Impact Of Agricultural Market Reforms On Smallholder Farmers In ...
Impact Of Agricultural Market Reforms On Smallholder Farmers In ... Impact Of Agricultural Market Reforms On Smallholder Farmers In ...
Small farmers in Malawi are mainly subsistence farmers. The extent of commercialization of agricultural commodities by small farmers is quite limited in Malawi. Only a few cash crops such as tobacco, cotton, soybeans, vegetables, and a few horticultural crops are grown to be sold in the market. And these cash crops are grown by less than 50 percent of the households. The rest of the crops are mainly grown for household consumption. Market orientation is limited by markets that are still a bit risky in terms of availability and competitiveness; small and fragmented farms; poor road infrastructure; low agricultural input use and productivity; limited access to pertinent market information except through the radio; low levels of education; and limited organization of farmers into groups. Low use of fertilizer and hybrid seeds. Only one-third of the households used fertilizer and about a half used hybrid seeds. These numbers are low and explain the low levels of agricultural productivity and declining soil fertility reported in Malawi. Average maize yields have stagnated at about 1 metric ton per hectare for the past two decades. Low levels of input use are due to the high cost of the input relative to the output (mainly maize) and poor access to credit to purchase inputs. Because of their low levels of working capital and inability to ensure loan repayment, private traders are not willing to extend input on credit to small farmers. The MRFC seems to be the most active provider of input on credit. However, most small farmers are not eligible for MRFC credit, because the MRFC extends loans only to tobacco clubs or farmers that grow cash crops, and charges commercial interest rates which are exorbitant for a small farmer. The single most important complaint about the reforms is the higher cost of fertilizer. A little less than two-thirds of the farmers indicated that they felt worse off since the reforms of 1995. Of those, more than half explained that they felt worse off because fertilizer had become more expensive. This response may have been a strategic answer by the farmers because during the interviews, both the Starter Park Scheme (SPS) and the Agricultural Productivity Investment Program (APIP) were about to be launched, and farmers may have thought that this was an assessment of whether they should be included for the distribution of free inputs. Furthermore, despite their complaints about the high cost of fertilizer, only 18 percent of the farmers reported a decline in fertilizer use since 1995. Nevertheless, although farmers’ complaints may have been exaggerated, it remains a fact that the high cost of fertilizer is an important concern for small farmers in Malawi. Low use of rural credit. Less than twenty percent of the farm households applied for credit in Malawi and farmers rely mainly on family and friends to secure some credit. As a result, farmers cannot smooth out their consumption needs and do not have enough resources to buy inputs. This very low rate 343
of credit use highlights a market failure in the provision of rural credit in Malawi and begs for a reexamination of the role of the public and private sector in developing institutions to address the credit needs of the rural population. Growing tobacco increases the likelihood of using fertilizer. Tobacco growers are three times as likely to apply fertilizer to their maize fields than non-tobacco growers. Growing tobacco increases the cash income of farmers thereby allowing them to purchase fertilizer. It is also possible that the residual of the fertilizer purchased for tobacco production is used on the farmers’ maize plot. This demonstrates that production of a tradable cash crop (where fertilizer use is still profitable) has positive spill-over effects on the production of non-tradable food crops. Tobacco farming is not restricted to non-poor farmers. Growing tobacco cuts across all expenditure groups in Malawi. This means that growing tobacco is not restricted to the non-poor. However, tobacco growers have better access to credit and inputs because of their membership in clubs and their access to cash income which allows them to purchase inputs. Agricultural wages contribute very little to rural income. Although a little more than one-third of the farm households supply agricultural labor, the contribution of agricultural wages to their total income is only about 5 percent. Furthermore, the poorest farmers are those that rely the most on agricultural labor to supplement their cash income. Non-farm employment seems to be more remunerative than agricultural sector employment, and is associated with better off farmers. But because the majority of the farmers are illiterate, they often do not have an opportunity to work outside the agricultural sector - - employment in other sectors of the economy requires a basic level of education and additional skills besides farming. Female-headed households have equal access to input and output markets but are less welloff than male-headed households. Although the descriptive statistics of the IFPRI/APRU small farmer survey suggest that female-headed households have smaller farms, lower per capita expenditures, lower marketed surplus, and use less purchased inputs, the regression results fail to show these trends. The advantage of regression analysis is that it allows one to look at the effect of a separate variable while all other variables are held fixed. Therefore, when we conduct the regression analysis, we do not find a relationship between fertilizer use, expenditure levels, marketed surplus, and perceptions about well-being on the one hand, and gender of the household head on the other. This indicates that there is no systematic bias against women in the agricultural sector of Malawi. However, it is a fact that because female-headed 344
