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
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
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
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
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
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
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
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
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
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