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Achieving food security through stronger markets

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FACE CHALLENGES—Smallholder farmers

By Todd Benson:

Malawi’s food systems are in crisis and, over the past 10 years, an average of 2.3 million Malawians annually have been vulnerable to hunger.

Yet the country’s policy approach to food security continues to centre on subsistence production. In a book entitled ‘Disentangling Food Security from Subsistence Agriculture in Malawi’, recently published by the International Food Policy Research Institute, a set of approaches are advanced to change how most Malawians obtain their food away from reliance on own production to dependence on strengthened markets.

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Such markets will both provide diverse, remunerative livelihoods for Malawian households and reliably supply them with food at prices they can afford.

Malawi’s agricultural markets are thin with often unmatched levels of supply and demand. Consequently, prices in them are volatile.

The dominant subsistence orientation of smallholder farming households and the weak agricultural markets are two halves of the same vicious cycle:

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  • Farmers cannot be certain they will find buyers who will pay them a profitable price for their food crops. Consequently, any surplus production of maize or other staple foods by most farmers primarily is generated as a safety measure against the food security risks to their household of a bad cropping season, rather than as a commercial decision.

The small transactions they make with their limited surplus production contribute to the pattern of thin food crop markets – in the 2019-20 cropping season, for example, while almost all farming households produced maize, less than one-quarter sold any of their maize harvest.

  • In consequence, consumers, at the other end of the food value chain, cannot be certain they will find the food they require in the market at a price they can afford.

Most will feel that they can better obtain the food they need through their own farming rather than through relying on the market.

This weighing of the risks to household food security between rain-fed low productivity farming and unreliable markets results in the persistence of subsistence farming as a central component of the livelihood strategies for most Malawian households – they trust their own farming more than local markets to meet their food needs.

An important consequence of the relatively limited supplies of food to domestic markets is that small variations in supply can result in sharp price changes. Maize prices in Malawi over the past decade or so have been unpredictable both within the annual cropping cycle and between cycles.

These irregular price patterns increase market risks for potential commercial maize producers and for maize traders and further deter consumers from relying on the market for the food they require, further reinforcing their subsistence orientation.

Moreover, with unpredictable prices, traders will be unwilling to store maize in expectations of higher prices later in the year, as the risks of their facing financial losses are too great.

However, without significant commercial stocks of maize, the food security of Malawi as a whole is put at risk when maize production levels fall sharply due to poor rainfall, pest infestation, or crop disease.

In addition, the high value that farm households place on self-sufficient food production results in relatively little specialisation in crop production among smallholders.

In general, the poor quality of local market performance raises the risk that a producer who brings product A to the market in order to obtain product B from the proceeds of the sale of product A will not find buyers for product A offering a price that would allow them to purchase the quantities they need of product B.

Consequently, most farmers will seek as best they can to be self-sufficient in all commodities they can produce.

Very few farming households in Malawi specialise in the production of the small set of crops or other commodities that they can produce efficiently, relying on others through the market to supply the food, goods, and other services that they cannot produce so well.

Overall productivity within farming in Malawi therefore suffers in consequence.

Critical to improving food systems in Malawi will be strengthened markets. Because of the challenges in relying upon subsistence production to meet food needs, markets will soon be the primary source of maize for Malawian households, even in rural areas.

While rural households surveyed by the National Statistical Office reported purchasing 29 percent of the maize they consumed in 2010-11, that share increased to just under 50 percent by 2019-20.

Moreover, as households increasingly are unable to meet their food needs solely from their own farm production and as workers consequently increasingly seek livelihoods outside of farming, markets will increasingly be even more central to assuring access to food for all Malawians.

In strengthening markets, traders must be seen as part of the solution for ensuring food security in Malawi. They mobilise their own resources to obtain food from farmers to supply it to consumers and processors.

However, with little justification, both politicians and journalists generally see traders as social parasites who work against the best interests of both farmers and consumers.

This view should be challenged. Although traders are certainly self-interested, just as are both the producers who sell to the traders and the consumers who buy from them, it is not in their longer-term interest to operate in a manner that is unfair or is not determined by market conditions.

Within a competitive market, it is irrational for traders to take advantage of those with whom they are repeatedly transacting their business—they will not stay in business long.

The activities of traders should be supported and not undermined by government. Traders play a central role in ensuring that the food available within Malawi and the region is provided to those who need it in a sustainable and beneficial manner for all concerned.

While government must be more supportive of traders, it does have a legitimate role in regulating markets to ensure transparency and fair trade, to sanction dishonesty, to uphold quality standards, and to disseminate to all market actors’ price and other market information.

However, it should not exercise this role in an uninformed and haphazard manner— predictability is important.

Government must clearly communicate under what market conditions it will intervene and impose any heightened restrictions on marketing and trade. Food security through markets requires that they be predictably regulated and the rules of participation in them are clear to all.

In summary, vibrant and reliable markets are a necessary component of achieving a vision of a food secure Malawi.

All market participants must profit – farmers must always be able to find sufficient traders offering remunerative prices for their increased crop output at the same time as households that increasingly rely on non-farm livelihoods must always be able to find the food they require from traders at reasonable prices.

Stronger markets that operate predictability for the benefit of producers, consumers, and traders will facilitate reliable access to food for all Malawians.

*The author is a Senior Research Fellow at the International Food Policy Research Institute.

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