Agricultural growth and poverty reduction in Malawi: past performance and recent trends

The agricultural sector continues to be the most important sector in the Malawian economy. It accounts for 39 per cent of gross domestic product (GDP), 85 per cent of the labour force and generates about 83 per cent of foreign exchange earnings. National surveys estimate that crop production accounts for 74 per cent of all rural incomes.

The agricultural sector has two main sub-sectors – the smallholder subsector that contributes more than 70 per cent, and the estate sub-sector that contributes less than 30 per cent to GDP – originating from the agricultural sector. The smallholder agricultural sector in Malawi cultivates mainly maize, the main staple grain, to meet subsistence requirements.

This paper reviews the link between agricultural growth and poverty reduction in Malawi. The contribution of the agriculture sector in Malawi has been fairly stable over time, accounting for more than one-third of GDP product. However, the performance has been mixed in terms of growth rates, with more growth witnessed in the 1960s and 1970s and erratic growth rates in subsequent periods. The analysis also shows no significant link between the growth in the agricultural sector and indicators of poverty such as malnutrition rates and poverty head count ratio.

The disappointing performance of the agriculture sector can be attributed to many factors including:

• declining farm productivity
•  rain-fed nature of cultivation and associated exogenous shocks
•  thin agricultural markets, policy reversals and associated uncertainties
•  and declining public investments in the agricultural sector.
  

In order to revive the agricultural sector, the study recommends policies towards greater commercialization, revitalization of extension services and increased investments in marketing systems, rural infrastructure and irrigation development.