Potential of Input Vouchers as a
Mechanism for Integrating the
Non-Commercial and Commercial
Input Markets: The Case of Malawi
By
Richard Kachule and Thabbie Chilongo
Centre for Agricultural Research & Development
Bunda College of Agriculture
Paper Presented at FANRPAN Stakeholders Regional Policy Dialogue and
AMG Crossroads Hotel, Lilongwe, 2-5th September, 2008
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Presentation Outline
•
•
•
•
•
Background
Purpose and Objectives of the Study
Major Findings
Conclusions
Recommendations
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BACKGROUND
Malawi has had recurring food deficits from mid
1990s
Contributing Factors
 Disasters such as droughts and floods
 Lack of and/or inadequate use of improved
technologies due to poverty
 The impact of HIV/AIDS
 Poorly managed liberalisation of the markets
 Insufficient arable land, poor/declining soil
fertility
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BACKGROUND (cont’d)
Interventions to alleviate the suffering of those affected by the
declining agricultural productivity:
 Emergency relief programmes
 The programmes have involved distribution of agricultural
inputs
 principally seeds of various crops and fertilizers
 Inputs Interventions: Starter Pack Scheme , Targeted
Input Program, Input subsidy, Seed Fairs
• Funded by: The Government of Malawi, The European
Union (EU) and The Department for International
Development (DFID)
• Some of the NGOs involved in input interventions
– Canadian Physicians for Aid & Relief (CPAR), Catholic
Relief Services (CRS), CADECOM, etc.
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BACKGROUND (cont’d)
• Thus the input market has roughly been dualistic
in nature with both non-commercial (the
interventions/distortions) and commercial
markets (minus interventions/distortions)
running side by side.
• However, there has been poor integration of
commercial and non-commercial input supply
systems. For instance, there was an outcry in the
2005/06 subsidy programme that the private
sector was not fully involved.
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PURPOSE & OBJECTIVES OF STUDY
Purpose of the study

To demonstrate the potential impacts of integrating
the inputs delivery systems through an input voucher
system which can be used to enhance the purchasing
power of the poor while the commercial sector can
expand their distribution networks.
Objectives of the study


To test the potential benefits of using voucher systems
to integrate the commercial and non-commercial input
distribution channels.
To establish the nature of fraud and to determine antifraud measures so that the system is not abused.
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MAJOR FINDINGS
•
Improved household and national food security
(0.5million metric tonnes and 1.3 million metric
tonnes surpluses in 2005/06 and 2006/07
respectively)
•
Increased yield from <1 ton/ha up to 2.04 tons/ha.
–
Increased sales volume by commercial agencies
–
Program provided an assured market for input dealers
–
Increased per capita use of inputs (fertilizer and hybrid
seed)
•
Small agro-dealers were marginalized because most of them
did not participate
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MAJOR FINDINGS
1. Registration System
 There was no systematic procedure on registration of beneficiaries
 Identification of beneficiaries by VDC
 In some case VDC & Subsidy Committee
 Most chiefs registered all the people in the village
2. Types of inputs and coupons
Fertilizer
 23:21:0 +4S (NPK + S) and Urea for maize
 D. Compound and C.A.N for the tobacco
Maize Seed
 Hybrid (2kg) and OPV (4kg)
 Farmers asking for a minimum of 5kg
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3. Quality


of inputs and distributors
Quality for all inputs was generally said to be
good
Distribution networks - There were a number of
outlets, namely: SFFRFM, ADMARC, Farmers
World, Kulima Gold, Chipiku Stores, Individual
small-scale agro-dealers, NASFAM
4.
Logistical problems



Mismatch between # of coupons and inputs
Much publicity on fertilizer and not seed
Mismatch between qty of fertilizer and seed
(50kg vs. 2kg)
Lengthy coupon redeeming process

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4.
Logistical problems cont’d
 More paperwork involved (for suppliers, donors)
 Late planning for the program resulting in late
coupon and input distribution
 Lack of supplier identification on the coupons
 Few input distribution points
 Conflicting information on who are the intended
beneficiaries
 Pan-territorial input distribution (e.g. CAN vs.
Urea in Lower Shire)
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5. Fraud/Corruption
 Some companies not registered as input
suppliers were offered tenders
 Bribes being given at various levels
(registration, issuance of coupons and at
distribution points)
 Ghost names registered
 Suspected selling of coupons by chiefs
 Vendors found with coupons
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GENERAL CONCLUSIONS
• Despite some of the mentioned challenges, the program was
generally a success.
– Food security at national level
– Increased use of inputs
• Input vouchers had shown great potential of integrating
commercial and non-commercial input supply systems as
demonstrated by:
– Growth and expansion of private sector business
– Increased per capita use of fertilizer
• Still more room for improvement of integrating commercial
and non-commercial systems as the programme favoured
large and well-established input suppliers at the expense of
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small-scale agro-dealers.
RECOMMENDATIONS
 Timely planning of activities:
– Beneficiary identification by June
– Issue of coupons by August
– Issue of inputs by September




Need to have a clear targeting criteria
The subsidy package to consider ecological zones
Coupons to identify suppliers
Government must ensure that unauthorized and
unregistered companies and individuals do not trade
in fertilizers and seeds to enhance quality and prevent
corruption
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RECOMMENDATIONS (cont’d)
• Small-scale agro-dealers to be supported with capital
by their respective association (e.g. AISAM and
CNFA) in order to participate in the programme. This
will:
– Assist in expanding the distribution network;
– Eventually reduce distances the beneficiaries travel to input
distribution points; and
– Assist in building capacity of the agro-dealers.
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THANK YOU FOR
YOUR ATTENTION
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