Burying off subsistence farming

It has been torrid weeks with our currency on the fall. Those that have made to the banks have a shocker every day. If you also looked at other currency traders, it has even been scary. It is not surprising that inflation is taking a hike as businesses reposition themselves to absorb exchange losses.

But if we look closely, one comes to the realisation that many currencies have been battered. From within the region, Zambian kwacha, South African rand and others have consistently lost ground to the greenback. At global level the euro, British pound, Japanese yen, Chinese Yuan and Australian dollar have all become much weaker against the US dollar.

In the mix of all the currency dynamics, the huge chunk of our gross domestic product (GDP) does not bring any exports. While tobacco has been at the core of foreign exchange, its contribution to GDP is quite small. Most of our farming has been subsistence and maybe it is time to bury this chapter and take a different approach. Maybe it might lead us to a kwacha that takes a different route and kill off those sentiments that may lead to its demise.

The US economy has been recovering fast quarter on quarter. The massive bond buying programme came to an end months ago signalling recovery. Sentiments and speculations had been rife of a rate rise. Well, the rates finally rose with, though decimal, a signal of a recovery. On the other hand, China’s decades of hyper growth are now over with latest growth figures showing a modest single digit growth.

There are some serious implications. Malawi is tobacco reliant and heavy consumer of imported consumables. Currently, all commodity prices are taking a huge hit. Examples are many, including Zambia, next door that has taken a hit due to low prices of copper as China sneezes. So, as we debate on commodities such as mining, I think each one of us must come to terms that it is not a rosy industry. It will not fix the kind of issues that have confronted our republic in recent times.

Meanwhile, the kwacha is taking a huge hit. The rains are also erratic and crops are drying. In all this most of us still believe that one day the kwacha will get stronger once the tobacco selling season begins. Similarly, the expectation that the rains will continue and solve an obvious food crisis across is observable. At the core of it all, are smallholder farmers, toiling with their wooden equipment. Unknown to them, they carry the hopes of a nation. Their crop will solve the food crisis. Sales of their tobacco on their small pieces of land will bring foreign exchange. I guess it is time to get that pressure off them, if the talk walked the right path.

But the main issue to me is something very different. This is the season. They are out there in the sun with their wooden shoes. They are tending to their tobacco nurseries watering their seedlings in rural Malawi in hot sun. Over their shoulders, they carry the hopes of all elites that flock into dealer banks to buy foreign exchange to finance their obscene appetites that flow with affluence.

Soon, most of us will be opining about the kwacha as the tobacco selling season approaches. And when the kwacha tends to get even weaker as we sell tobacco, we will opine again possibly thinking someone is playing mind games. It is not mind games. The reality is that tobacco revenues cannot cover a mere fuel import bill let alone our other needs. Similarly, tea, our second major export crop does not bring a lot and its production has traditionally been stuck at an average of 43 million metric tonnes. The sugar business does not look good too as the duty free market into European markets is gone.

As we pin our hopes on tobacco farmers, one also thinks about the balancing act that is required. Some pessimist estimate thinks that at the current rate of population of growth, by 2080 Malawi will completely run out of land. That is where it gets tricky as the average farmer will play into hedonistic calculus. Grow an export crop or grow something to feed oneself.

As we think throughout diversification or the export strategy, at the moment the evidence is ruthless. Farmers with wooden hoes and plastic watering cans growing tobacco cannot carry the hopes of a consumer nation whose appetite for imports is too huge. Worse still, they are at the mercy of rainfall. Conceding that land is so limited and that agriculture has no future and taking those steps that see our service exports a reality, every season, opinions will galore about how weak or strong the kwacha is. n