Minister of Agriculture Sam Kawale says government has embarked on contract farming for maize and other food crops as part of a strategy to phase out the Affordable Inputs Programme (AIP).
The minister, speaking in an interview on Monday, said government has since set aside K40 billion for the National Food Reserve Agency (NFRA) and Agricultural Development and Marketing Corporation (Admarc) to engage farmers in contract farming.
He said: “This is contract farming where farmers produce and supply NFRA and Admarc, just like what happens in tobacco.
“The money will help have more maize produced. If all goes well, four tonnes per hectare can be achieved, but the final figure will only be known after factoring in all production costs, which are different for each farmer.”
Kawale said, government anticipates, through this approach, buying more agricultural produce locally and promoting commercial farming which is key to achieving food security.
He said: “You will see the ministry investing so much money and time in commercial farming, and not AIP, until we migrate all the farmers from subsidy to social protection programme and commercial farming.”
Kawale said the K40 billion will be split equally between NFRA and Admarc,
The contract farming is part of the reforms by the ministry to migrate farmers from AIP to commercial farming.
In a strategy called ‘From subsidy to social protection and commercial farming’, the minister indicates that the ministry is implementing the reforms to ensure the country achieves the Malawi 2063 goals of having an agricultural sector that is productive and commercially driven.
Said Kawale: “Farmers with five hectares or more, ready to do irrigation and rain-fed farming, will have access to K20 billion financing from Admarc.
“Commercial farmers with 20 hectares or more, with readily available irrigation land and equipment, will have access to K20 billion financing from NFRA. Those with large pieces of land will be migrated to megafarms, a project worth about K20 billion.”
The minister said the funds are part of the response by development partners to President Lazarus Chakwera’s State of Disaster declaration following El Nino-induced poor yield.
Besides these funds, the Treasury has also allocated about K161 billion in the 2024/25 National Budget for the AIP, which aims to provide over one million households with fertiliser, seed and goats.
Chakwera in 2021 indicated that government was pondering exit strategies for the AIP after several experts criticised the programme as being a burden on the public purse.
In a separate interview, Admarc chief executive officer Dan Makata said Admarc is taking commercial farming seriously and plans to invest over K20 billion in contract farming, adding the K20 billion that government is providing is just a starting point.
Reacting to the news, Grain Traders Association of Malawi president Grace Mijiga Mhango called on government to ensure that the contracts are insured, especially for maize, to avoid losses due to climate-induced shocks.
She urged government to find ways of increasing the investment, saying K40 billion is too small for inputs especially.
In April this year, the World Bank provided $57.6 million (about K100 billion) through its Catastrophe Deferred Drawdown Option. The funds were channelled to the Ministry of Finance and Economic Affairs which worked with the Ministry of Agriculture and the Department of Disaster Management Affairs (Dodma).
The Ministry of Agriculture received $10 million for crop production through irrigation.
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