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AGRICULTURAL INPUT AGRICULTURAL INPUT SUBSIDY PROGRAMMESUBSIDY PROGRAMME

By

Idrissa Mwale

Ministry of Agriculture and Food SecurityP.O. Box 30134

Lilongwe 3

September 2008

Email: idrissa08@gmail.com

BACKGROUND Malawi’s economy - agro based with 85% depending

and surviving on subsistence farming. Agriculture sector generates over 90% of the

country’s export earnings. Contributes 40% of the GDP. Smallholder sector with 3.2 million households – less

than 1 ha of land. Smallholder sub-sector dominates with a contribution

of 75% of the food crop production in the country. Since Malawi got independence in 1964, the

agricultural sector has undergone through several policy reforms.

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BACKGROUND Bad weather impacted the

production Prolonged food shortage – between

2000 and 2004 National yields were as low as 0.81

MT per ha in 2004/2005 Political commitment to implement

the Input Subsidy Programme 3

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Main Goal for ISP The main objective of ISP

Improve national food security The immediate objective

Improve accessibility and affordability of agricultural inputs among the most vulnerable farmers in the country

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BACKGROUND TO ISP 2005/2006 ISP

147,000 mt of fertiliser for both maize and tobacco production

A surplus of approximately 500,000 mt of maize

2006/2007 ISP 176,000 mt of fertiliser

156,000mt for maize growers 20,000 mt for tobacco growers

A surplus of about approximately 1.1 million mt of maize

2007/2008 ISP 216,500 mt of fertiliser

193,000 mt 23,500 mt

A surplus of about approximately 500,000 mt of maize has been produced

Current food requirement – 2.4 million metric tonnes

Maize production VS national requirement

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OTHER CROPS

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CROPS Production (Metric Tonnes)

Rice - 101,633Groundnuts - 242,628Pulses - 352,665Cotton - 76,861Cassava - 3,491,183 Sweet Potato - 1,711,864Potato - 353,855Wheat - 2,278Millet - 31,868Sorghum - 61,999

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BENEFICIARY IDENTIFICATION

Farm family verification Update farm family registers Pre-registration of beneficiaries Village Development Committee oversees

the pre-registration of beneficiaries Dates and places are announced in

advance A Beneficiaries register be kept in the

Village, Extension Planning Area, District and Agriculture Development Division.

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BENEFICIARY IDENTIFICATION

Criteria for beneficiary identification include:-

A Malawian that owns a piece of land Vulnerable household, with low purchasing power Guardian looking after physically challenged persons

who are unable to farm Adopter of new technologies Resident of the village The vulnerable group-Child headed household, Female

headed household, Elderly but hard working household

A combination of this is used in identifying the beneficiaries One beneficiary per household is registered

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BENEFICIARY IDENTIFICATION - CONT Verification Team: the team verifies

registers of beneficiaries and constitutes the following:

Village Development Committee Agricultural staff Community police and District Assembly To ensure that the final figures match with

the coupon allocation.

DISTRICT BENEFICIARY MATRIX

Compilation of all farm families Village data District data ADD data National database

Develop beneficiary matrix Two factors are used:

Number of farm families Land area Previous demand for a particular inputs

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MODE OF DISTRIBUTING INPUTS TO BENEFICIARIES

Use of coupons being the best approach in reaching out to the beneficiaries

Printing services are advertised Internal Procurement Committee

evaluate the tender and award the contract

Coupons printed basing on the district beneficiary matrix

COUPON DISTRIBUTION Dates are announced in advance for the

beneficiaries to gather at an open fora Those registered receives the coupons as

follows: Maize growing – NPK (23:21:0 + 4S), Urea &

Maize seed coupons Tobacco – D Compound (8:18:15) & CAN Others – flexible coupons (cotton, ground

nuts, common beans, soya beans, pigeons peas).

