Fertilizer in Malawi

Mark Thoma sends us to: Celia Dugger, "Ending Famine, Simply by Ignoring the Experts".

Alas, Celia Dugger doesn't tell us (a) how large Malawi's fertilizer subsidies are, or (b) who pays for them. So it's very hard to assess what is going on.

Comments

[anne]

http://economistsview.typepad.com/economistsview/2007/12/are-some-develo.html

December 2, 2007

Are Some Development Experts "Full of Fertilizer"?
Edited by Mark Thoma

This is very Rodrikian. It's also Sachsian:

Ending Famine, Simply by Ignoring the Experts, by Celia W. Dugger, NY Times: Malawi hovered for years at the brink of famine. After a disastrous corn harvest in 2005, almost five million of its 13 million people needed emergency food aid.

But this year..., It is selling more corn to the World Food Program of the United Nations than any other country in southern Africa and is exporting hundreds of thousands of tons of corn to Zimbabwe. In Malawi itself, the prevalence of acute child hunger has fallen sharply. ...

Farmers explain Malawi’s extraordinary turnaround ... with one word: fertilizer.

Over the past 20 years, the World Bank and some rich nations Malawi depends on for aid have periodically pressed this small, landlocked country to adhere to free market policies and cut back or eliminate fertilizer subsidies, even as the United States and Europe extensively subsidized their own farmers. But after the 2005 harvest, the worst in a decade, Bingu wa Mutharika, Malawi’s newly elected president, decided to follow what the West practiced, not what it preached.

Stung by the humiliation of pleading for charity, he led the way to reinstating and deepening fertilizer subsidies despite a skeptical reception from the United States and Britain. Malawi’s soil, like that across sub-Saharan Africa, is gravely depleted, and many, if not most, of its farmers are too poor to afford fertilizer at market prices. ...

Patrick Kabambe, the senior civil servant in the Agriculture Ministry, said the president told his advisers, “Our people are poor because they lack the resources to use the soil and the water we have.”

The country’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. ...

Malawi’s leaders have long favored fertilizer subsidies, but they reluctantly acceded to donor prescriptions, often shaped by foreign-aid fashions in Washington, that featured a faith in private markets and an antipathy to government intervention.

In the 1980s and again in the 1990s, the World Bank pushed Malawi to eliminate fertilizer subsidies entirely. Its theory both times was that Malawi’s farmers should shift to growing cash crops for export and use the foreign exchange earnings to import food...

In a withering evaluation of the World Bank’s record on African agriculture, the bank’s own internal watchdog concluded in October not only that the removal of subsidies had led to exorbitant fertilizer prices in African countries, but that the bank itself had often failed to recognize that improving Africa’s declining soil quality was essential to lifting food production.

“The donors took away the role of the government and the disasters mounted,” said Jeffrey Sachs, a Columbia University economist...

[anne]

http://economistsview.typepad.com/economistsview/2007/12/are-some-develo.html

Mark Thoma says...

I thought the distribution method at the local level was interesting - left up to local authorities, or so it seems from the article. I couldn't figure out if this is a feature or a bug, it depends on local corruption, etc., and I don't know much about that, but the story they did tell suggests the priorities that were followed for ditribution of the subsidy:

Villagers in Chembe gathered one recent morning under the spreading arms of a kachere tree to decide who most needed fertilizer coupons as the planting season loomed. They had only enough for 19 of the village’s 53 families.

“Ladies and gentlemen, should we start with the elderly or the orphans?” asked Samuel Dama, a representative of the Chembe clan.

Men led the assembly, but women sitting on the ground at their feet called out almost all the names of the neediest, gesturing to families rearing children orphaned by AIDS or caring for toothless elders.

There were more poor families than there were coupons, so grumbling began among those who knew they would have to watch over the coming year as their neighbors’ fertilized corn fields turned deep green.

Sensing the rising resentment, the village chief, Zaudeni Mapila, rose. Barefoot and dressed in dusty jeans and a royal blue jacket, he acted out a silly pantomime of husbands stuffing their pants with corn to sell on the sly for money to get drunk at the beer hall. The women howled with laughter. The tension fled.

He closed with a reminder he hoped would dampen any jealousy.

“I don’t want anyone to complain,” he said. “It’s not me who chose. It’s you.”

[anne]

I am thoroughly convinced that development infrastructure must include and often emphasize agriculture, not mass agriculture as in Mexico but agriculture in general. For just this reason, I am reluctant to criticize the heritage of agricultural subsidies here though I would prefer the subsidy mix be changed and that there be less emphasis on subsidizing large agriculture.

The healthier farm families are in developing Africa, the more fluid, the less chaotic, will be the movement to urban communities.

