Figure 5: Trends in Main Food Staples per Capita, 1974-200

The trends in levels and growth of livestock per capita show that livestock production has been declining (Figure 5). The numbers of chickens and cattle per capita have been declining, with the average in the last past five years being lower than that recorded in the early 1970s. The per capita number of goats, however, has marginally increased. The poor performance of the livestock sector is partially a reflection of the lack of emphasis in the agricultural strategies and policies towards livestock. Another factor is the poor performance of the cropping sector- as the demands for cropping land increase, so farmers move more into traditional grazing areas and cropping displaces livestock. Thus increases in grazing livestock in Malawi will depend on improved productivity in arable agriculture. Livestock also serve as security assets especially for the poorest households; in times of crisis, animals will be sold to raise cash for food and other needs. The dairy farming sector in Malawi is just being developed, but it faces several capacity constraints including lack of financial resources to purchase cows, poor farm management, outdated machinery in some dairy processing plants, and lack of competition in milk processing.

Source: Computed using FAOSTAT data

The agricultural sector contributes more than 80 per cent of foreign exchange earnings, with exports dominated by tobacco, tea and sugar (Table 4). Maize is mainly grown to meet the subsistence needs of many farming households, with only 15 per cent of total production being marketed. Tobacco is the major export crop in Malawi accounting for about 71 per cent of total exports in the 1995-99 period from 47.7 per cent in the 1970s, although its share in export dropped to 55 per cent recently due to declining prices. Tea has been traditionally the second foreign exchange earner, but its significance has been declining from 21.2 per cent in the 1970s to 8.8 per cent in the late 2000s. Sugar has traditionally been the third most important export commodity but is now taking over from tea, thereby accounting for 11.4 per cent of export earnings in the 2000-05 period. With the liberalization of burley tobacco production and marketing, smallholder farmers now account for about 70 per cent of the total national output.

There are several key constraints in the agricultural sector. The constraints include low and stagnant yields, over dependence on rain-fed farming which increases vulnerability to weather related shocks, low level of irrigation development, and low uptake of improved farm inputs. In addition, low profitability of smallholder agriculture is influenced by weak links to markets, high transport costs, few farmer organizations, poor quality control and lack of market information.

The poor performance of the agricultural sector in Malawi is partly attributed to the low levels and growth rates in productivity. Figure 7 presents trends in productivity of main agricultural crops in Malawi between 1970 and 2005. Productivity is narrowly defined as output per hectare of land cultivated indexed to base 1970. This shows that productivity in most of the agricultural crops increased but not sufficiently to offset the effects of population growth. The percent yield gaps range from 38 per cent to 53 per cent for cereals, and 40-75 per cent for legumes.

Source: Computed from FAOSTAT data

The agricultural sector is heavily dependent on rain-fed cultivation. Malawi has 3 million hectares of agricultural cultivatable land, but more than 99 per cent of agricultural land remains under rain-fed cultivation. The rain-fed nature of smallholder farming makes agricultural production prone to adverse weather conditions such as drought and floods. The country has experienced a number of climate change-related hazards over the past decades, particularly increased incidence of drought, dry spells, intense rainfall with riverside and flash floods, poor distribution of rainfall, and pest and disease outbreaks. In 1970, only 0.06 per cent of cultivatable land was under irrigation, but this has marginally increased to 0.47 per cent in 2005. More recently, government and non-governmental organisations have been promoting irrigated cropping during the rainy and dry season using low cost irrigation equipment such as treadle pumps. Most of the bumper harvests in maize have been in years that Malawi had good rains.

Smallholder production is on customary land, on which rights to cultivate and transfer land is conferred by traditional chiefs. With the growing population, customary land has become more fragmented and the land holding sizes have declined. Average land size holding per household in Malawi is 1.2 hectares while the average land per capita is 0.33 hectares (GOM and World Bank, 2006). In addition, per capita land holdings are highly skewed, with the poor holding only 0.23 hectares per capita compared to the non-poor that hold 0.42 hectares per capita. The small land holding sizes are reflected in Figure 9 which shows the trends in per capita cultivatable land in Malawi. Per capita land holdings have been declining since 1970s, partly due to population growth of 3 per cent per annum. The increase in cultivated land may be due to cultivation of marginal and less productive land.

The liberalization of the agricultural sector witnessed the State withdrawing from direct interventions on input, output and financial markets in order to bring operational efficiency and to ensure private sector development. However, product markets and input markets for agricultural growth are still functioning imperfectly. With respect to product markets, most smallholder farmers are poorly organised and lack bargaining power over pricing of agricultural produce. Transaction costs remain high due to low traded volumes of agricultural produce and lack of agricultural financing. In the input market, access to agricultural financing is limited among smallholder farmers, particularly since the collapse of the government run smallholder credit scheme. Commercial banks and microfinance institutions consider lending to the agricultural sector as a risky investment; preferring to lend to non-farm sectors.

Smallholder agriculture is associated with lack of value addition in agricultural products. There is very little agro-processing and most smallholder farmers sell raw agricultural produce without adding value. For the main cash crops, such as tobacco, groundnuts and cotton, which are mainly grown by smallholder farmers there is no value addition by smallholder farmers. However, in some cash crops such as cotton, sugar, tea and coffee smallholder farmers are linked to commercial processing facilities and some value addition takes place. For example, in the coffee sector, the cooperatives have their own processing facilities and smallholder farmers are producing some of the final products such as Mzuzu coffee that is sold in retail markets both in Malawi and export markets. Mzuzu coffee, for example, has achieved a premium price of up to 47 percent which benefit smallholder farmers directly.

3.3 institutional and capacity Challenges

3.3.1 Weak and Poor coordination among implementing Institutions

Institutional structures with clear roles, responsibilities, and linkages supported by adequate resources and systems capacities are essential for the delivery of development programmes. Institutional arrangements for implementation of agricultural programmes and delivery of related services involve both state and non-state actors at central and district level. At national level, emphasis has been on the formulation and implementation of sector policies, strategies, projects and programmes and this has largely entailed a top-down approach. However, with the advent of decentralization, emphasis has shifted to state and non-state institutions at district level, which now have a greatly increased role in planning and implementation programmes and projects as well as delivery of services.

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  National and local level responsibilities: This involves delineating the responsibilities of the MoAFS at central level (including the Agricultural Development Divisions) from those of the districts. An overarching principle, consistent with decentralisation policy, is that activities should be planned and implemented at the lowest possible level.
  
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  Responsibilities outside the public sector: This comprises defining which functions can be implemented by other stakeholders. This may include implementation through sub-contracting and, indeed, one of the challenges is to identify ways to collaborate with the private sector.
  

There exist weak implementation and management capacities in the agricultural sector that pose significant challenges to the implementation agricultural programmes. The implementation of programmes is also hampered by shortage of skilled staff in the sector.