Engaging for Success: How USAID is Engaging with the Private Sector to Catalyze Ag-Led Growth in Malawi
Market-led, private sector solutions are at the heart of USAID’s work in Malawi and carried out through activities led by the Mission, USAID’s Malawi Agriculture Diversification Activity (Ag Div) and Feed the Future Innovation Labs. In a country like Malawi, with a young and rapidly growing population, urgency is needed to accelerate economic development and job creation. USAID’s ag-led growth is a big part of this effort, and finding “anchor” companies, like within the tobacco industry, and creating models for future businesses are part of the keys to success. As much as possible, de-risking the ability to do business and creating a strong private sector business environment are the future of Malawi.
As global demand for tobacco products drops, Malawi is feeling the impacts. The country’s tobacco exports are a source of critically needed foreign exchange. USAID is providing research and business development services through its Feed the Future Innovation Lab for Peanut at the University of Georgia, Ag Div and Malawi Mission to support tobacco companies. The companies are leveraging their infrastructure and decades-long farmer relationships to diversify into alternative crops like soybean and groundnuts.
Groundnuts, in particular, hold special interest in Malawi as they provide protein and high-quality calories for home consumption while also creating cash crop opportunities for smallholder farmers. Private sector tobacco companies are providing combinations of new groundnut variety seed, short-term credit and agronomic guidance to thousands of farmers who have previously, or still may be, growing tobacco. After harvest, the companies will purchase groundnuts from them at a fair and transparent price and provide storage (see Figure 1) and transportation services as well. Extension services are also part of some of these production packages. One major difference from tobacco is that up to 100% of the production package contracts from these companies are with women. Especially encouraging is that 97% of these farmers pay back the operating loan on time, driving confidence in the inputs package model and greater prosperity for smallholder farmers.
Challenges, such as shorter growing seasons, low yields, poor quality groundnuts and low supply of high-quality, certified seed, are being met and solved through partnerships with USAID. The Ag Div investment works in four main areas: 1) providing training and travel for U.S. agronomy, extension and manufacturing experts; 2) supporting select Feed the Future Innovation Lab initiatives focused on peanut, soybean and horticulture; 3) evaluating and developing quality improvements for legumes and oilseeds; and 4) developing value-added products to create even greater demand for groundnuts. Critical to the success of these investments is the linkage among the various partners, including the private sector, farmers, national research programs and USAID support. This level of coordination ensures that the investments made do not rely on a project funding cycle but are directly embedded throughout the value chain.
The Feed the Future Innovation Lab for Peanut provides guidance and consulting on groundnut breeding, seed production, extension and improved agronomic practices to match new varieties, harvest, and post-harvest quality improvements. One example is the combination of new, disease-resistant varieties and optimum planting density that delivers as much as two times the yield as baseline practices. New varieties in Malawi are also becoming more available, with greater disease resistance, quality and productivity in each release (see Figure 2). The tobacco companies are also working with the national breeding program in Chitedze, Malawi, to increase certified seed volumes.
Many of the collaborative partners from the national programs, extension service, private sector and Ag Div have also been on the infamous “Georgia Peanut Tour” sponsored each year by University of Georgia Research and Extension. The Georgia Peanut Tour is organized by the University of Georgia College of Agricultural and Environmental Sciences, USDA-ARS (Agricultural Research Service) National Peanut Laboratory and the Georgia Peanut Commission. Each year, they host nearly 200 attendees from across the United States and abroad to demonstrate to product users the level of technology involved in producing high-quality peanuts in Georgia. This tour is only possible with the support of the entire industry to keep the registration fee for participants as low as possible, demonstrating yet another means of private sector engagement.