Abstract: Drawing on a household survey conducted in 2025 and focus group discussions held in 2026, this paper examines how smallholder farmers engage with three anchor enterprises in Malawi. The schemes differ both in the crop at their center and in how the partnership is structured. Tropha Estates sources chili in Mzimba under two-year contracts but provides neither inputs on credit nor formal extension services. Pyxus Agriculture Malawi (PAM) contracts groundnut in Kasungu on a seasonal basis, supplying an input package on credit that is recovered from delivered output and operates an extensive extension network. Malawi Mangoes sources fruit in Salima without formal contracts from farmers whose indigenous trees it has grafted with improved varieties.
Although the pattern is not uniform across the schemes, participation is selective. All three schemes draw disproportionately from larger households with older heads, while households with less than half a hectare— roughly the national median — are notably underrepresented. PAM’s outgrowers are substantially better resourced than their neighbors and are by far the largest and wealthiest group. In contrast, Tropha, which imposes no minimum land requirement, collateral, or loan obligation, works with households that are no wealthier than their neighbors, farm similar areas, and its outgrowers are predominantly female. Malawi Mangoes sits in between. It appears to attract somewhat better-off households with larger farms, although less markedly than PAM. Female-headed households are slightly overrepresented, and women make up the majority of outgrowers.
While Tropha introduced a new crop, PAM and Malawi Mangoes delivered on technology adoption, through improved seed and inoculant use and grafting respectively. All three enterprises also serve as an important source of agricultural advice for their outgrowers. However, none appears to have delivered on productivity in the 2024/25 season. Yields remain relatively low, and neither groundnut nor mango outgrowers outperform neighboring farmers. Adverse growing conditions, including erratic rainfall, likely contributed to these outcomes. PAM’s more input-intensive model, however, entails higher costs, and nearly one-third of its outgrowers failed to cover their groundnut production expenses.
The most tangible benefit these arrangements provide is access to a reliable market, and marketing is the dimension on which outgrowers differ most consistently from their neighbors. They are more likely to sell part of their harvest and to sell a larger share of it. Side-selling is less common than might be expected, despite the presence of active vendors offering competitive prices. Loyalty to the enterprise, distrust of vendors, and, in PAM's case, the obligation to repay input loans all appear to contribute.
Communication and grievance handling appear weak across all three schemes. Concerns typically pass through intermediaries, are perceived to receive little response, and speaking up is sometimes considered risky. How the transaction is organized also matters. Late collection, long waits at buying points, and disputes over weighing and grading are frequent sources of frustration among Tropha and Malawi Mangoes outgrowers.
The crop at the center shapes who participates, and which model can be sustained. Groundnut’s thinner margins require scale, and scale requires land; mango demands little land but an asset that takes years to establish; chili generates meaningful returns at small scale and soon after planting. Mango’s perishability and thinner local market then again create incentives to maintain a partnership even without contracts or credit, reflected in the highest continuity of the three schemes. Widely grown, non-perishable crops provide fewer such incentives, requiring the relationship to be sustained in other ways. PAM's input-credit model appears to contribute to retention, but disappointing yields leave farmers unable to cover their costs and exposes the enterprise to default. At the other end of the spectrum, Tropha's model creates few ties between seasons and engagement fluctuates accordingly.
Finally, these arrangements form only one part of diversified livelihood strategies and contribute modestly to household income. In all three cases, the crop at the center of the arrangement accounts for around a tenth of household income and is not the main source of farming income. Even among outgrowers, 29 to 48 percent of income comes from activities off their own farms. While the partnerships can contribute to household livelihoods, their potential to move households out of poverty is constrained by the same land scarcity that limits the role of farming more broadly.
Authors: Lara Cockx, Anderson Benson, and Edwin Siyame
Read and download the working paper here (PDF KB)
https://hdl.handle.net/10568/186336
