Mixed fortunes for central Malawi’s farmer producer organisations

Written by: Masautso Chimombo

Malawi’s agriculture sector has a multiplicity of different types of farmer producer organisations (FPOs), operating at different levels. Farmer clubs, farmer associations, and farmer cooperatives are among the various names that FPOs are known as in Malawi, but what they all have in common is their mission to transform their members’ farms into commercially successful enterprises, characterised by high productivity and high profitability. APRA Working Paper 82 explores the effectiveness of FPOs in enhancing smallholder commercialisation in central Malawi. This blog reflects on the paper’s findings.

To achieve their mission of supporting their members in effectively commercialising, FPO activities include organising farmers to receive agricultural extension services, bulk purchase and distribution of inputs, aggregation and joint sale (or buying) of farmer products, handling and storage, processing, transportation, and creation of access to finance from banks and microfinance institutes. But are FPOs in Malawi effectively performing these activities and delivering the goods to their members? To answer this question, the APRA Malawi team spoke to farmers, FPO leaders, and frontline extension workers in central Malawi’s Mchinji and Ntchisi districts.

Mixed findings

The results are mixed, with success on the production side, but not when it comes to marketing. Our study found that FPOs in central Malawi have been very effective in enhancing and widening their members’ access to agricultural inputs like improved seeds, pesticides, and inorganic fertilisers. Unlike non-member counterparts, FPO members have greater access to farm input loans. Farmers, FPO leaders, and extension workers testified that farm input loan providers have more trust in farmers who are members of FPOs, arguing the security provided by FPOs assures loan providers of near zero chance of the loan turning into a bad debt. This is because the FPOs exert strong social pressure on its members to repay their loans. Moreover, it was pointed out by the respondents that loans taken through the FPO platform are relatively cheap and have conditions that are more favourable to farmers.

Even where there is no organisation offering farm inputs to FPO members, FPO members still have greater access to productivity-enhancing farm inputs due to a growing culture of village savings and loans (VSLs) groups which most FPOs are incorporating into their activity profiles.  VSLs activities enable members to save, and this money can then be used to purchase adequate inputs at the start of a farming season. Even farmers who are not members of FPOs admitted that this is one of the benefits of FPOs:

‘Our friends who are members of a NASFAM farmer club are better off. They harvest more produce than us because they get input loans with cheap interests. Even crops in their farm plots stand out’. (A FPO non-member, Mchinji)

Essential extension services

Having improved access to productivity-enhancing farm inputs would have little impact on farmers’ yield if extension services were not also accessible. To use the farm inputs correctly and optimally, farmers need technical guidance and advice from well trained professional extension workers. We found that compared to farmers who are not FPO members, members had greater and more frequent access to agricultural extension and advisory services, giving them an added advantage in their agricultural production enterprises. It is therefore no wonder that there is a feeling among non-members that FPO members get preferential treatment from extension workers. Interviews with extension workers revealed that growing numbers of smallholder farmers and a shortage of extension workers meant that a group approach to delivering extension had become most common as it enables extension workers to reach more farmers at once. Farmers who are already organised into an FPO therefore are preferred and prioritised by extension workers when delivering their services. Everything being equal, smallholder farmers who have more access to agricultural extension services are more likely to adopt modern and recommended farming practices and, in turn, realise high yields from their farms. FPOs have impressively excelled in this objective of enhancing members’ access to agricultural extension and advisory services.

The success of FPOs in increasing and widening their members’ access to productivity-enhancing farm inputs and agricultural extension services has resulted in most FPO members enjoying higher yields. Once productivity and production challenges have been successfully resolved, however, concerns shift to marketing challenges. An FPO, therefore, is not completely effective until it succeeds in linking its members to lucrative farm produce markets that offer profitable prices.

The marketing question remains

So how are FPOs in central Malawi fairing in this regard? Through our study, we find that FPOs have failed in achieving their marketing objectives, specifically linking their member farmers to structured profitable markets. Farmers, FPOs leaders, and extension workers all painted a gloomy picture of how FPOs are failing to secure markets for their farmers. While FPOs have succeeded in convincing their members to aggregate their produce, and wait for a better market, these are, more often than not, never found. Instead, and out of desperation as produce prices begin to tumble towards the end of produce buying season, the FPOs and their members end up selling their produce to vendors. These are middlemen who the FPOs and their members were initially avoiding dealing with on the grounds that they are exploitative, and manipulative in the prices they offer and the weighing scales they use. Thus, FPO members still sell their produce at markets that are neither structured nor profitable and farmers.

Perhaps we should be asking ourselves the following questions:

  1. Do so called structured and profitable markets for farm produce exist?
  2. If they exist, where are these markets?
  3. And what do these markets demand from farm producer sellers and their produce?

Answering these questions is very important before we can accuse FPOs in Malawi of failure. However, if the answer to the first question is in the affirmative, then stakeholders in the agricultural sector need to sit down and reflect on the nature, model, and capacity of FPOs. When this critical reflection is complete, then the factors that are causing FPOs to fail in their marketing functions can be holistically and structurally identified and addressed. The question here is not whether we need FPOs or not, but is instead a question of how we establish and strengthen FPOs so that they can effectively discharge their marketing functions.

Photo credit: Swathi Sridharan (ICRISAT)