Agricultural Sector

Introduction

Malawi’s economy is largely centered on agriculture, which contributes 30% to the country’s GDP and accounts for over 80% of its national export earnings. Tobacco alone generates more than 40% of the country’s annual export revenue, while other significant cash crops include dried legumes, sugar, tea, cotton, and nuts. The agricultural sector plays a crucial role in providing direct and indirect employment, reducing poverty, and ensuring food security and proper nutrition. Currently, agriculture employs approximately 64% of Malawi’s workforce, yet it operates below its full production potential. Transforming agriculture into a robust engine of growth has been a longstanding development objective for Malawi.

The sector primarily relies on rain-fed crop production, and the production and consumption of animal products remain minimal. Consequently, the country frequently grapples with food shortages at both national and household levels. The government recognizes the need for agricultural diversification to bolster economic growth and enhance food security.

However, several challenges hinder the sector’s ability to realize its productivity potential. These challenges include vulnerability to weather-related shocks, inadequate management of land, water, and soils, a lack of structured markets, minimal adoption of modern agricultural technologies, limited access to financial resources for investment and farm inputs, low mechanization levels, insufficient technical labor skills, an underdeveloped irrigation system, inadequate research and extension services, and weak market linkages.

To address market connectivity, efforts have been made to develop agricultural markets through increased liberalization, improved rural marketing infrastructure, agricultural market information systems, and the establishment of commodity exchanges. Despite these initiatives, agricultural marketing systems remain rudimentary, with persistent gaps in market access, particularly in rural areas. Many farmers lack sufficient information about current market prices, allowing traders to exploit this knowledge gap by purchasing produce at prices significantly lower than the government’s set farm gate price.

The Malawi 2063 (MW2063)

Malawi Vision 2063 is a comprehensive long-term development agenda that builds upon the framework of Vision 2020, officially launched in January 2021. This initiative is structured around three fundamental pillars, with Agriculture Productivity and Commercialization being a primary focus. To facilitate the realization of this vision, the Malawi Government has developed a 10-year implementation plan known as the Medium-Term Implementation Plan (MIP-1), spanning from 2021 to 2030.

MIP-1 outlines key priority areas under Pillar 1: Agriculture Productivity and Commercialization, aimed at enhancing productivity and commercializing the agricultural sector for exports. The critical focus areas within the first decade of this plan include: (a) Agricultural Diversification, (b) Irrigation Development, (c) Anchor Farms, (d) Agricultural Inputs, (e) Agricultural Mechanization, (f) Structured Markets, and (g) Agricultural Research, Innovation, and Dissemination.

Through this vision, the Government of Malawi is dedicated to transforming agricultural production by promoting large-scale farming through the establishment of “mega-farms.”

Mega farms structural transformation

These mega-farms will function as centers for extensive production, serving not only their operations but also acting as hubs for surrounding farmers by attracting private markets for both inputs and outputs. This strategic approach aims to significantly elevate the agricultural sector from its current state, fostering growth and sustainability.

The government’s strategy aims to create partnerships between large-scale commercial farms—referred to as mega or anchor farms—and smallholder farms. This initiative is designed to provide smallholders with access to enhanced agricultural inputs, comprehensive training, and connections to processors and various end markets. The intended reform seeks to yield positive spillover effects for smallholder farmers while addressing critical issues such as low agricultural productivity, declining yields in both crops and livestock, limited competitiveness within the agro-industry, and the sector’s vulnerability to climate change and weather-related disruptions. Furthermore, the goals of the mega-farm initiative involve promoting irrigation, giving investors access to unused or underutilized estate land, bolstering agricultural financing, and increasing agricultural exports. The government recognizes that successfully implementing the mega-farm model, along with encouraging high performance and investment in these farms, requires a range of incentives. The government of Malawi has implemented a range of incentives aimed at fostering success and generating significant returns in various agricultural sectors. These initiatives have established a solid foundation for the commercialization of agriculture, creating opportunities for the private sector and foreign investors to capitalize on the potential for growth and profitability in Malawi’s agricultural landscape. (Government of Malawi Incentives for Agricultural Diversification and Commercialization)