Additionally, what will be needed through Africa is crop insurance. Weather conditions seem to be increasingly variable or threatening, but even in the best of circumstances farming is fraught with risk and to the extent insurance is possible sustained agricultural productivity increases should be possible after subsidies. The idea is to use developed country protections of agriculture for those developing. China learned this several decades back.

[anne]

Notice the express inclusion of women and the calling out of families to be subsidized by women, then the complaints and the gender specific illustration of Zaudeni Mapila that stemmed the complaints. We often learn of an important sense of community responsibility in southern Africa that rural women are indicative of and can be well relied on. Similarly in southern Asia.

[anne]

Mark Thoma pointed here as well....

http://www.sciam.com/print_version.cfm?articleID=8526909C-E7F2-99DF-3A3D0C8917766EDA

August 20, 2007

Feeding the Hungry and Sick: Fish Farming Boosts Nutrition in Rural Malawi

By digging small ponds on farms in Malawi, researchers cut malnutrition in children in half—and provide a nutritional boost to families struggling with HIV/AIDS

Malawi is a landlocked country in southeastern Africa, primarily known for its tobacco. At least 90 percent of the more than 12 million Malawians are farmers, typically with small spreads of less than one hectare (roughly 2.5 acres). At least one in five adult Malawians are infected with HIV/AIDS, often rendering them incapable of heavy farm work. Researchers discovered, though, that they could boost the farmers' health—and double their income—by simply digging a 200 square-meter (about 2,000-square-foot) pond on the property and stocking it with fish.

Over the past five years, ecologist Daniel Jamu of the WorldFish Center and his colleagues in Malawi dug such ponds for 1,200 households. By stocking them with tilapias—a native African species that thrives in fish farms—they reduced childhood malnutrition in the region from 45 to 15 percent....

[anne]

Conservation rightfully matters....

http://www.irinnews.org/PrintReport.aspx?ReportId=74478

September 25, 2007

Cutting Edge Farming Methods Boost Production
By IRIN

JOHANNESBURG

Conservation agriculture aims to achieve sustainable and profitable agriculture.

The basics:

Minimal soil disturbance - Farmers either use a method called basin tillage in which they dig basins that capture water and plant nutrients or they use an ox-pulled plough-like "ripper". They can also use hand planters. The ripper opens just a very small furrow in the soil's surface instead of upturning an entire field which increases moisture loss and erosion.

Exact timing for planting and effective weeding - Generally, farmers are taught to dig their basins, fertilise them with manure or manufactured fertilizer, allow the first rains to fall and collect in the basin's soils and then plant. This is a shift from the conventional methods of rushing to plant when the rains begin.

Ground cover - Instead of burning off the previous year's crop residues, farmers are encouraged to keep the soil covered which preserves moisture and serves as a mulch that enriches the soil while decreasing presence of weeds.

Crop rotation and inter-cropping - Mixing and rotating crops even within one field so that one year's maize patch will be legumes the next. Other plants can be grown in between the maize rows to provide additional ground cover.

[anne]

Mark Thoma says...

Yes - last night, before I sort of fell asleep at my computer, I had written the following as a start to commenting on this post:

In a well-developed economy, the financial institutions would likely exist that would allow farmers to borrow enough to purchase fertilizer, seed, equipment, etc., then repay the loan once the crop is harvested, or, in the case of equipment, over even longer time periods. The variations in crop yields and prices from year to year can be smoothed with crop insurance and through other means such as locking in prices through futures markets.

But all of the needed markets and institutions to support farmers and entrepreneurs do not suddenly appear, they must be built up through time in conjunction with the economy's development. Construction of these institutions is an important long-run development goal, but until they are in place, what do you do? Market solutions don't seem to work for precisely this reason, i.e. becasue the structure to support well-functioning markets is not yet in place.

But I never quite finished it...

[anne]

Also:

http://www.nytimes.com/2007/08/18/world/africa/18malawi.html

August 18, 2007

Chinese Entrepreneurs in Africa Flourish Where Others Faltered
By HOWARD W. FRENCH and LYDIA POLGREEN

LILONGWE, Malawi — When Yang Jie left home at 18, he was doing what people from China's hardscrabble Fujian Province have done for generations: emigrating in search of a better living overseas.

What set him apart was his destination. Instead of the traditional adopted homelands like the United States and Europe, where Fujian people have settled by the hundreds of thousands, he chose this small, landlocked country in southern Africa.

"Before I left China," said Mr. Yang, now 25, "I thought Africa was all one big desert." So he figured that ice cream would be in high demand, and with money pooled from relatives and friends, he created his own factory at the edge of Lilongwe, Malawi's capital. The climate is in fact subtropical, but that has not stopped his ice cream company from becoming the country's biggest.

