Ending Famine, Simply by Ignoring the Experts- A summary
In the past, the country of Malawi has struggled to feed itself with subsistence farming practices, and poor harvests drive the population to the brink of starvation. However, the use of conventional fertilizer produced a surplus in crops, causing a drop in acute child hunger, and a significant export of corn to neighboring countries.
The use of fertilizer came after a devastating harvest year in 2005, after which the president of Malawi, Bingu wa Mutharika re-instated fertilizer subsidies to increase yields on the country's severely depleted soils. Farmers were able to buy fertilizer at about a third of the market price.
The country (about the size of Pennsylvannia) was pushed by the World Bank to eliminate fertilizer subsidies during the 1980s and 1990s, suggesting that the farmers switch to cash crops for export and use the foreign exchange earnings to import food. This approach (which was pushed to other African countries as well) led to higher fertilizer prices throughout Africa.
As the population in Malawi grew and inherited landholdings shrunk, the farmers were forced to plant every inch of the ground without fallow seasons, further depleting the land and the farmers fell into even deeper poverty.
In following what the west practiced, rather than what it preached, Malawi was able to generate record-breaking crops in 2006 and 2007, lifting the region out of severe poverty.
The U.S. has seen subsidies as undermining the effort to promote the private sector in delivering fertilizer and seed. Bank officials in Malawi support the policy, but criticize the government for not having a plan to end the subsidies in the future. Still, the subsidies available are not covering all poor families; in a village of 53 families, only 19 coupons for fertilizer were granted, forcing the village to limit fertilizer to those needy families raising orphaned children or elders.
Ending Famine, Simply by Ignoring the Experts By CELIA W. DUGGER (Dec 2007)
During 2005 in Malawi almost 40% of the population needed emergency food aid.
At the end of 2007 Malawi was selling was selling corn to the World Food Program.
The change was due to government subsidized fertilizers.
Over twenty years the IMF, USA and Europe had convinced Malawi to eliminate its subsidies on fertilizers. They believed that Malawi should grow cash crops for export and use the money to buy food. But the United States and Europe extensively subsidized their own farmers.
Over the years, the United States Agency for International Development has focused on promoting the role of the private sector in delivering fertilizer and seed, and saw subsidies as undermining that effort.
The United States, which has shipped $147 million worth of American food to Malawi as emergency relief since 2002, but only $53 million to help Malawi grow its own food, has not provided any financial support for the subsidy program, except for helping pay for the evaluation of it..
As Malawi’s population grew inherited land holdings shrunk and soil fertility declined it became more difficult to grow the required quantity of food on unfertilized land, the deficit was provided as aid by US and Europe.
Farmers fell deeper into poverty and were too poor to buy unsubsidized fertilizers.
In 2005 the rains failed and there was famine.
The new president of Malawi decided to provide deep fertilizer subsidies and lesser ones for seed, abetted by good rains, it helped farmers produce record-breaking corn harvests in 2006 and 2007.
Malawi’s successful use of subsidies is contributing to a broader reappraisal of the crucial role of agriculture in alleviating poverty in Africa and the pivotal importance of public investments in the basics of a farm economy: fertilizer, improved seed, farmer education, credit and agricultural research.
Independent evaluation, financed by the United States and Britain, found that the subsidy program accounted for a large share of this year’s increase in corn production.
Report conclusion from Imperial College London and Michigan State University: a well run subsidy program in a sensibly managed economy has the potential to drive growth forward out of the poverty trap in which many Malawians and the Malawian economy is currently caught.
The Department for International Development in Britain contributed $8 million to the subsidy program in 2006.
The World Bank now sometimes supports the temporary use of subsidies aimed at the poor and carried out in a way that fosters private markets.