‘Green Gold’?: Burley Tobacco, Smallholder Agriculture, and Poverty Alleviation in Malawi
Introduction
The widespread perception that price-adjustment policies have failed to deliver broad-based economic growth in sub-Saharan Africa (SSA) has led to a growing consensus on the need to address the underlying structural constraints on smallholder agriculture, and particularly the need to improve access to inputs and new technology by resource-poor farmers Cornia et al., 1992, Green and Faber, 1994, Please, 1992.
This shift in perspective is reflected in changing adjustment policies in Malawi, a small, landlocked country of 10 million people ranked seventh poorest among 27 “low-income” countries in SSA (World Bank, 1994). During 1980–93, Malawi was signatory to no fewer than ten separate structural adjustment programs Jespersen, 1992, SPSS, 1990. While these programs have helped stabilize the economy, however, “growth has not contributed to poverty reduction and has not led to an improvement in the distribution of income” (United Nations/GOM, 1993). In particular, despite three structural adjustment loans (SALs) between 1981–87, smallholder agriculture has continued to stagnate (Sahn & Arulpragasam, 1991). Analyses of this stagnation have highlighted the government’s reluctance to implement price policies that threatened national food security Sahn and Arulpragasam, 1991, Harrigan, 1988, Kydd and Hewitt, 1986 and structural constraints on productivity growth Lele, 1989, Cromwell, 1992.
The World Bank’s Agricultural Sector Adjustment Credit (ASAC) (1990–93), that addressed several of these structural constraints, has been hailed as the “first attempt to adjust Malawi’s colonial pattern of agricultural production” (Harrigan, 1991). A striking feature of this pattern was the division of agriculture into two subsectors: estates, defined as holdings operating leasehold or freehold tenures, and smallholders with usufruct rights to customary land. Until 1990, the production of burley and flue-cured tobacco was restricted to the estate subsector through a national system of annual production quotas. The ASAC broke this legal monopoly by allocating a small proportion of the burley and flue-cured tobacco quotas to smallholders. For the first time in Malawi’s history, smallholders were allowed to grow the country's premier cash crop, so lucrative that it is popularly known as “green gold”.
Burley accounts for the lion’s share of tobacco production, which dominates the economy, accounting for 30% of GDP and 70% of domestic exports (Chilowa, 1993). Transferring burley production from estates to smallholders will therefore involve a massive transfer of income. Average annual household income in 1992–93 was 312 Kwacha/adult equivalent (US$66).1 Income distribution is highly skewed, with a Gini coefficient of 0.57, the highest recorded in SSA (World Bank, 1995b). Smallholder burley is expected to play a key role in alleviating poverty and reducing income inequalities. The smallholder quota is specifically targeted at poorer households. Income from burley is expected to provide smallholders with the necessary cash to purchase hybrid maize seed and fertilizer, thereby increasing household food security. Burley is also expected to have significant multiplier effects within the smallholder subsector, particularly on the demand for rural services and hired labor. The combined effect of these changes is potentially far-reaching. A World Bank simulation model predicted that, if smallholders invested income from burley in hybrid maize seed and fertilizer, per capita income in the smallholder subsector would increase by 2.3% per annum and smallholder production by 5.3% per annum (Simler, 1993a). Not surprisingly, burley is regarded as “the single best chance in the medium term to accelerate the growth of smallholder agriculture and through this the entire rural economy” (Donovan, 1993).
This article analyzes the potential of smallholder burley as a strategy for poverty alleviation in Malawi. It contrasts donor and government expectations of widespread benefits with the more modest reality that is emerging. High expectations from burley are linked in part to the search for an “engine of growth” which will inject cash into the rural economy, replacing the need for massive fertilizer subsidies which Malawi can no longer afford without donor assistance, and whose removal is a central feature of the structural adjustment program. In addition, they reflect a widespread perception of Malawi as a country of “small farmers” with untapped resources for cash crop production. In fact, Malawi is moving rapidly toward a South Asian agrarian structure where, under current technology, half or more of rural households can be classified as “functionally landless” in the sense that average holding size lies below the minimum required for sustainable livelihoods from agriculture. Because of the need to rotate tobacco with foodcrops, burley is not appropriate for such land-poor households, and evidence suggests that they are also unlikely to benefit much from burley through “trickle down” effects such as employment and demand for rural services.
Section 2 sets the smallholder burley program in its historical context. Section 3 describes the data set. Section 4 analyzes the characteristics of burley growers, while Section 5 examines the impact of burley on fertilizer use, food security, and employment. The last section summarizes conclusions and outlines some policy implications.
Section snippets
Smallholder burley
Given the importance of burley tobacco in the Malawian economy, the abolition of the estate monopoly on burley production is more than simply a “technical fix” to relieve smallholder poverty. By attempting to redistribute income from burley away from the estate sector toward smallholders, it challenges powerful vested interests, including those of the Life President and leading members of his Malawi Congress Party.
Throughout the colonial period, estates successfully resisted attempts by
The data
The analysis is based on the Policy Impact Survey (PIS) conducted by SDA Project, MOALD, in the 1993–94 crop year. The survey used the frame developed by the annual Crop Estimates, which samples 30 households from each extension Block. The PIS randomly selected a subsample of these Blocks, with the number of Blocks sampled determined by the number of enumerators available within each Agricultural Development Division (ADD). For each Block, four of 30 households listed by the Crop Estimates were
Burley growers
Unlike previous donor-funded programs in agriculture, which were not targeted at poorer smallholders (Kydd & Spooner, 1985), smallholder burley was specifically targeted at smallholders cultivating 0.8–1.5 hectares.5
Hybrid maize, fertilizer, and food security
Cash from burley tobacco may increase household food security directly by allowing households to buy additional maize, or indirectly through investment in additional fertilizer and hybrid seed. Although burley, fertilizer, and hybrid maize were not expressly designed to create a “virtuous circle” to replace the present vicious circle of low productivity and increasing poverty, they may in some cases interact to produce this effect. Indeed, an important expectation of smallholder burley was that
Conclusions
Viewed in historical perspective, smallholder burley marks a profound shift in Malawi’s agricultural strategy from estate-led growth towards a smallholder cash crop regime. While this change in strategy is undoubtably necessary for a serious committment to poverty alleviation, it is arguable that cash crops in general, and burley in particular, will not be sufficient to reduce poverty among the majority of rural households.
Burley will naturally reduce poverty among burley-growers. The ASAP’s
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