A Journey of a Thousand Miles Begins with a Single Step: How Malawi’s Reform is Just the Beginning for Smallholder Farmers

Agriculture is the backbone of Malawi’s economy, accounting for almost a quarter of its GDP and employing three-quarters of the population, mostly through small-scale subsistence farming. In rural areas, the food sector employs 93% of Malawians. But poverty, recurrent shocks, and weak livelihoods are driving a sharp rise in hunger and food insecurity, with over 1 in 4 Malawians facing crisis levels in early 2025. Malawi’s agricultural sector has a chance to prosper if its resources are redirected to more cost-efficient and impactful programs and approaches. Working with the World Bank, the country is now pursuing agricultural reforms to turn a vicious cycle into a virtuous one. 

The previous Malawian input support program, designed to support farmers with crucial inputs such as affordable fertilizers, was a significant fiscal burden. For example, around 2015, the program accounted for approximately 75 percent of the Ministry of Agriculture's budget. The initiative was also marred by delays, cost overruns, and a financially untenable subsidy model – even with significant spending, the program failed to reach the most productive farmers, food supply barely improved and the program failed to achieve its intended objective of boosting food and nutrition security. The program instead increased the country’s reliance on maize, leading to widespread micronutrient deficiencies, stagnating yields, and soil degradation amid worsening climate conditions.

A systems approach to change

The Ministry of Agriculture, Irrigation and water Development set out to reform the Affordable Input Subsidy Program (AIP), initiated in 2020, by reducing the size the program and changing the nature of the subsidies. Reducing the level of subsidy received for every household, the government is now targeting those farms that can productively use the inputs. As compensation, beneficiaries with the lowest incomes were transitioned to cash transfer and public works programs.  The program is also shifting towards private sector-led procurement and distribution.   

The World Bank supported the reforms and initiated two major programs to support farmer alliances and stimulate private sector-led growth.  Using an online platform that tracks and manages farming data across Malawi, targeting was improved – this means that now, roughly 1 million farmers who make up the country’s most productive farms are the primary beneficiaries of the AIP.

In addition, the government is now working to strengthen and scale digital infrastructure, research and irrigation under the regional Food System Resilience Program. As part of a US$20 million grant funded by the FoodSystems 2030 Trust Fund, a pilot project is working to improve the design of AIP and its impact on soil health, productivity and livelihoods.

The initiative will serve to further improve fertilizer subsidies. A new e-voucher system, built on a new digital farmer registry, is testing data-driven subsidy allocation in twelve districts, alongside enhanced soil testing to promote sustainable fertilizer use and performance-based payments. The government plans to use the pilot’s results to repurpose its US$300 million annual inputs program.

It includes two e-voucher schemes allowing farmers to choose their inputs, with expanded subsidies to include legumes seeds, lime, and organo-mineral fertilizers. In the pilot phase, input subsidies are now bundled with extension services and soil and water conservation practices, with farmers required to adopt at least one conservation measure.

“Remember, our goal is to make sure that we end hunger. We increase income generation at household level as well as exports for future generations. So, for us, Malawi, and our context, the food system and our transformation is something that we strongly believe we need to be a part of here,” said Hon. Samuel Kawale, the Minister of Agriculture.

Early results

The first soil health pilot supported over 23,000 farmers, 43% of them women, with farm inputs and soil and water improvement practices. These farmers were trained in soil health management, alongside over 100 agricultural extension workers.

“The skills I’ve gained through this endeavor are invaluable. I will continue to use them even if the project phases out,” said a female farmer participating in the soil health pilot.

To provide more tailored recommendations on fertilizer use and soil management practices, the project collected soil samples from 1,500 farmers. The vast majority of farmers used the inputs given and applied soil and water conservation practices, while maize yields also increased.

“What we are now doing is to reform the subsidy program, but more money has gone toward commercial farming where a lot of Malawians are very happy to find themselves – away from the subsidies to the commercial farming, which, for us, we consider to be a milestone in the transformation of food systems in the country,” said Minister Samuel Kawale.

Malawi’s ambitions are high as it enters the next phase of its reforms – a key part of which will be to double-down on training of farmers, agro-dealers and extension officers. The country will also learn lessons from the implementation of flexible e-vouchers and how to ensure e-vouchers reach intended recipients.