Input Subsidies to Improve Smallholder Maize Productivity in Malawi: Toward an African Green Revolution

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Input Subsidies to Improve Smallholder Maize Productivity in Malawi: Toward an African Green Revolution
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  PLoS Biology | www.plosbiology.org0002January 2009 | Volume 7 | Issue 1 | e1000023 Essay Input Subsidies to Improve Smallholder Maize Productivity in Malawi: Toward an African Green Revolution Glenn Denning*, Patrick Kabambe, Pedro Sanchez, Alia Malik, Rafael Flor, Rebbie Harawa, Phelire Nkhoma, Colleen Zamba, Clement Banda, Chrispin Magombo, Michael Keating, Justine Wangila, Jeffrey Sachs E merging from the worst harvest in a decade, the Government of Malawi implemented one of the most ambitious and successful assaults on hunger in the history of the African continent. Through a national input subsidy program, coinciding with better rainfall conditions, maize production doubled in 2006 and almost tripled in 2007. From a 43% national food deficit in 2005, Malawi achieved a 53% surplus in 2007, some of which was exported to neighboring countries. An associated decline in the price of maize conveys important benefits to low-income urban and rural households that are net food consumers. Malawi’s recent experience may provide important lessons for achieving food security through smallholders in Africa. Agricultural productivity improvements have long been viewed as the foundation for economic prosperity and social development [1–3]. Asia’s Green Revolution began in the 1960s  with the development of fertilizer-responsive, high-yielding varieties of rice and wheat [4]. Global average  yields of these staple crops more than doubled over this period with greatest impact in regions with irrigation or more reliable rainfall. Improved access to fertilizer through state-supported subsidies, rural credit, and improved infrastructure contributed to strong productivity growth in both crops.  Asian governments also supported the uptake of new technology through research and extension, and intervened in the market though price support [5,6].In contrast, agricultural productivity growth in sub-Saharan Africa has not kept pace with population growth. The per capita growth rate of agricultural gross domestic product was negative during the 1980s and 1990s, though improvements have been noted since 2000 [6]. Production growth of the major African food crops (maize and root crops) was based almost entirely on extending the cultivated area,  with only minor contributions from  yield growth [4]. Poor infrastructure and related high transport costs (for both inputs and surplus production), inadequate institutional support (credit and extension), political instability, diverse agroecological complexities, low fertilizer use, and the limited availability of suitable high-yielding  varieties have all contributed to low agricultural productivity growth in  Africa [4–6].The slower productivity growth in Africa compared with Asia masks a number of limited successes that could point to a latent African Green Revolution. Recognizing the role of agriculture in stimulating economic growth and reducing rural poverty,  African governments promoted fertilizer use during the 1970s and early 1980s [7] through several interventions, including direct subsidies that reduced fertilizer prices for farmers, government-financed and -managed input credit programs, centralized fertilizer procurement and distribution, and control of output markets. Impressive improvements in maize productivity were demonstrated in Kenya, Zimbabwe, and Zambia during the 1980s [8]. Cereal crop output in Ethiopia has dramatically increased over the past decade [9]. Several other studies have shown the potential of input subsidies in accelerating crop production [10–12]. However, these positive results were generally not sustained with the advent of donor-driven structural adjustment and the dismantling of government-supported institutions and subsidies.By the turn of the century, fertilizer use in Africa was only 8 kg/ha, compared with 96 kg/ha in East and Southeast Asia and 101 kg/ha in South Asia [7]. Today, Africa accounts for less than 1% of global fertilizer consumption. A World Bank synthesis of lessons learned from earlier efforts to promote fertilizer use on the continent [7] attributed this failure to high and unsustainable fiscal and administrative costs, governments’ weak capacity to implement programs, and governments’ inability to take account of the diversity of production systems and farmers’ needs.Donors, led by the World Bank, argued for the abolition of state-led interventions including subsidies. As a Essays articulate a specific perspective on a topic of broad interest to scientists. Citation: Denning G, Kabambe P, Sanchez P, Malik A, Flor R, et al.   (2009) Input subsidies to improve smallholder maize productivity in Malawi: Toward an African Green Revolution. PLoS Biol 7(1): e1000023. doi:10.1371/journal.pbio.1000023 Copyright: © 2009 Denning et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the srcinal author and source are credited. Abbreviations: MVP, Millennium Villages Project; OPV, open pollinated variety; t/ha, tons per hectareGlenn Denning,   Alia Malik, and Justine Wangila   are with the Millennium Development Goals Centre for East and Southern Africa, Earth Institute at Columbia University, Nairobi, Kenya. Patrick Kabambe is   with the Ministry of Labour and Vocational Training, Lilongwe, Malawi. Pedro Sanchez, Rafael Flor, and Jeffrey Sachs   are with the Earth Institute at Columbia University, New York, New York, United States of America. Rebbie Harawa, Phelire Nkhoma, Clement Banda, and Chrispin Magombo are with the   Millennium Villages Project, Zomba, Malawi. Colleen Zamba is with the   United Nations Development Programme, Lilongwe, Malawi. Michael Keating is with the Africa Progress Panel, Geneva, Switzerland.* To whom correspondence should be addressed. E-mail: g.denning@cgiar.org  PLoS Biology | www.plosbiology.org0003January 2009 | Volume 7 | Issue 1 | e1000023 result, many government input supply agencies were dissolved or privatized. Under these circumstances, fertilizer costs rose sharply and constrained adoption of fertilizer use by small-scale farmers. The World Bank study concluded that “although these reforms had generated positive impacts on government budgets, they resulted in significant reductions in overall levels of fertilizer use and increased food insecurity among many rural households” [7, p. 4]. This policy failure caused a serious reassessment among governments, creating the setting for a return to subsidies as a potential intervention for promoting food security and agricultural growth. Against the broader continent-wide trend, fertilizer use by smallholder farmers in Kenya has increased dramatically since the early 1990s [7]. This apparent anomaly has been attributed to four main factors: stable fertilizer market policies leading to rapid expansion of private fertilizer distribution networks; reduction in the average distance between farmers and fertilizer retailers; greater competition among importers and  wholesalers; and high profitability of Kenya’s horticulture industry leading to maize-horticulture intercrops [7]. However, this country-level impact of market liberalization remains concentrated in more favorable and  wealthier regions of the country where farmers earn sufficient cash from other enterprises, such as horticulture and dairy farming, to buy maize fertilizer. In one of Kenya’s poorest and most food-insecure regions, the western lowlands, 87% of smallholders use no fertilizer on maize [13]. While generally praising Kenya’s progress in fertilizer market liberalization, a recent study of fertilizer policies and use in Kenya [13] acknowledged the fragility of the Kenyan success story and concluded: “Because mean household incomes are higher in Kenya compared with many other African countries, the impressive market-led growth in smallholder fertilizer use in Kenya may not be easily transferable to areas where effective demand is highly constrained” [13, p. 39].In Malawi, recent success with input subsidies highlights how pro-poor public investments in maize productivity improvement can be made cost-effectively. This essay examines the circumstances, results, and implications from the 2005–2006 and 2006–2007 national input subsidy programs, and describes the experience of more intensive support undertaken by the Millennium Villages Project (MVP) in one district of southern Malawi. Smallholder Maize Production in Malawi Malawi is a landlocked tropical country of more than 13 million people. Its economy is heavily dependent on agriculture, which employs 78% of the national labor force [14]. Maize is grown by 97% of farming households and accounts for 60% of total calorie consumption. Almost all maize is grown  without irrigation during the single rainy season from October to April,  which is subject to rainfall variability that can be particularly damaging  when short dry spells occur during the critical flowering and early grain filling stages [15].Decades of intensive cultivation by smallholders, in the absence of significant fertilizer use, have depleted soils of nutrients, particularly nitrogen [16,17]. National yields of maize have averaged 1.3 metric tons per hectare (t/ha) during the last 20 years [9]. In contrast, the average yield of rainfed maize in Iowa in the United States (1997–2007) exceeded 10 t/ha [18].Over half of Malawi’s farming households operate below subsistence. Because of low productivity and small farm size, only 20% of maize farmers produce surplus and sell their product. On-farm storage losses