The International Food Policy Research Institute (Ifpri) has cast doubt on the possibility of maintaining the planned level of subsidy and number of beneficiaries in this year’s Affordable Inputs Programme (AIP).
Ifpri’s sentiments follow revelations by a senior official at the Ministry of Agriculture who told The Nation last week that maintaining the AIP at current beneficiary levels would require taxpayers to cough an extra K70 billion.
This means that the value of the AIP, which is the Tonse Alliance administration’s flagship programme, would increase from the current K142 billion to K212 billion.
In its August 2021 paper titled Why Are Fertiliser Prices in Malawi High, Ifpri said reducing the price of fertiliser is beyond government in the short-term.
Ifpri said it will be necessary to reduce the number of beneficiaries, increase the subsidised price, increase the cost of the programme or implement a combination of these measures.
According to Ifpri, fertiliser prices are likely to increase further in the coming weeks necessitating harder compromises.
The institute says any delay will endanger timely distribution of the commodity to smallholder farmers as it takes on average eight weeks for fertiliser to arrive to Malawi.
Reads the paper in part: “As of August 2021, only about 130 000 tonnes of fertiliser [30 percent of the amount planned for the AIP] is in Malawi—75 000 tonnes with SFFRFM [Smallholder Farmers Fertiliser Revolving Fund of Malawi] and 55 000 tonnes with private suppliers.
“Both types of fertiliser supplied through the AIP [NPK and Urea] are currently being sold for as much as K38 000 per 50 kg bag in Malawi. This is 73 percent higher than last year’s price of around K22 000 per bag.”
World Bank figures show that globally, US dollar-denominated fertiliser prices increased on average by 82 percent in the 12 months ending July 2021 due to a combination of strong demand and high input costs.
A poor 2020 harvest of maize and soya beans in South America drove up global prices of these commodities and major growers have reacted by increasing acreage and fertiliser use.
During the same period, the kwacha depreciated against the dollar by nine percent from K756 to K821.
“In kwacha terms, global fertiliser prices, therefore, increased by 98 percent, that is even sharper than retail prices in Malawi,” reads the Ifpri statement.
In July, the Ministry of Agriculture announced that it would reduce the number of AIP beneficiaries from 3.7 million in the previous growing season to 2.7 million.
Weeks later, President Lazarus Chakwera said in a national address that no one would be removed from the list.
He vowed not to leave one million poor families behind in the race for household food security.
In an earlier interview, Civil Society Agriculture Network executive director Pamela Kuwali noted that the Ministry of Agriculture should provide clarity on the number of AIP beneficiaries this season.
Under the programme last season, beneficiary farmers were paying a fixed price of K4 495 per 50 kg bag of fertiliser and K2 000 for five-kg cereal seed coupon (either five kg maize hybrid seed or seven kg sorghum seed or seven kg rice seed).