- Page 300 and 301: Table 5.34 - Crop disposal by type
- Page 302 and 303: Table 5.38 - Determinants of Market
- Page 304 and 305: Table 5.42 - Summary of expenditure
- Page 306 and 307: Table 5.45 - Food consumption by so
- Page 308 and 309: Table 5.47 - Percent of households
- Page 310 and 311: Table 5.49 - Percent of households
- Page 312 and 313: Table 5.51 - Food consumption by ex
- Page 314 and 315: Table 5.56 - Determinants of per ca
- Page 316 and 317: Table 5.59 Percent of households ow
- Page 318 and 319: Table 5.62 - Characteristics of the
- Page 320 and 321: Table 5.68 - Determinants of percei
- Page 322 and 323: Table 5.71 - Average yields per cro
- Page 324 and 325: Table 5.77 - Changes in the availab
- Page 326 and 327: Figure 5.1 Distribution of househol
- Page 328 and 329: Figure 5.7 - Percentage of Househol
- Page 330 and 331: CHAPTER 6 - SUMMARY, CONCLUSIONS AN
- Page 332 and 333: Fertilizer Half of the far
- Page 334 and 335: Regression analysis indicates that
- Page 336 and 337: Among those seeing improvement, the
- Page 338 and 339: Agricultural markets Three quart
- Page 340 and 341: The economic reforms have boosted p
- Page 342 and 343: department. The farms with very lit
- Page 344 and 345: Strengthen the extension service by
- Page 346 and 347: The most time-consuming agricultura
- Page 348 and 349: Most common means of transport to t
- Page 352 and 353: households have less assets and les
- Page 354 and 355: Place more serious efforts to impro
- Page 356 and 357: REFERENCES Ahoyo Adjovi, N.R. and F
of credit use highlights a market failure in the provision of rural credit in Malawi and begs for a reexamination<br />
of the role of the public and private sector in developing institutions to address the credit<br />
needs of the rural population.<br />
Growing tobacco increases the likelihood of using fertilizer. Tobacco growers are three times<br />
as likely to apply fertilizer to their maize fields than non-tobacco growers. Growing tobacco increases the<br />
cash income of farmers thereby allowing them to purchase fertilizer. It is also possible that the residual of<br />
the fertilizer purchased for tobacco production is used on the farmers’ maize plot. This demonstrates that<br />
production of a tradable cash crop (where fertilizer use is still profitable) has positive spill-over effects on<br />
the production of non-tradable food crops.<br />
Tobacco farming is not restricted to non-poor farmers. Growing tobacco cuts across all<br />
expenditure groups in Malawi. This means that growing tobacco is not restricted to the non-poor.<br />
However, tobacco growers have better access to credit and inputs because of their membership in clubs<br />
and their access to cash income which allows them to purchase inputs.<br />
<strong>Agricultural</strong> wages contribute very little to rural income. Although a little more than one-third<br />
of the farm households supply agricultural labor, the contribution of agricultural wages to their total<br />
income is only about 5 percent. Furthermore, the poorest farmers are those that rely the most on<br />
agricultural labor to supplement their cash income. Non-farm employment seems to be more remunerative<br />
than agricultural sector employment, and is associated with better off farmers. But because the majority<br />
of the farmers are illiterate, they often do not have an opportunity to work outside the agricultural sector -<br />
- employment in other sectors of the economy requires a basic level of education and additional skills<br />
besides farming.<br />
Female-headed households have equal access to input and output markets but are less welloff<br />
than male-headed households. Although the descriptive statistics of the IFPRI/APRU small farmer<br />
survey suggest that female-headed households have smaller farms, lower per capita expenditures, lower<br />
marketed surplus, and use less purchased inputs, the regression results fail to show these trends. The<br />
advantage of regression analysis is that it allows one to look at the effect of a separate variable while all<br />
other variables are held fixed. Therefore, when we conduct the regression analysis, we do not find a<br />
relationship between fertilizer use, expenditure levels, marketed surplus, and perceptions about well-being<br />
on the one hand, and gender of the household head on the other. This indicates that there is no systematic<br />
bias against women in the agricultural sector of Malawi. However, it is a fact that because female-headed<br />
344
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