are high. As a result, most households purchase maize at much higher prices when stocks are exhausted, typically during January to March [14].To cope with food deficits, households reduce daily maize consumption, increase consumption of alternative calorie sources (such as cassava), sell assets (such as Box 1: OPVs versus Hybrids In Malawi and throughout Africa, there is debate about the relative merits of OPVs and hybrid varieties of maize [45]. Smallholder maize production in Africa has traditionally been based on the use of OPVs, whereby the seed is retained from year to year. Over time, through farmer selection, these traditional OPVs, known as landraces, become well adapted to the particular farm environment. Improved OPVs have been bred and selected for special characteristics such as drought tolerance and disease resistance. Seed can be recycled by farmers for a maximum of three years without significant yield loss. OPVs typically yield 10%–25% less than hybrids [45].Hybrid maize is produced by crossing two genetically unrelated inbred parents. The resulting seed exhibits hybrid vigor, but recycled hybrid seed will not breed true in subsequent generations, and can result in yield losses of 30% or more, reducing and perhaps eliminating any yield advantage in subsequent planting [45]. Hybrids are more uniform and generally higher yielding than OPVs. The Government of Malawi launched a hybrid breeding program in 1950, following a severe drought in 1949 [46]. The first hybrids were released in 1958 and by the 1990s were adopted by about a quarter of Malawi’s smallholders. Research indicated a consistent yield advantage of hybrids over local maize varieties at all levels of fertilizer use, including in a drought year [22,47].  This yield advantage of hybrids remained even under low soil fertility and drought conditions.On balance, the yield advantage of hybrids appears robust for smallholder maize production in Malawi. However, the choice of hybrids versus OPVs is constrained by a complex set of factors including the higher seed cost and the often poorer storage and processing characteristics of hybrids [47]. During the second year of the Malawi input subsidy program, voucher recipients were given a choice of OPV or hybrids: 2 kg of hybrid seed or 3 kg improved OPV, depending on supplier costs. Based on coupon redemption, 76% of farmers chose hybrids over OPVs [29]. Thus, in Malawi, there is clearly a strong farmer preference for hybrids over improved OPVs provided that the prices of seed and fertilizer are subsidized. Hybrid seed is generally more expensive than OPVs because of the higher cost of seed production and private sector control over supplies. Farmers in lower potential environments often find it difficult to recover the costs of hybrid seed and fertilizer. In the absence of deep subsidies to both seed and fertilizer, risk perceptions of small-scale farmers, especially in low potential rainfed environments, have been shown to constrain adoption of hybrid maize [47,48].  PLoS Biology | www.plosbiology.org0004January 2009 | Volume 7 | Issue 1 | e1000023 livestock), and seek employment on large commercial estates or in towns [14]. Theft of crops in the field is common during severe food shortages, prompting farmers to harvest unripe green maize for immediate consumption. Food insecurity also encourages unsafe sexual practices leading to higher incidence of HIV/ AIDS, other sexually transmitted diseases, teenage pregnancies, and abortions [19]. Gender and theft-related violence increase. And school attendance usually drops during times of food shortage.These dire circumstances underscore the urgent need to improve smallholder maize productivity through an African Green Revolution [20]. The technology and the knowledge to improve maize yields in Malawi have existed for at least three decades [21,22]. The challenge, identified in July 2004 by then United Nations Secretary-General Kofi Annan, is to “turn this knowledge into practice” and thereby “take the first steps out of chronic poverty” [20, p. 19]. 2005 Food Emergency Leads to a Bold Policy Decision The 2004–2005 maize season (planted October–December 2004 and harvested April–June 2005) was the  worst in a decade (Figure 1). Many parts of the country went without rain for up to one month during  January and February—the critical tasseling and ear development stages for maize—with a devastating effect on yields: the national average was only 0.76 t/ha, 40% below the long-term average. Total maize production for 2004–2005 was 24% less than the previous year, amounting to 57% of the estimated national maize food requirement [9].In May 2005, the Malawi  Vulnerability Assessment Committee concluded that over 4.2 million people required food aid [23]. The food situation was deteriorating rapidly, and a major humanitarian relief operation began [24]. By November 2005, as