Stories like this have become legion across Africa in the past five years or so, as hundreds of thousands of Chinese have discovered the continent, setting off to do business in a part of the world that had been terra incognita. The Xinhua News Agency recently estimated that at least 750,000 Chinese were working or living for extended periods on the continent, a reflection of deepening economic ties between China and Africa that reached $55 billion in trade in 2006, compared with less than $10 million a generation earlier.

Even when Mr. Yang arrived here in 2001, he said, he could go weeks without encountering another traveler from his homeland. But as surely as his investments in the country have prospered, he said, an increasingly large community of Chinese migrants has taken root, and now runs everything from small factories to health care clinics and trading companies.

During the previous wave of Chinese interest in Africa in the 1960s and '70s, an era of radical socialism and proclaimed third-world solidarity, European and American companies held sway over economies in most of the continent. Here and there, though, the Chinese made their presence felt, often in drably dressed, state-run work brigades that built stadiums, railroads and highways, crushing rocks and doing other labor by hand....

[anne]

Brad DeLong:

"Alas, Celia Dugger doesn't tell us (a) how large Malawi's fertilizer subsidies are, or (b) who pays for them. So it's very hard to assess what is going on."

Right, so we need to look considerably more deeply for details and I will be asking about just this in days to come.

[Mark Thoma]

A few quick notes from the article:

"Last year, roughly half the country’s farming families received coupons that entitled them to buy two 110-pound bags of fertilizer, enough to nourish an acre of land, for around $15 — about a third the market price. The government also gave them coupons for enough seed to plant less than half an acre."

...

"The Department for International Development in Britain contributed $8 million to the subsidy program last year. Bernabé Sánchez, an economist with the agency in Malawi, estimated the extra corn produced because of the $74 million subsidy was worth $120 million to $140 million.

“It was really a good economic investment,” he said.

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."

[dsquared]

as far as I'm aware, the answers are a) around US$100m and b) mainly China.

[anne]

More definition of the program is needed, and I am cautious over reticence of America in appreciating the program, as though we alone are allowed to subsidize agricultural production, while the World Bank is pleased but already wondering when subsidies will not gone. So, caution is called for but my guess is that Malawi will not be easily swayed having found success.

D Squared, please expand your remarks when possible so we can get more of a sense of the program.

[Jim S]

When there is no fertilizer you have failed subsistence farming, which a "market system" cannot affect is what I take from the article. And in addition is Malawi in a part of Africa completely unaffected by the bad weather in much of the continent and they just caught a break in rainfall this year so that the farmers often won't have any extra crops to sell to afford unsubsidized fertilizer? It seems likely.

[Robert Waldmann]

It seems to me that the total cost was stated

"The Department for International Development in Britain contributed $8 million to the subsidy program last year. Bernabé Sánchez, an economist with the agency in Malawi, estimated the extra corn produced because of the $74 million subsidy was worth $120 million to $140 million."

It also seems that most of the money was Malawian. The US did not contribute and the World Bank opposes subsidies.

Now the article stresses that there were good rains, so the high return is clearly a high very risky return. However, it seems that farmers could repay loans by giving a share of their crops after harvest in exchange for the fertilizer.

That would make the program relief of a liquidity constraint, not a give away. Also note that you can't drink fertilizer (seems money to alcohol is a big problem there).

We know that the market system is not good at lending small amounts to poor people. A public program with access to uhm public means of collection of debts, could solve eliminate an inefficiency.

[anne]

Robert Waldmann further supports Mark Thoma's reading adding what I had preferred not to think, that the World Bank offers no evidence of having supported the subsidies. I am disappointed, but Waldmann's reading seems preferable to my hope.

[sm]

Two points: The so-called experts who were eventually ignored couldn't come up with a prescription for Malawian ag that would actually keep people alive.

Second: The cost of the subsidies would be the equivalent of how many minutes of the war in Iraq (just counting US costs)?

[anne]

Fine points by SM to add to Robert Waldmann and D Squared.

"But Alan Eastham, the American ambassador to Malawi, said in a recent interview that the subsidy program had worked 'pretty well,' though it displaced some commercial fertilizer sales.

" 'The plain fact is that Malawi got lucky last year,' he said. 'They got fertilizer out while it was needed. The lucky part was that they got the rains.'

"And 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.

"Here in Malawi, bank officials say they generally support Malawi’s policy, though they criticize the government for not having a strategy to eventually end the subsidies, question whether its 2007 corn production estimates are inflated and say there is still a lot of room for improvement in how the subsidy is carried out.

