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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:The Sequencing of Agricultural Market Reforms in Malawi
Authors:Kherallah, M.
Govindan, K.
Periodical:Journal of African Economies
Geographic term:Malawi
Subjects:economic policy
agricultural market
agricultural products
Economics and Trade
Agriculture, Natural Resources and the Environment
External link:https://jae.oxfordjournals.org/content/8/2/125.full.pdf
Abstract:This paper evaluates the welfare impacts of alternative sequencing scenarios of agricultural market reforms in Malawi using a profit maximization approach. It tries to determine whether Malawi's government should have liberalized the staple crop subsector before or after the export subsector, and whether it should have deregulated agricultural output markets before input markets. After a review of the literature on the sequencing of agricultural market reforms, the agricultural sector in Malawi is described and its history of market reforms is summarized. Subsequently, a normalized quadratic profit function, with maize and groundnuts as the main competing outputs and fertilizer and labour as the major variable inputs, is estimated. The simulation results using the coefficients of the estimated normalized quadratic profit function show that, contrary to the sequencing path adopted in the 1980s, Malawi's government should have liberalized the maize sector first, followed by the groundnut export sector, and once a supply response was generated, input subsidies could have been phased out. This sequence would have minimized the adjustment costs of smallholder farmers and would have reduced the negative impact on maize productivity and food security. Bibliogr., notes, ref., sum.