IFPRI Malawi Strategy Support Program Policy Note 42
Why Are Fertilizer Prices in Malawi High, and What Can Be Done?
In this policy note, researchers Jan Duchoslav of IFPRI and Joseph Rusike of AFAP assess the drivers of rising fertilizer prices in Malawi and outline the policy options available to the Government to ensure sufficient fertilizer supply in the country through the Affordable Input Programme (AIP). Under the AIP, fertilizer was to be distributed by the private sector as well as the parastatals SFFRFM and ADMARC. However, considering the high price of fertilizer proposed by the private sector, the Government is considering procuring all fertilizer for the program exclusively through SFFRFM and ADMARC.
The researchers argue that the parastatals will likely be unable to offer better prices than the private sector, as they will face the same cost of procurement, 85 percent of which is determined abroad and due to high global prices of fertilizer, skyrocketing costs of maritime transport and a depreciating Kwacha. Duchoslav and Rusike suggest several measures the Government can take to partially counter the rising prices, but they argue that regardless of who will procure the fertilizer, the Government will not be able to retain the intended number of beneficiaries of the AIP as well as the retail price they will be charged without increasing the program’s budget. They conclude by stressing that whichever policy option is chosen, should be acted upon fast in order for fertilizer to get to farmers in time for the growing season.
Click here to download and read the policy note. (PDF 832 KB)