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COUPON REDEMPTION Farmers free to use the coupons in any

recognised retail shop across the country The trader collects the fee (Mk 900 for

fertiliser last year) and the coupon Submit the coupons to the Ministry through

the Logistics Unit for payment Payment based on submitted coupons only The Traders submits an invoice on the same

PROCUREMENT OF INPUTS Fertiliser procured under the

International Competitive Bidding process – follow standard procedures

Internal Procurement Committee evaluate the tender documents

Successful bidder sign a contract with Government

DELIVERY & DISTRIBUTION OF INPUTS Three channels are used as follows:

Deliver the fertiliser to designated warehouses in three main regions

Deliver some of the contracted fertiliser and retail part through the existing outlets

Retail all the contract through the existing retail outlets

Most of the fertiliser is imported by the private sector – over 75%

TRANSPORTATION Transport services are contracted out Tenders floated in the papers IPC evaluate and award contracted to

transporters priority to those with a large fleet of vehicles

Transport the inputs to assigned routes

This is 100% private sector

LOGISTICS UNIT Handles the movements of inputs to the retail

markets Replenishes stock in all the markets Receives the coupons from the traders Compiles the coupons Reconciles the coupons together with the

invoice Submits the invoice after verification to

Ministry for payment

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ISP TASK FORCE Membership of the Task Force:

Ministry of Agriculture Ministry of Finance Malawi Police Service Donor Community Fertiliser Association Seed Traders Association of Malawi UN Agencies

To review progress Address critical issues relating to the

implementation of the programme Provide feedback to stakeholders on any issues

raised

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MANAGEMENT OF THE PROGRAMME

Institutional arrangement Ministry’s Management provides overall

policy guidance Secretariat oversee the implementation of

the programme Logistics Unit provides logistical support Agricultural Development Divisions

backstops the implementation The districts implement the programme

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COUPON DISTRIBUTION Beneficiary matrix developed on three

levels Extension Planning Area District ADD

Flow of coupon Hand over to District Agriculture Officer in

presence of District Assembly officials Hand over to agriculture official Distribution to beneficiaries by the frontline

staff the VDC, village headmen and all village members: NGOs if present in the village

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Management structure

INPUT SUBSIDY PROGRAMME SECRETARIAT

MINISTRY OF AGRICULTURE AND FOOD SECURITY MANAGEMENT

ADMARC, SFFRFM AND PRIVATE TRADERS

VILLAGE DEVELOPMENT COMMITTEE

BENEFICIARIES

AGRICULTURE DEVELOPMENT DIVISION

LOGISTICS UNIT

DISTRICT AGRICULTURE

OFFICE

DISTRICT ASSEMBLIES

EXTENSION PLANNING AREA

AREA DEVELOPMENT COMMITTEE

Coupon FlowCommunication and coordination

Registration Process

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IMPLEMENTATION OF ISP Sensitization and Beneficiary Selection

The Ministry carries out sensitization campaign at all levels

Mainly the beneficiaries and other stakeholders The sensitization mainly covers:

Technical messages, Beneficiary identification Beneficiary pre-registration Coupon distribution and redemption Availability of commercial inputs within the

areas

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Private Sector participation

Private Sector participates in the programme in all the 2005/2006, 2006/2007, 2007/2008

Private sector participation was about 35% Seed was 100% supplied by the Private

Sector Increased input uptake among smallholder

farmers Agro-dealers are allowed to participate as

long as they link up with any company having a contract with the Government.

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SECURITY FEATURES Use of different security features in

each programme Each coupon for one commodity

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MONITORING & EVALUATION Monitoring at all levels At district level – district teams ADD – Directors assigned to each Agriculture

Development Division Ministry HQs supervision and backstopping support ISP Task Force meetings

COMMUNICATION Technical and other important messages are

disseminated through: Print and Electronic media Drama Radio and TV debates

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Financing arrangements Government of Malawi DfID Norway EU WB Irish aid UNDP

Program ExpendituresDescription Actual

Expenditure As a Percentage

Suppliers of fertilizer

10.7 billion 64

Transporters 859 million 5Redemption of fert. coupons

3.2 billion 19

Redemption of seed Coupon

1.05 billion 6

Operational costs 304 million 2Other Costs 654 million 4Total 16.7 billion 100