the maize prices in local markets continued to rise, the estimate went up to 5 million Malawians—38% of the population—in need of food aid [15]. In response to recurring food deficits, the Government decided to invest in subsidizing agricultural inputs, an approach that was being vigorously promoted by the UN Millennium Project [25]. This policy attracted objections from some major donors [26] who were concerned about the potential cost and the absence of a clear exit strategy. Those same donors had earlier supported a Starter Pack program in 1998–1999 and 1999–2000  whereby small packages of fertilizer, maize seed, and legume seed, sufficient for 0.1 ha, were distributed free to almost all maize smallholders in Malawi [27]. This program led to an extra 280,000 to 420,000 t maize produced. However, the main donors scaled down their support to Starter Pack, citing operational weaknesses, lack of targeting to the poorest households, and the negative impact on diversification efforts [28]. The sharp reduction in the coverage of the program was reflected in national production statistics (Figure 1). Malawi once again fell below self-sufficiency and resumed its dependency on food aid [19,27].In the face of adverse donor reactions, and after heated parliamentary debate, the Government used discretionary budget funds and support from the UN to import fertilizer and procure improved maize seed for distribution to farmers. Through the national input subsidy program, the Government allocated coupons to buy sufficient fertilizer to grow maize on one acre (0.4 ha), a 4-fold increase in the amount provided under Starter Pack, as well as 3 kg of maize seed—an insufficient amount (10 kg of seed are needed for 0.4 ha) necessitated by funding constraints. Seed, of a limited number of Government-recommended open pollinated varieties (OPVs), was sold at less than one third of the market rate. The total market value of the inputs was MK5,500 (US$44.00), of  which the farmers paid MK2,050 (US$16.40), representing an overall 63% subsidy. Coupons were allocated across regions and then distributed to districts and traditional authorities (sub-district government entities), who allocated them to Village Development Committees, which identified the recipients. All of the subsidized fertilizer and seed was distributed through government agencies [29].Including late distribution of supplementary coupons, 3.4 million coupons were issued (73% of these  were for maize cultivation), of which 75% were redeemed [29]. A total of 132,000 t fertilizer (22,000 t of which  were for tobacco fertilizers) and 6,000 t of improved maize seed were made available. The total cost of the program  was estimated at MK7.2 billion (US$58 million), representing the direct costs of purchase and distribution of fertilizer, net of sales receipts [29]. Excluding the cost of tobacco fertilizer, the cost of the maize subsidy in 2005–2006 is estimated at approximately US$50 million. doi:10.1371/journal.pbio.1000023.g001 Figure 1. National Maize Production and Maize Food Requirement over 25 Years Compiled from [9,49]. Unusual dips and spikes in maize requirement are a reflection of inconsistency in methods of national population determination.  PLoS Biology | www.plosbiology.org0005January 2009 | Volume 7 | Issue 1 | e1000023 There was no explicit targeting of subsidies toward the poor, who represented 54% of the population in 2005 [14]. This was another criticism from donors and a reason for their slow support. However, there was officially a maximum allocation of two 50 kg bags per household. This upper limit was intended to reduce the potential for capture of subsidies by larger farmers. A Bumper Harvest in 2006 The 2005–2006 season had good rains, and total maize production was more than double the 2004–2005 harvest, producing a surplus of 510,000 t above the national maize requirement (Table 1). Maize yields averaged 1.59 t/ha, doubling the 0.76 t/ha of the drought-affected 2004–2005 season. Incremental maize production attributed to the fertilizer subsidy was estimated at 300,000 to 400,000 t [30].The 2005–2006 growing season  was clearly more favorable for maize production than the drought-affected 2004–2005 season but was broadly comparable to the 2001–2002 and 2002–2003 seasons, when relatively small subsidies were provided. Maize production in 2005–2006 was higher than in the 2001–2002 and 2002–2003 seasons by 1.02 million t and 600,000 t, respectively, suggesting a large incremental impact of the subsidy beyond the effect of better rainfall.Encouraged by this achievement, the Government continued the subsidy program for the 2006–2007 season.  