Malawi Government seems not ready, at least for now, to do away with the Farm Input Subsidy Programme (Fisp) based on pronouncements from the late president Bingu wa Mutharika and the current one, Joyce Banda.
Under Fisp, a million plus smallholder farmers have over the past seven years been receiving a coupon with which they buy a 50 kilogramme bag of fertiliser at a subsidised price of K500.
In the 2012/13 budget, government allocated K68 billion to the agriculture sector, out of which, K40.6 billion, 10 percent of the K406 billion budget, was allocated to Fisp.
The money was meant to procure 150 000 tonnes of fertilisers comprising 75 000 tonnes of Urea and the remainder for NPK fertilisers to distribute to 1.7 million smallholder farmers.
But Farmers Union of Malawi (FUM) president Felix Jumbe thinks with a proper system for supplying farm inputs to both commercial and smallholder farmers, Malawi can be food secure and even export the surplus as has happened in the recent past.
Jumbe told Business News this week that for Fisp to be sustainable, there is need to re-examine its impact. He said judging from what made Malawi grow agriculture contribution to gross domestic product (GDP) to about 40 percent in the past, the country needs medium and large-scale farmers to benefit with a credit line from the banks using their land as collateral.
Currently, figures show that agricultureâ€™s contribution to GDP has dropped to less than 30 percent.
â€œThese [commercial] farmers would produce commercially to feed into our industrial agriculture raw materials requirements and mostly on contract basis. The medium and large-scale farmers would target export markets for the agriculture raw materials into industries of other countries such as South Africa which need soya, for example,â€ said Jumbe.
He, however, said this requires financing to achieve the required volumes and quality, observing that farmers would also be engaged in supplying the National Food Reserve Agency (NFRA).
Jumbe said what has been missing all these years is access to credit lines for smallholder farmers and government has instead focused on subsidy for household food security. He said luckily though, this has enhanced the national food security and, sometimes, enabled Malawi to export.
â€œBeing an agriculture-based economy is beyond being food secure. We also need to be secure in industrial raw material supply from our agriculture and also be able to export raw agriculture materials,â€ said Jumbe.
He observed that in the absence of policies on credit, government has no choice but to abide by the survival mechanism of subsidy.
Experts have argued that Greenbelt Initiative is the best, but without sound objectives and strategies for implementation beyond smallholder perspective, it could be another failure.
Malawi has rice schemes such as Hara, Wowve, Lufilya, Chonanga, Bua, Bwanje, Domasi and others in the Lower Shire that are unable to produce for the export market because smallholder farmers have been left to do things on their own.
Most of them do not have organised financing for their inputs. Since government started implementing Fisp, Malawi has managed to produce maize surpluses every year, but experts have questioned the effectiveness of the programme because most of the smallholder farmers have not graduated from poverty.
This year, despite Malawi achieving a surplus, about 1.7 million people will need humanitarian assistance between October and March 2013.
Experts and other donors have advised the Malawi Government to devise an exit strategy of the multi-billion kwacha programme.