Malawi's agriculture minister Aleka Banda says subsidies of maize and other crops are temporary. They will last until the government can convince donors to support alternatives, like rural credit schemes, and until the government can help more farmers adopt simple irrigation techniques, such as the use of water pumps.
The government has borrowed money from the World Bank and others to subsidize the current cost of maize at about 28 cents per kilogram – and to help lower the cost of fertilizer and seed to subsistence farmers.
Maize accounts for nearly 80 percent of a Malawian family’s diet. Maize meal is in high demand for making a familiar staple called nsima – a starchy paste used like bread to handle pieces of meat and fish, or dip in various sauces.
In the past, donors have encouraged Malawi and other developing countries to reduce government subsidies in food production -- and to rely more on private businessmen to distribute fertilizers and seeds, to and market crops. But Mr. Banda is critical of those suggestions, since he says most industrial nations still subsidize their own farmers: "Regarding the debate (over) subsidies, the donors are being unfair – they preach no subsidies, yet the Americans and Europeans subsidize their own (farmers) heavily. The only reason we pay attention to what they say is [that] … they say if you are going to subsidize your people, do it yourselves. But as a philosophy, it does not make sense, because…in the United States farmers are sometimes paid money not to produce. We do not intend to keep subsidies forever because we simply do not have the money."
On the other hand, he says, it’s much cheaper for donors to help Malawi subsidize production – like the distribution of fertilizer – than it is to subsidize consumption – or the price of maize. He says the government is temporarily subsidizing production this year with so-called “starter packs” for farmers that include low cost seeds and fertilizer. The starter packs were also credited with a boom in maize production a few years ago – just before Malawi was hit by drought and flooding.
The failure of maize crops over the past two years has been blamed on flooding and drought – as well as on government mismanagement. For example, a government parastatal in charge of disaster relief – the National Food Reserve Agency – was criticized for selling maize reserves, some to neighboring countries, rather than saving them for emergencies.
For the past eight years, the government has pursued market reforms in agriculture – such as an effort to make the state owned food marketing parastatal, the Agricultural Development and Marketing Corporation, or ADMARC, operate more along free market lines. But many think that as a food security agency, it should continue have state support. Others fear it will return to its old role and interfere with market prices. Malawi’s agriculture minister says he’s against shutting down the agency: "There are no plans to privatize ADMARC – if that means selling it off to a private operator – because of the crucial role in plays economically and socially. We have cited to the donors the example of Zambia: they had an institution called ZIMBOARD – the equivalent of ADMARC that was closed over night under pressure from donors with the premise that (private) traders would take over (its role). But they did not take over."
Aleke Banda say the problem is that traders often operate along rail and road lines – but have no incentive to go into rural areas to buy and sell produce. He says ADMARC should do the job in hard-to-reach areas where traders refuse to go. He also says the organization should be able to compete effectively against other commodity and input dealers, and to operate efficiently – with the smallest government subsidies possible.
Some complain that Malawi was better able to feed itself under the rule of long-time leader Hastings Kamuzu Banda. He came to power shortly after independence in the 1960’s and ruled until popular dissatisfaction and multi-party elections ousted him in 1994. Under his government, state monopolies helped farmers grow and market food – in contrast to the current government’s adherence to free market principles.
Agriculture minister Aleka Banda is not related to the former president, but served in his government 30 years ago. The minister denies that food production was higher when Malawi was under authoritarian rule: "What is true is that the donors were much [easier] on Dr. Banda than on current president Bakili Muluzi. Dr. Banda ruled during the Cold War and as an ally of the West against the communists in Africa. Because of that Dr. Banda could get away with lots of things which are not possible today. [In fact], liberal economics was strengthened in this part of the world by (the influence of former British Prime Minister) Margaret Thatcher and intensified after the collapse of the Eastern European economic [socialist and state controlled] systems. So were [then] working under very different economic systems."
Aleke Banda says when the new government took over in 1994, Malawi was producing only 800 thousand metric tons out of a demand for one point eight million metric tons. He says over the next few years, the democratically elected administration tripled production – until weather conditions and an end to subsidized fertilizer contributed to the recent food shortages. To make matters worse, he said the new government had to take drastic action to reverse the economic problems it inherited, such as9 the devaluation of the currency, the kwatcha. He says that made fertilizer more expensive – since more kwatcha were needed to buy it.
Mr. Banda says there are other differences between then and now. He says people were not allowed to complain under the authoritarian government. Even when there was hunger, he says people were supposed to praise the government. Now, he says, people complain and make demands on the government – because they’re free to do so.