Agro-dealers, Subsidies and Rural Market Development in Malawi

1. Agro-dealers, Subsidies and Rural Market Development in Malawi Blessings Chinsinga Chancellor College, University of Malawi Department of Political and Administrative Studies P.O Box 280, Zomba E-mail: kchinsinga@yahoo.co.uk

2. Outline of the Presentation • What is the paper about? • Background and context • Who is an agro-dealer? • Agro-dealer development in Malawi • Agro-dealers and subsidies: what are the issues? • Concluding reflections

3. What is the paper about? • A story about how the FISP has changed the operative dynamics of agro-dealership and how it threatens the prospects for a sustainable green revolution • A green revolution depends on farmers’ access to productivity enhancing inputs and technologies as well as massive investments in public goods • Key public goods include research, extension, credit and infrastructure development broadly defined • The Asian green revolution was actually attributed to investments in agricultural research, extension, credit and fertilizer distribution and supply systems rather than to marginal changes in prices of either crops or fertilizer

4. What is the paper about? cont’d • Story told on the basis of an intensive case study that was done in the districts of Thyolo and Dedza during the 2009/2010 growing season • Employed anthropological approaches using political economy analysis • Political economy analysis investigates how political and economic processes interact in a given society, and support or impede the ability to solve development problems that require collective action • Focuses on interests and incentives driving behaviour of different groups and individuals, the distribution of power and wealth between them, and how the relationships are created, sustained and transformed over time • These relationships are crucial in explaining how politics, how wealth is created and how developmental change happens • Do not always think of politics in hard terms: the basic definition of politics is conflict

5. Background and context • Development of the agro-dealer concept can be linked to the failure of SAPs • SAPs were meant to revitalize the agricultural sector especially since it was dominated by state parastatals that were not guided by the forces of demand and supply • State parastatals were inefficient because they suffered enormous political pressures, bureaucratic failure and lack of financial discipline • Agricultural sector was often effective in meeting government’s patronage objectives than in raising the poor farmers’ access to inputs and guaranteeing decent returns on their produce

6. Background and context cont’d • SAPs have been disappointing; they did not work as expected • Most notably the private sector did not fill up the vacuum left by the withdrawal of the state parastatals • Failed to create a network of input and output markets widely accessible to farmers to support and sustain the green revolution efforts • The emergence of the concept of agro-dealer is an attempt to address the failures of SAPs to kick-start a vibrant network of input and output markets in rural areas • Failure of SAPs is attributed to partial liberalization of the sector, weak institutions and coordination problems

7. Who is an agro-dealer? • A typical agro-dealer is a rural shop owner who is trained in business skills, product knowledge, safe handling and use of modern technology • Linked to major input supply companies using a credit guarantee scheme which covers some of the risk related costs normally borne firms building rural input supply network • Expected to kick-start the development of sustainable private sector led agricultural marketing system because scaling up is dependent on the ability of agro-dealers to sell their products and repay credit • Agro-dealers are expected to serve as providers of basic extension services to farmers, creating an invaluable source of knowledge and advice to farmers

8. Agro-Dealer Development in Malawi • Two phases can be distinguished • The phase of ideal agro-dealership (2001-2005) • The phase of FISP agro-dealership (2005 to date) • RUMARK and AISAM played a critical in facilitating the development of agro-dealers in Malawi • They facilitated the development of a tripartite arrangement between themselves, agro-dealers and seed companies • Some challenges led to the breakdown of the tripartite arrangement but was accelerated by the introduction of the FISP • Attributed mainly to FISP’s institutional arrangement: agro-dealers can only participate in FISP if and only if they have contracts with seed companies

9. Agro-dealership and FISP: what are the issues? • Growing patronage in FISP agro-dealer contracts • Rise of untrained agro-dealers • Rise of seasonal agro-dealers • Limited attention to agro-ecological appropriateness of seeds • Promotion of foreign germ plasma and maize bias

10. Concluding Remarks • The role of agro-dealership initiative in delivering smart subsidies was believed to act as spring board for a sustainable green revolution • There is potential for agro-dealership to anchor or drive Malawi’s green revolution but there are several key challenges that still have to be addressed • FISP has substantially transformed the operative context for agro-dealers in a way that is less supportive to the attainment of a sustainable green revolution • Instead of functioning as the engine of a private sector led agricultural recovery, FISP has been captured by a network of elites primarily for selfish gains • The end of FISP would have serious implications of farmers’ access to productivity enhancing technologies and inputs

11. THANKS VERY MUCH