The World Bank has said increased allocations to the agricultural sector have not translated into proper management of risks in times of shocks such as drought and floods, resulting in loss of savings.
For several years, Malawi’s agricultural budget has hovered around 10 percent of the total national budget, but the majority of the allocation has gone towards consumption such as Farm Input Subsidy Programme (Fisp).
This year, Fisp has been allocated K43.5 billion out of the K198 billion total allocation to the Ministry of Agriculture, Irrigation and Water Development vote.
The Bretton Woods’ Malawi Economic Monitor (MEM) report, launched in Lilongwe on Wednesday, indicates that government was spending about $250 million (K18 billion) annually on the agricultural sector, but the risks continue to have major negative impact.
The World Bank has identified these risks as drought, which will affect 6.5 million people, pests and diseases and price volatility.
However, the report has stressed that investments in agricultural resilience going forward would spur growth in 2017.
World Bank economist Asa Giertz said frequent agricultural risks have put Malawi in a shock-recovery mode, and as result, any savings during recovery stage were being lost.
She identified maize and tobacco as crops which were undergoing frequesnt risks, translating to loses of about $150 million.
Said Giertz: “It is time to look at managing these risks and build resilience and this has to be a multi-layered approach. There should be better agricultural practices and this means better inputs and food safety management.
Commenting on the proposals, National Smallholder Farmers Association of Malawi (Nasfam) deputy chief executive officer Betty Chinyamunyamu said it is time the country focuses on risk mitigation as opposed to risk coping.
She observed that there is too much focus on maize in all risk mitigation measures such as winter cropping, maize purchases by the State produce trader Agricultural Development and Marketing Corporation (Admarc) but most importantly Fisp.
“Generally, when government is spending 10 percent of the annual budget on agriculture, this should consistently generate six percent growth on GDP, [gross domestic product] but why is this not happening?? The agriculture budget is not focusing on agricultural growth,” said Chinyamunyamu.
She said Nasfam was in support of the Fisp reforms, especially the reduction of beneficiaries but also private sector engagement, stressing that beneficiaries must also contribute not just financially but also supplementing fertiliser subsidy with manure to increase productivity.
World Bank economist based in Tanzania Yutaka Yoshino said government should also consider reviewing the dual platforms on which strategic grain reserves operate as well as reviewing the functions of Admarc while addressing concerns of lack of transparency on price setting.