Commercial smallholder farmers in Malawi challenge conventional thinking about agriculture

Smallholder farmers are defying well-established beliefs and proving that commercial agriculture can make Malawi a more prosperous place. Let me go through three of the most common misconceptions and show how the beneficiaries of the Agricultural Commercialization Project (AGCOM) are challenging them. 

Smallholder farmers are too poor to invest  

Since I arrived in Malawi, I have been hearing things such as “small farmers don’t have money…” “farmers can’t afford to do this…” “farmers must be given hand-outs...” “they are simply too poor…”

But the truth is that some farmers invest and are investing. Under AGCOM, more than 15,000 smallholder farmers, including 8,000 women, have mobilized more than half a million US dollars to match grants made available by the project. By the end of AGCOM, beneficiaries will have mobilized over $2.5 million to co-finance investments: this is happening in a country where about 70% of the population lives on less than $1.90 a day.

Markets and mindset are the keys for investing. Smallholder farmers that are ready to invest are those who consider agriculture as a business.  AGCOM targets farmers that are predominantly growing crops for markets. These farmers are not rich, many are still below the poverty line, but they are willing to take risks and seize opportunities in the farming business.

Farmers should boost yields first, then look for markets to sell

In a memorable discussion I had last year with policy makers, they were advocating for our investment projects to focus only on increasing yields. “The question on where to sell comes later” they were stressing. But they are not the only ones with this view and in fact this approach has historically guided many agriculture policies and investments in the country (and elsewhere). 

However, when farmers can identify markets and market needs, they are better placed to succeed. AGCOM therefore co-finances business plans of organized farmers that are already partnering with a buyer. The investments help the farmers produce what the buyer needs and is willing to pay for. By doing so, farmers secure sales and revenues. Take for example the Mtendere Tea and Horticulture Cooperative in Thyolo with 196 farmers. In a partnership with Satemwa Tea Estate, the Cooperative was awarded a grant to expand the supply of quality tea. The buyer’s needs were clear, so was the roadmap to meet these needs. After one year of investment, the Cooperative has increased sales from 21 to 39 metric tons per year (85%) and is reaping the benefits: prospects for future growth are promising.       

To create more jobs, find alternatives and shift away from agriculture

Few people believe that the nascent agribusiness sector in Malawi can meet the growing demand for jobs.  Instead, people believe that because urban services and manufacturing have been a source of jobs in other contexts, this strategy can also work for Malawi.

While indeed an economic transformation will certainly take place at some point, agriculture remains the main employer presently. Data from the Integrated Household Survey from 2004 to 2016 suggest that many Malawians spend most of their life working in the agriculture industry and there are few signs of labor mobility to other sectors. Currently, primary agricultural production employs over 60% of the active population. In the absence of huge investments in the manufacturing industry, agriculture is the default option.

But there is hope in agriculture, both on and off the farm, based on what we have observed while implementing AGCOM. Small farmers are thriving in lucrative primary production and every single cooperative being supported is creating new employment opportunities. For instance, with AGCOM support, the Shire Highlands Milk Producers Association, a supplier of Lilongwe Dairy Ltd, is adding more than 300 new farmers yearly to milk production. And there are more reasons for optimism in the agri-food sector off the farm. Evidence shows that as countries develop, the relative importance of on-farm agriculture as an employer declines. Meanwhile, driven by a shift in consumption patterns, the broader agri-food system expands, generating quality off-farm jobs in agri-processing, food manufacturing and related services.

Small farmers making strides towards Malawi’s vision

The Government of Malawi, recognizing the importance of moving towards a more commercial farm sector that promotes inclusive economic growth and reduce poverty, has placed this topic as a top priority in the newly launched Malawi Vision 2063. This is the right way to go!

Smallholder farmers attest to the fact that commercial agriculture is the name of the game moving forward: if they are organized and see opportunities they will respond, invest, and even contribute to the daunting challenge of creating jobs for the new generations.