While donors acknowledged the impact of the 2005–2006 subsidy, they argued for increasing the participation of the private sector, especially the agro-dealer network. The Government recognized the need to partner with the private sector, but expressed concerns in the event of unsold government stocks, unreliable seed quality, and inability to reach the more remote areas that were not served by the private sector. After the UK Department for International Development offered technical and financial support, a compromise was reached whereby the Government was financially buffered against possible unsold stocks, input distribution was supported by a professional logistics unit, and seed and fertilizer quality was monitored. Continued Success in 2007 For the 2006–2007 season, the input subsidy program was repeated on a similar scale to 2005–2006. A total of 3.5 million coupons for maize fertilizer were distributed, targeted to maize-growing households, to enable purchase of the same amounts of fertilizer at the same price as in the previous year. Two million seed coupons were also distributed, each enabling recipients to obtain 3 kg of OPV seed or 2 kg hybrid seed, depending on the farmers’ choice and seed availability. According to Government of Malawi estimates [29], overall coupon redemption was 95% for fertilizer and 91% for seed, higher than in the previous season. The Government met 87% of the net subsidy cost. The private sector distributed 28% of the fertilizer and all of the seed. Seventy-six percent of farmers opted for the higher-yielding hybrids over the less expensive OPVs [29], challenging perceptions among some donors and nongovernmental organizations that hybrid varieties were inappropriate for small-scale farmers (Box 1).The 2006–2007 harvest was estimated at 3.44 million t, an all-time national record for Malawi, generating a surplus of about 1.34 million t of maize grain above national requirements (Table 1, Figure 1). The incremental effect of the fertilizer subsidy on maize production  was estimated at 670,000 t for 2006–2007, valued at US$117 million in additional crop production, assuming a maize producer price of US$175/t. The total program cost in 2006–2007  was US$72 million [29], approximately US$62 million of which was directed to maize fertilizer and seed costs. By late 2007, Malawi had exported over 300,000 t of maize to Zimbabwe, not only generating income for its smallholder farmers, but contributing to regional food security [15]. The Government decided to continue the program in 2007–2008.The poor harvest of 2004–2005 led to a sharp rise in the price of maize sold at local markets throughout Malawi [15]. By June 2006, with most of the 2005–2006 crop harvested, the average price had dropped by 61%. With the effects of the 2006–2007 bumper crop, the maize price dropped still further. Anecdotal evidence pointed to a modest increase in maize prices in some markets during August–October 2007 due to procurement for export to Zimbabwe. Since then, global food shortages have maintained prices at levels attractive to farmers [15].These results suggest that the maize consumers in Malawi have benefited from the two successive strong harvests and the related price declines. This outcome is fully consistent with experience in Asia [4] and suggests an important potential impact of seed and fertilizer subsidies on food security for the poorest households that are net consumers even after good harvests. Further research is needed to understand the impact of the subsidy on maize consumers.Displacement of commercial sales by subsidized fertilizer was estimated at 60% in 2005–2006 and 54% in 2006–2007 [29]. While this raised concerns from the business community, the results must be weighed against the net social impact of achieving Table 1. Malawi’s National Maize Production, Food Self-Sufficiency, and the Malawi Maize Production Index, 2000–2001 to 2006–2007 IndicatorSeason2000–20012001–20022002–20032003–20042004–20052005–20062006–2007 National average yield (t/ha) [9]1.181.051.281.050.761.592.04National production (million t) [9]1.711.561.981.611.232.583.44Food requirement met (%) [9,49]8878978357118153MMPI (deviation from 100%) [50]577−2−19812 MMPI, Malawi Maize Production Index.doi:10.1371/journal.pbio.1000023.t001  PLoS Biology | www.plosbiology.org0006January 2009 | Volume 7 | Issue 1 | e1000023 national food security. Experience from the MVP (below), which operates in low-income “hunger hot-spots,” is revealing that commercial sales actually increase in the poorest areas that were previously unserved or underserved by agricultural input dealers. In time, stimulating agricultural productivity  will likely increase commercial activity in rural areas and extend new opportunities for agricultural input suppliers. Millennium Villages: Deepening and Broadening Rural Investment Concurrent with the implementation of the national input subsidy program, the MVP was established in Malawi. The MVP is an integrated rural development approach that supports public-sector investments, leading to increased private-sector saving and investments [31]. The MVP began a  year earlier in Sauri Village in western Kenya, achieving average maize yields of over 5 t/ha, and meeting 166% of basic caloric requirements [31]. Inspired by Sauri’s early success, the MVP employed a similar approach in Malawi.    