Agricultural Sector Policy Reforms: Implications for Poverty and the Environment in Malawi

Abstract

Since independence in 1964, Malawi has implemented a number of agricultural reforms particularly in the tobacco and maize sectors. These reforms have been designed with four key objectives as follows: (a) to improve smallholder prices particularly in the tobacco sector; (b) to increase income for the poor especially in the rural areas; (c) to reduce income inequality between smallholders and estate owners; (d) to ensure food security both at national and household levels. In this thesis, econometric and optimization techniques were employed to examine and explore the extent to which these objectives have been achieved. In addition, the links between poverty and deforestation in the country were investigated.

Although some objectives have been achieved, there is underperformance in a number of areas. For instance, while there were improvements in the prices of tobacco that smallholders receive, reforms in the tobacco sector did not lead to a sustainable reduction in income inequality between small and large growers. In the maize sector, fertilizer subsidies were found to improve food security at the national level. However, at household level, maize production was heavily skewed with the south lagging behind the centre and the north. Although maize sector reforms improved income distribution for smallholders, they failed to improve the income level and poverty status of non-agricultural households in rural areas.

Finally, it was demonstrated that cultivation of maize on customary land by poor smallholders, is the primary causative agent of deforestation in Malawi, with cultivation of tobacco and pulses being the next most important causes. It is therefore recommended that Malawi should adopt improved farming techniques and technology to ensure that farmers are able to produce more output from less land. In addition, there is a need to ensure that farmers, especially the poor, cultivating plots on customary land are granted stronger property rights. This would give smallholders the incentive to consider the issue of reforestation more seriously than is the case today.