Abstract:

The economic crisis of sub-Saharan African countries in the early 1980s has led to the adoption of the Structural Adjustment Programs (SAPs) as a recommendation by international donor agencies such as the World Bank and the International Monetary Fund (IMF), in order to reverse an economic decay in the region. Among the SAP policies are the promotion of tradables as opposed to nontradables, the increase in prices of tradables, and the withdrawal of fertilizer subsidies to farmers. It was hoped that this would eventually initiate more economic activity and, therefore, economic growth in the region. However, because sub-Saharan African economies are dependent on agriculture both for employment and food, these policies have had some adverse effects on agricultural production of African farmers. Malawi, in Central Africa, is one these sub-Saharan African countries that adopted SAPs in the 1980s. A Fertilizer Subsidy Removal Program (FSRP) has been adopted. Through SAP policies, the government of Malawi has encouraged the cultivation of cash crops (tradables) such as tobacco, hybrid maize, and cotton, at the expense of subsistence crops (nontradables) such as local maize, which occupy 90% of smallholder farms and are grown mainly by women. Intensive agricultural production by fertilizer use and other appropriate technologies must be encouraged in Malawi because of the country’s high population and the low production of local maize, the staple food whose production has stagnated during the past five years. During the study, the FSRP in Malawi is described, and the program’s economics and impact on farmers are analyzed. The major factors limiting smallholders’ use of chemical fertilizer were determined to be lack of cash and/or credit. Smallholders who were credit club members applied more fertilizer than nonclub members. The study also indicated that a withdrawal of the fertilizer subsidy from smallholders and, therefore, an increase in fertilizer prices, will lead to less fertilizer use on local maize and, as a result, will not elicit a supply response in local maize production. An increase in the price of local maize cannot offset the increase in fertilizer prices and removal of the fertilizer subsidy. On the other hand, an increase in price and profitability of hybrid maize offsets an increase in the price of fertilizer and removal of the fertilizer subsidy. Women lose out in such an SAP arrangement of promoting only tradables, and hence, SAP policies are gender biased.