" 'The issue is, let’s do a better job of it,' said David Rohrbach, a senior agricultural economist at the bank."

This is not the response I want to hear from America or the World Bank. We have a lunatic's foreign policy intrasigency, and the Bank must reflect that, but there have to be other aid sources and we help in highlighting the issue.

[Random African]

"It also seems that most of the money was Malawian."

but who ? where does the revenue come from ?

it's relevant question because in the past in other african countries, taxes on farmers (via marketing boards) were paying for the subsidies and the trade-off wasn't always positive.

furthermore the word "distribution" is interesting. and are there tarriffs on non-government fertilizer imports ?

[bigTom]

Even in the developed world, using temporary subsides to kick start certain practices which are thought to likely be create future societal benefits (think of new technolgies such as solar power) can be very helpful in overcoming the inertia of the system. You can see the inertia operating here, poor farmers couldn't borrow the money for the fertilizer, so even if there was a benefit to its use, it just wasn't happening.

That doesn't mean there won't be problems in the future caused by the distorting effects of the subsidies, and the political lobbies which will arise to defend them. These likely future effects should of course be considered in formulating the subsidies. But it is foolish (and in a case like this unethical) to oppose all subsides by a recourse to kneejerk free-market ideology.

[Random African]

"We didn't advise the government to stop starter packs (of free seed and fertilizer). We said if you want to subsidize, it has to be targeted," World Bank country director Tim Gilbo said. "It doesn't make sense to subsidize those who can afford to buy. We didn't have a problem with it, our only advice was that it should be targeted."

http://www.scrippsnews.com/node/27592

what you have to understand is that agriculture in Malawi is divided between large estates producing tobacco, tea and other cash crops in the North and small farms in the southern and central regions producing maize consumed locally.
and the former (pre-structural adjustment) subsidies were indiscriminate and tended to go towards the estates. the new program (the one the article refers to) is targeted specifically towards maize and small farms and was designed by...
http://www.worldbank.org/afr/fertilizer_tk/bpractices/MalawiSP.htm
and the disputes in the recent years have been about the targetting part with the WB and the IMF pushing for improvement.

[Ian Whitchurch]

Y'know, if this idea of targetting agricultural subsidies towards small farmers and away large estates could revolutionise farm subsidy policies in certain countries.

I'm not naming names here *glances casually at Iowa*

Ian Whitchurch

[Maynard Handley]

And exactly what will stop this fertilizer fix from being pissed away in a Malthusian orgy?

From Gapminder.org (which appears to have changed its flash app from the old one that worked well to something new that is a real POS but will, with enough swearing at it, deliver the data).
We see that Malawi's population in 1975 was of order 5.2 million; in 2004 it was 12.6 million --- a more than doubling in 30 years.

There's plenty of blame to go around here; the idiot Catholic church in cahoots with an equally idiotic American evangelical movement aren't helping. But among the few things that Malawians can do to improve their situation is to stop having so many damn kids. And I see precious little evidence of them doing so --- either at the grassroots level, or at the political level. At a certain point, when a person who has been hungry all his life decides the best way to improve with the situation is to have six kids, you have to throw your hands up in the air in despair.
We can start with the president of the country, Bingu wa Mutharika, who has four kids and who has spent his life, from his university education onward, doing various official type jobs, so don't give me excuses about how he's justifiably afraid that some of his kids might die young.

[dsquared]

[We see that Malawi's population in 1975 was of order 5.2 million; in 2004 it was 12.6 million --- a more than doubling in 30 years]

you say "A more than doubling in 30 years", I say "an annual growth rate of 3.1%".

[christofay]

good scoop, Anne, on the Malawi investment story. The Chinese man brings ice cream while we bring the world new bonds.

The Malawi story is a second link in the breaking of the Washington consensus. Krugman has written his own mea culpa observing how Malaysia managed the 1997 Asia crisis by not adhering to whatever bank, the World Bank or the Bank of Concerned Galaxians.

Reading with my high school son the dreary Good Earth many times practical Ah Lan saves Wang Lung while he dreams big.

[Random African]

In farming societies, extended families = available labor.
that explain this:

"At a certain point, when a person who has been hungry all his life decides the best way to improve with the situation is to have six kids, you have to throw your hands up in the air in despair. "

but i guess rationality doesn't exist with those damn colored folks, huh ?

[Anderson]

"That doesn't mean there won't be problems in the future caused by the distorting effects of the subsidies"

Yes, but hopefully these "problems" won't be on the level of "men starving to death trying to live on pumpkin leaves."

Which of you, when your child asks for bread, will give him a stone? Answer: The World Bank.