1 AGRICULTURAL INPUT SUBSIDY PROGRAMME By Idrissa Mwale Ministry of Agriculture and Food Security P.O. Box Lilongwe 3 September

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. 2

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

4 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

5 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 6

OTHER CROPS 7 CROPSProduction ( Metric Tonnes) Rice-101,633 Groundnuts-242,628 Pulses-352,665 Cotton-76,861 Cassava-3,491,183 Sweet Potato-1,711,864 Potato-353,855 Wheat-2,278 Millet-31,868 Sorghum-61,999

8 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.

9 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

10 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 11

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). 13

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 18

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

20 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

21 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

22 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 Flow Communication and coordination Registration Process

23 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

24 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.

25 SECURITY FEATURES Use of different security features in each programme Each coupon for one commodity

26 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 27

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

Program Expenditures DescriptionActual ExpenditureAs a Percentage Suppliers of fertilizer10.7 billion64 Transporters859 million5 Redemption of fert. coupons 3.2 billion19 Redemption of seed Coupon 1.05 billion6 Operational costs304 million2 Other Costs654 million4 Total16.7 billion100