Malawi Chilies: Building Trade Capacity
Malawi is one of Africa’s most densely populated countries, with more than 200 people per square kilometer, and with a national average family landholding of only one hectare. Malawi is also one of the poorest countries, with a per capita GDP at less than half the sub-Saharan African average, and with the highest income inequality in Africa. Agriculture plays a vital role in the economy, accounting for 85 percent of the labor force, 35 percent of GDP and 90 percent of foreign export earnings.
Beginning in 1994 ACDI/VOCA worked with farmers to create the National Smallholder Farmers’ Association of Malawi (NASFAM). Founded on the principles of collective action and self-reliance, NASFAM works to empower farmers at the grassroots level, encouraging them to form cohesive village-based “clubs” and financially independent business associations.
NASFAM today represents over to 108,000 farm families, with women constituting 31 percent of agribusiness committee members and 38 percent of the total membership. It provides a variety of member services financed through an ongoing government levy, user fees, member dues and external donor support. These services include training in business management, marketing, quality control, literacy and basic education. As part of NASFAM’s information services, there is a monthly trilingual newsletter and a weekly radio program.
One success story has been the Zikometso Smallholder Farmers’ Association. An ACDIVOCA survey of agricultural activities revealed that Malawi’s fiery birdseye chili peppers held the greatest potential for profits for this area. ACDIVOCA staff helped growers organize into small groups, which in turn joined forces to create collection and marketing centers, distribute quality seed and teach farmers how to correctly dry and grade chilies. The farmers worked hard to overcome initial quality problems, continually improving production, drying and grading practices in order to provide a consistently high-quality product.
The Zikometso Smallholder Farmers’ Association was formally admitted to NASFAM in 1999, having developed and adopted a set of bylaws and elected a board of directors. By that time, the association numbered over 5,000 farmers in 239 village-level clubs.
The following year, the association marketed 62 tons of chili peppers to Europe and Australia for a profit of $27,000, most of which was returned to members as a second bonus payment. Farmers who were association members thus received 35 percent more for their chili peppers than did non-members. The association was also the first to “graduate” from ACDI/VOCA’s assistance, recruiting its entire management and field staff, leasing two warehouses, purchasing its own computer and providing motorcycles to field employees. NASFAM acts in a field advisory capacity and exports the chilies as a broker for a fee.
In 2001 Zikometso Association’s 5,700 members enjoyed another successful harvest, producing 80 metric tons, 77 of which were exported to Europe and earned gross revenues of $200,000. The association has opened three farm supply shops selling seed and fertilizer, and business is booming.
Following its successes, the Zikometso Association shared its expertise with another NASFAM member, the Balaka Area Smallholder Farmers’ Association. High-quality seeds from Zikometso have been distributed to BASFA members, and training has been provided in seedbed preparation and transplanting. Eleven metric tons of chilies were transferred from BASFA to Zikometso’s warehouse for grading and export, and the first container of Balaka chilies was exported to Europe in late September 2002.
2002 was a successful year for both associations. Together they produced 82 metric tons and boost exports to 77 metric tons of grade A Malawi birdseye chili peppers. Quality improvement continues to be high on the agenda of the two associations. The grade-out percentage dropped from 6 percent (for the previous season) to 4 percent.
Towards the end of the season, the price for birdseye chili peppers in European markets went up from $2.09/kg in May to $3.20/kg in October and created higher than expected returns for members. ACDI/VOCA's project ended in 2003, however, at that time Zikometso expected to export 105 metric tons of chili peppers and Balaka expected to export 35 metric tons.
The success of these and the other 30-odd NASFAM agribusinesses have helped significant numbers of Malawi’s farmers to better cope with recent weather extremes and region-wide food shortages. They bear out the NASFAM slogan: “The future belongs to the organized.”