’s social accountability project is also being implemented in Zambia, Zimbabwe, Tanzania and Mozambique with funding from Swiss Agency for Development and Co-operation through PSA Alliance.
Apart from the National Small-holder Farmers Association of Malawi (Nasfam), other implementing partners of the project include Malawi Health Equity Network, Tiphedzane Community Support Organisation in Nsanje and the Coalition of Women Farmers Association.
The project is also working directly with Mudziwathu Community Radio and Nyanthepa Community Radio in Mchinji and Nsanje respectively and some national-level media institutions.