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Malawi has wasted K288.9 billion on farm input subsidy programme

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Since Malawi introduced the Farm Input Subsidy Programme (Fisp) in 2005/2006, K288.9 billion has been spent but without necessarily empowering poor Malawian farmers who almost every year seek relief food from the government because of hunger.

One of the beneficiaries of Fisp is Tereza Muwa, 63, from Masuku Village, Traditional Authority Kadewere in Chiradzulu. According to Muwa, she has been a beneficiary of the programme since 2005 when it started.

But every year, she is short of food from around September and she actually needs food aid to look after her family of six children.

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At the time of the interview a fortnight ago, she was at Mkando Trading Centre in Mulanje trying to sell a chicken at K2,800 with which she would buy maize.

Asked whether she felt Fisp has helped her to be food secure, she said: “I am not sure. I have been able to access fertiliser which I cannot afford on my own. But my piece of land is very small and sometimes rains have not been coming. 2008 was my best year because I harvested nine bags from my field. In all the other years, it’s been six or below.”

Visits to smallholder farmers in Chiradzulu, Mulanje and Thyolo found similar tales — of people thankful that Fisp has enabled them to buy fertiliser but not sure whether the programme has enabled them be food secure and be independent from food aid.

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Apparently, the same people that have been beneficiaries of Fisp are the same ones that need food aid in lean period, a situation which raises questions as to whether it has been worth it for government to bleed the taxpayer billions of kwacha every year to finance subsidy, which despite its implementation its beneficiaries still remain hungry.

According to World Bank report on Malawi Public Expenditure Review Report number 79865 January 2014, Fisp as a pro poor programme is not providing the adequate support to the poorest farming households while as a productivity increase programme is not targeting the most efficient and productive farmers.

Budget trends show that Fisp gets a large chunk, more than half of the budget for the Ministry of Agriculture and yet the beneficiaries are failing to stand on their own over the years.

In 2005, government allocated K2.2 billion for subsidy programme while K5.5 billion in 2006 and K10.7 billion in 2007. The K10.7 billion was slightly more than half of the budget to the Ministry of Agriculture which was at K21 billion and it was 12 percent of the entire budget.

In 2008, Fisp was allocated K19.4 billion from the ministry’s budget of K32.2 billion which was 14 percent of the entire budget. In 2009, Fisp received K17.8 billion with another K1.6 billion for seed while in 2010 government allocated K19.7 billion and K17.4 billion in 2011. In 2012 government allocated another K40.6 billion for Fisp and K54.4 billion in 2013 while K59.7 billion was allocated in 2014 and K41.5 in 2015. The total comes to K288.9 billion in the past 11 years.

Fisp which was introduced by the late president Bingu wa Mutharika’s administration was meant to empower the poorest of the poor and graduate them from food dependents to food producers.

But almost every year, government is forced to provide food relief items to poor Malawians who run short of food before the next harvesting season. For example, in 2012, Fisp had 1.5 million beneficiaries against 1.8 Malawians on food relief programme according to Famine Early Warning System.

Inkosi Chindi of Mzimba has asked government to find an alternative to Fisp arguing that it has failed to pull resource poor farming families out of abject poverty and that the government should redirect resources to areas that can help transform the lives of poor Malawians.

But the government has always defended Fisp. Minister of Agriculture, Irrigation and Water Development Allan Chitembekeza reacting to Inkosi Chindi, said the assertions of the chief do not represent opinions of the beneficiaries.

Minister of Finance Goodall Gondwe has always maintained that nothing would convince him that government should stop Fisp.

In 2010 government allocated K19.7 billion to Fisp which failed to empower Malawians resulting in 202 000 people finding themselves on food relief programme in the following year thus 2011.

In 2012, another chunk of 600 000 Malawians were put on public works programme in which they received K300 per day after working for two hours.

The World Bank pumped K10.7 billion into the programme.

And in 2015, another 2.8 million people were declared facing hunger and needing immediate relief food intervention.

This means that poverty still continues among Malawians despite the Fisp. IMF said in 2012 that although poverty has fallen significantly in urban areas, it has risen in the rural areas where the majority of Malawi live. Paradoxically, these are the same beneficiaries of Fisp.

Former Farmers Union of Malawi (FUM) president Felix Jumbe said in 2012 that Fisp has not helped Malawians become food secure and as such the programme needs to be changed because every year people who were supposed to have food continue giving headache to government for relief food.

“The government needs to come up with legislation that ensures that export security strategy; Malawi industrial agricultural raw material security strategy and strategic grain reserve security strategy have their production system in place other than Fisp and this would allow banks to start giving commercial credit to farmers.

“There is also need for household food security strategy. This is what the Fisp was supposed to serve targeting the most vulnerable members of the society but since at the moment there is no strategy serving the needs of groups in export, industrial agriculture and strategic grain reserve, all are scrambling for the Fisp production and since the target groups are the weakest members of the society they sell the little they get and render themselves vulnerable,” said Jumbe proposing redesigning of new farm inputs credit system to replace the Fisp which is linked to commodity off takers on the market.

But Civil Society Agriculture Network (Cisanet) says although it seems difficult to maintain Fisp under the current economic conditions, it is un realistic for the country to do away with the programme and be able to feed the people.

Cisanet national coordinator Tamani Nkhono-Mvula said the future of Fisp may be bleak but the fact remains that it would be hard for the country to continue producing food without helping farmers.

“If you look at the cost implication of subsidy, you see that it is being compounded by how we use money, we can redesign subsidy in a way that is sustainable,” said Mvula.

Recently IMF singled out Fisp as one of the costly subsidies in the budget.

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