The subsidy fertilizer supply chain challenges in Malawi

Abstract

The high cost of fertilizer left many small holder farmers unable to access fertilizer which resulted in low agricultural production in Malawi. To solve this problem, the government introduced the Farm Input Subsidy Program (FISP) in 2004/2005 growing season. The subsidy program constituted about 60% of all fertilizer imports into the country. But besides huge investment into this program, food insecurity situation had not been eliminated leaving many smallholder farmers depending on food handouts to take them to the next harvesting season. Policy makers had been exploring options on how to exploit the benefits of FISP. It is for that reason that an investigation was conducted on transportation challenges in fertilizer supply chain, as late delivery was reported to be one of the problems in the distribution process. Because of that, three research objectives and research questions were formulated, and a pragmatic philosophy was adopted. Through this philosophy, both qualitative as well as quantitative research methods in data collection were employed. A snowball sampling method was used with the assistance of Road Transport Operators Association (RTOA) in Malawi. Three managers from both public as well as private fertilizer companies were interviewed while 38 questionnaires were administered to transporters that had previously been involved in subsidy fertilizer distribution. The findings of the research spotted logistical problems in the process of awarding contracts to fertilizer importers as well as transporters as not effective because of bribery, political interference and bias claims, as the main causes of the inefficiencies. Other findings included problems with beneficiary identification, high transportation costs, not utilizing ICT, ITS and lack of Research and Development as other challenges affecting productivity. This research came up with a Roadmap to Fertilizer Supply Chain as a reference material to future fertilizer supply chain studies, proposed “group fertilizer procurement” in future fertilizer procurement policies and provided empirical evidence of transportation challenges affecting fertilizer distribution in Malawi.