IFPRI Malawi Strategy Support Program Policy Note 41
In this policy note, researchers Bob Baulch and Aubrey Jolex examine prices paid to farmers for their maize and soybean between April and July 2021 using an innovative crowdsourcing method. Compared to the 2020 main harvesting season, farmgate prices of soybean improved while farmgate prices of maize declined.
The information on farmgate prices was crowdsourced directly from farmers, who were encouraged through advertising on local radio stations to call into a toll-free call center operated by Farm Radio Trust to report the prices and locations of their crop sales. To incentivize participation, all callers were entered into a raffle to win prizes in the form of input vouchers redeemable at a major agro dealer. Between April and July, 1,370 maize and 1,710 soybean farmers reported their sales.
Not only were farmgate prices of soybean higher in 2021 than in 2020, but they increased as the marketing season progressed. On the other hand, farmgate prices of maize, which were already low, to begin with, declined slightly. As a result, over 79 percent of soybean farmers but fewer than 9 percent of maize farmers received an amount equal to or greater than the government-mandated minimum farmgate price of (MWK320/kg and MWK150/kg respectively) for their produce. Prices of both soybean and maize were highest in the areas surrounding the major cities of Lilongwe and Blantyre.
The differences can be explained by several factors. On the one hand, the Affordable Inputs Programme (AIP) combined with good rains led to increased maize production in the 2020/2021 growing season, boosting maize supply, and driving down prices. On the other hand, domestic prices of soybean were buoyed by high prices on international markets, which were due to poor harvests in north and south America. Distance to cities (i.e. the major consumption points) depresses prices paid to farmers both because of the additional costs of transportation, but also because of reduced competition between buyers.
The exercise exposed the limits to the Government’s ability to enforce minimum farmgate prices, which appear to be largely ineffective in guaranteeing farmers’ incomes. The solution to this, according to Baulch and Jolex, is to encourage more competition across the agricultural market chain.
Click here to download and read the policy note. (PDF 832 KB)
