Chakwera’s AIP moment

President Lazarus Chakwera faces a legacy defining moment to either abandon to starvation one million poor farming families or find an additional K70 billion and retain the endangered households in the Affordable Inputs Programme (AIP).

The President appears to have chosen to protect the likes of 82-year-old Isabel Maloya, who only tasted government-subsidised fertiliser last year under Chakwera’s AIP after decades of being left out of the then Farm Inputs Subsidy Programme (Fisp).

Courtesy of the Chakwera administration’s quadrupled beneficiaries from 900 000 under Fisp to 3.7 million under AIP, Maloya—from Masapula Village in Traditional Authority Mpama in Chiradzulu—finally accessed two bags of fertiliser last year. The bags helped her to double maize yield and have enough food in her household for much longer than ever before.

“Since 2005, my name has been included on the list of beneficiaries, only to be removed and replaced with the politically connected,” the widow told The Nation while preparing her field for the next growing season yesterday.

“Last year, my name was also included, but I thought it would be the same old story. I doubted that I would benefit from AIP after years of heartbreaks under Fisp.”

However, Maloya was surprised to see her name on the final list last year and said: “I went to my pastor to pray, thanking God for finally being granted the cheaper fertiliser. For the first time this year, I harvested six bags of maize from three in 2019.”

This year, Maloya has also been drafted into the programme, but fears she might be axed, having heard that government plans to drop one million families from the AIP as rising fertiliser prices push the programme’s 2021/22 budget up.

“I am worried because I am old. There is no one to support me with a bag of fertiliser. I am praying to God that this should not happen to me,” she said.

In a national address on the issue, the President vowed not to leave one million poor families behind in the race for household food security, but he faces an uphill fiscal battle to preserve the integrity of his flagship programme—and cushion the poor from high inputs prices.

Tough policy choices

Three near-term hard choices or policy options are available to Capital Hill on the future of AIP.

First is that government can proceed to chop the number of beneficiaries and remain on budget. The second option is that it can reduce the value of the subsidy from the current K142 billion, which would leave the poor paying more than the current K4 495. This is a policy choice that could edge out the likes of Maloya and send them back into the dungeons of perennial starvation.

Finally, government could, as the President has signalled, increase the AIP budget then source the money to pay for it.

But policy experts The Nation has spoken to rule out the first option because the President has made it clear that he will maintain the number of beneficiaries at 3 788 105. The position countered the Ministry of Agriculture’s announcement that due to financial constraints and the rising prices of fertiliser, the number of AIP beneficiaries would be slashed from 3 788 105 to 2 740 893.

Treasury’s fiscal space is shrinking with little room to maneuver, and experts say burdening the same Treasury to increase the value of the programme is an even harder option.

A senior official at the Ministry of Agriculture, who did not want to be named because of the sensitivity of the matter, confided in The Nation that maintaining the AIP at current beneficiary levels would require taxpayers to cough an extra K70 billion, implying that the value of the AIP would increase from the current K142 billion to K212 billion.

Said the official: “The thing is that you want to maintain the same beneficiaries as last year’s, but the price of fertiliser goes up, which means that the cost of the programme will not just be fertiliser, but also distribution, and many other related costs. As such, the additional money the Ministry of Agriculture wants Treasury to release is K70 billion.

“Fertiliser prices have surged by an estimated range of 60-75 percent, compared to the same last year. We are talking about NPK and Urea, which are generic types that most smallholder farmers use.”

In a written response to our questionnaire, Civil Society Agriculture Network (CisaNet) executive director Pamela Kuwali noted that the Ministry of Agriculture should provide clarity quickly on the number of beneficiaries for 2021 AIP.

She said: “The options for the government remain either to indeed increase the budget so as to maintain the number of beneficiaries; increase the price of subsidised fertiliser; or indeed reduce the number of beneficiaries.”

In a telephone interview, William Chadza, executive director of Malawi Agriculture Policy Advancement and Transformation Agenda (Mwapata) Institute—an independent agricultural think-tank, stated that eliminating the shock of the fertiliser price spike is not possible because most of the cost is incurred before the commodity reaches Malawian borders.

“The only choice in the near term is how to distribute the shock between these three components of the AIP, that is to reduce the number of beneficiaries, reduce the value of the subsidy, or increase the overall cost to Treasury,” he said.

In a separate interview, Farmers Union of Malawi (FUM) chief executive officer Jacob Nyirongo called on Capital Hill to redesign the programme to incorporate other value chains.

When asked for a comment, Ministry of Finance spokesperson Williams Banda referred this reporter to the Ministry of Agriculture, whose spokesperson had not responded to our questionnaire as we went to press. 

In the Tonse Alliance maiden 2020/21 National Budget, government allocated K160 billion to AIP, an allocation that was four times that of the preceding Fisp at about K36 billion in the 2019/20 National Budget. AIP budget alone then represented seven percent of the total approved 2020/21 National Budget of K2.2 trillion.

But later in February this year, government revised the AIP budget at mid-year to K142 billion and the same value has been maintained in the 2021/22 National Budget that will run for nine months as government transitions to a new financial year cycle to start from April 1.

Under the programme, beneficiary farmers were paying a fixed price of K4 495 per 50 kilogramme (Kg) fertiliser bag and K2 000 for 5kg cereal seed coupon (either 5kg maize hybrid seed or 7 kg sorghum seed or 7 kg rice seed). n

—Additional reporting by BOBBY KABANGO, Staff Writer.