Presented by Asa Giertz Presented at Maize Markets Symposium Bingu International Conference Centre - 1st October, 2015

1. AGRICULTURAL RISK
MANAGEMENT FOR GROWTH &
FOOD SECUIRTY IN MALAWI
Lilongwe, October 1, 2015
The World Bank

2. Why do we analyze data and trends?
World Bank methodology applied around the
world
Provides an overview of what major risks are
(production, marketing, enabling environment)
Gives an understanding of how frequent the
risks are
Shows the scope of the major risks
Shows resources allocated to risk management
Sector-Wide Agricultural Risk Assessments

3. Why do we analyze data and trends?
- Risks differ from constraints and trends!
- To capture systemic risks to the whole sector, we look
at:
– Production Risks
– Market Risk
– Enabling environment risks
- We look at biggest commodities that together account
for 80% of GAO and assess risks over the past 30 years
Risk Assessment Approach

4. MAIN FINDINGS FROM AGRICULTURE
SECTOR RISK ASSESSMENT IN MALAWI

5. Systemic Risks to Malawi’s Agricultural Sector
• Droughts (all major crops, in particular maize,
cassava, potato, and tobacco)
• Pests and Diseases
• Price Volatilities (maize, tobacco, cotton)
• Government Interventions (maize)

6. Cassava Maize
Potatoes
Tobacco,
Sugar Cane
Groundnuts
Beans
Pigeon Peas
Bananas
Rice
Tea
Cotton
(200.00)
-
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
1,600.00
0.00 0.10 0.20 0.30 0.40 0.50 0.60
LossesperCrop(millionUSD)
Frequency of Losses
 Production losses in Malawi add up to US$150 million /year over the past 30 years
*) I should be noted that the production data upon which these estimates are based (yield and area data) is
debated in Malawi and that cassava losses therefore may be over estimated.
Production Losses to the Sector

7. Risks Have Direct Impacts On Malawi’s GDP (1968-2014)

8. Solutions Should be Risk Management, not Risk Response

9. 100
15
10
0
20
40
60
80
100
120
m US$
RM allocation and Losses (m US$)
Risk mitigation Losses Coping mechanisms
Ideally….
Additional positive effects are productivity increases
and more stable business climate

10. 0
20
40
60
80
100
120
140
160
Mitigation Losses Coping
Costs of Mitigation and Coping in Malawi
MITIGATION
Irrigation
Extension
Research
COPING
NFRA
WFP
DODMA
ADMARC

11. Solutions Areas Agreed with the Ministry
1. On-farm risk mitigating technologies and practices:
What are the obstacles to uptake?
2. Mechanisms for Food Security Interventions: How can
coordination and decision-making be improved?
3. MoAIWD capacity to effectively respond to
agricultural risks: How can policy formulation and
analysis be strengthened?

12. ON-FARM RISK MITIGATING TECHNOLOGIES
AND PRACTICES: OBSTACLES TO UPTAKE

13. Root Causes Behind Poor Uptake
 Government coordination of donors/NGOs and
coordination between donors/NGOs & government
 Project design
 Gender
 Extension
 Seed System
 Limited Access to Finance
 Limited Access to Markets
Stronger leadership by the Ministry is needed in the
sector for individual interventions to be sustained and
for investments to take off

14. Incentives for Investments?
• Farm budgets from 2008 and 2014: maize, groundnuts,
beans
• Nominal prices increased for all three crops in this period
• BUT maize prices did not keep up with prices for inputs in
this period => gross income declined in this period.
Note: Incomes are based on production with improved inputs;
the ranges in gross income reflect different practices and labor
inputs, including for CA

15. STRENGTHENED COORDINATION BETWEEN THE
SGR, ADMARC, MVAC, & DODMA

16. Main Findings
 Export ban affects farm-gate prices but retail prices tend to follow
regional prices later in the season when consumer demand
increases – this also during good harvest years
 High intra-annual and monthly price volatility in Malawi
compared to other countries in the region
 The coefficient of variation (CV) 2007-2014 of average monthly
prices:
Malawi: 62%
Sub-Saharan Africa: 36%
Zambia: 24%
 Limited price differences between surplus areas and deficit areas

17. What Distort Prices?
• Interventions are not guided by rules or
triggers (e.g. procurement, ADMARC’s
interventions)
• Timing of procurement leads to distortions
and are more costly than necessary
• No transparency in the system – costs are not
clear, interventions and prices are not
systematically reported
• Impacts (positive or negative) of interventions
are not evaluated

18. What Are the Costs to the Sector?
Results of the Policy Analysis Matrix (PAM)

19. BETTER INFORMATION
FOR BETTER POLICY MAKING AND M&E

20. Important Gaps
• Information systems are inadequate for effective
policy making and M&E – difficult to assess exactly
what is needed and what are the results of
interventions
• Result in misaligned and sometimes contradictory
policies (e.g. for productivity and food security)
• Communication is poor between and within of
institutions
• Actors are poorly coordinated in the sector and
interventions are often not aligned

21. Policies Are Implemented But What Are The Impacts?

22. RECOMMENDATIONS

23. Institutions, institutions, institutions…
Strengthen policy capacity in ministry by
 Better information systems (e.g. AMIS, registers, production data, agriculture health
data, subscribe to regional data; define farm HH)
 Better communication back from the field
 Systematic M&E of policy
Food Security Agencies for non-distortive support in times of need
 Rule-based management and interventions, e.g. by triggers
 Align procurement with the agriculture year and make it predictable
 Move towards a combination of virtual (call options, etc.)-physical SGR
 Remove trade bans
 Revised and strengthened roles of ADMARC and DODMA
Coordination of activities
 Develop system for coordinating agriculture activities between actors
(or build on data-base in MoF)
 Develop GAP Manual to standardize ag. principals for Malawi
 Strengthen communication between Public Agencies

24. All Under One Umbrella
Food Security:
Availability
and Access
Productivity and
Resilience
Emergency
Preparedness
Good risk management is often win-win => strengthened
productivity and competitiveness

25. Thank You!