A total of 11,000 farming households in and around the village of Mwandama in Zomba District were identified for a program of intensified multisectoral support beginning in the 2005–2006 season.During August to October 2005, several rounds of consultation were held with the Mwandama community. These revealed major concerns about food security and the ability to recover from the 2004–2005 crop failure. Women were especially vocal about food shortages. Despite their desperation, farmers expressed an urgent need for seed and fertilizer over food aid, although aid was also required for the worst affected households. However, most farmers in these severely affected areas did not even have enough money to take advantage of the national fertilizer subsidy, revealing the need to modify the policies of the national input subsidy program.Instead of purchasing inputs at subsidized rates, each household in the Millennium Villages received 10 kg of hybrid maize seed and the recommended fertilizer inputs for a typical smallholder farm of 0.4 ha. Farmers were also trained in the “Sasakawa” planting method advocated by Sasakawa Global 2000 [32], using closer ridge spacing (75 cm apart) and single seeds (25 cm apart) instead of the traditional method of planting multiple seeds 50 cm apart along the ridges. The main differences with the broader national subsidy program were (1) enough seed was provided to plant 0.4 ha maize, and (2) farmers were not required to pay for the fertilizer up front. Instead, after harvest, the recipients were required to repay a portion of the input cost (around 30%) in kind to a school meal program to be implemented in their villages.Farmers welcomed the availability of seed, fertilizer, and extension services.  Aided by a better than average rainy season, the intervention package resulted in unprecedented productivity improvements. In Mwandama Village, 1,000 farmers obtained an average yield of 6.50 t/ha—more than four times the officially estimated national average for 2005–2006. In the broader cluster of 11 Millennium Villages around and including Mwandama, 11,000 farmers averaged a yield of 5.18 t/ha (random sample of 90 fields), compared with a yield of 2.21 t/ha (random sample of 30 fields) from non-intervention areas (where farmers had access to the national subsidy program) (Table 2).The interventions were repeated for the 2006–2007 season. The only difference was the addition of 3 kg groundnut seed and 2 kg pigeon pea seed to encourage crop diversification. The yields obtained in 2006–2007 dropped sharply to 3.61 t/ha, primarily because of poor seed germination due to a two-week dry spell following the germinating rains. However, even under these circumstances, farmers in the Mwandama cluster gained 2.11 t/ha from the additional inputs (Table 2).To estimate the relative effects of rainfall and inputs (here defined as the combination of hybrid seed, fertilizer, and Sasakawa plant spacing) on maize  yields, the 2004–2005 drought-affected crop that received little fertilizer  was used as a baseline. The rainfall effect for the 2005–2006 season was then estimated by comparing the 2004–2005 yield (farmers’ estimates)  with the 2005–2006 estimates based on crop cuts of fields adjacent to the Mwandama MVP cluster. Using this simple estimation technique, the rainfall effect is 32%. The balance of 68% accounts for the use of improved inputs. The results for 2006–2007 indicated a similar effect. Thus, in both years, the rainfall effect appears to account for 25%–32% of the yield increase. The balance can be attributed to the use of improved seed, fertilizer application, and related extension advice.The impact of the interventions in the MVP undoubtedly means the difference between a food deficit experienced in “normal years” and a significant surplus above normal consumption needs, which is about 1,000 kg/year for the average family farm size of 5.5 people. Older farmers Table 2. Partitioning the Yield Increases at Mwandama Cluster of 11,000 Farms Time Frame and Yield EffectYield (t/ha)Yield Increase (t/ha)% Increase Due to Rains or to Inputs 2004–2005 drought year0.80Not applicableNot applicable2005–2006 effect due to good rains (low input)2.211.41322005–2006 effect due to inputs (hybrid seed, fertilizer, Sasakawa plant spacing)Not applicable2.97682005–2006 combined effect5.184.381002006–2007 effect due to good rains (low input)1.500.70252006–2007 effect due to inputs (hybrid seed, fertilizer, Sasakawa plant spacing)Not applicable2.11752006–2007 combined effect3.612.81100 doi:10.1371/journal.pbio.1000023.t002
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