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Input voucher study in Malawi, Mozambique and Zambia
Final Synthesis Report
November 2007
Julius H Mangisoni, Richard Kachule, Thompson Kalinda, Thabbie Chilongo, Mwalimu Simfukwe and Emílio Tostão


Abstract

The input voucher study aimed to test the potential benefits of using a voucher system to integrate the commercial and non-commercial agricultural production input distribution channels while also providing targeted support to poor smallholder farmers. Another dimension of the study was to demonstrate the potential impact of implementing a full cycle of policy research, analysis and engagement using the case of seed and fertilizer input vouchers. The studies were carried out in Malawi, Mozambique and Zambia. The first phase of the study focused on reviewing voucher-related literature and updating previous studies done on the subject. The second phase involved rapid field research consultations with stakeholders in Malawi and Zambia, and further mining of existing survey data in Mozambique.

The first phase has revealed that a number of interventions are used in Malawi, Mozambique and Zambia to assist households facing chronic food insecurity to increase their productivity and improve their food security. These include direct input distribution to target households, seed vouchers and fairs, starter packs, and vouchers of different types. The Zambian Government uses direct input distribution through the Fertilizer Support Program and Program Against Malnutrition’s Food Security Pack. NGOs and international organizations in Zambia and Malawi also use direct input distribution. There are also pockets of seed vouchers and fairs being used by NGOs and donors in all the three countries.

The starter pack scheme and targeted input program were used in Malawi from 1998 to 2004. Currently, the Malawi Government is implementing a combination of direct input distribution and vouchers. The voucher system was first tested in Malawi in 1999 alongside the starter pack program. The results showed that flexi-vouchers are the most economically enhancing tool for smallholder farmers, especially the poorest. Distribution of flexi-vouchers allowed households to have freedom in the selection of goods. The Malawi study and other international literature reveal a number of likely outcomes from use of vouchers. First, utilization of local retail outlets for distribution instead of distribution of pre-packaged inputs increases availability of desired goods such as fertilizer at retail level. Second, direct input distribution such as the starter packs has minimal impact on enhancement of household discretionary cash and maize production. Third, direct input distribution does not allow the private sector to expand its retail distribution networks countrywide into the rural areas, as is apparent in Mozambique and Zambia where the private sector normally operates only in urban and peri-urban areas. Fourth, direct input distribution is costly to government and is susceptible to pilferage and fraud compared to the voucher-based systems.

A number of key conclusions are derived from the individual second phase country reports. In Malawi, the input voucher program has improved food security at household level and increased maize surplus at national level from 0.5 million MT surplus in 2005/06 season to 1.3 million MT in 2006/07. The maize yields have increased from less than one tone to about 2.04 MT/ha. Other benefits include growth and expansion of private sector business; creation of competition among players; increased use of new technologies and increased per capita use of fertilizer and seed.

In Mozambique, the country report focused on determining smallholders’ probability of buying maize seed, and the effect of seed emergency programs on smallholders’ likelihood to purchase maize. The econometric study showed that smallholders who receive emergency seed are less likely to buy commercial or marketed seed. Thus, emergency seed programs are likely preventing the development of Mozambique’s commercial seed market.

In Zambia, the study observed that the input voucher system, if it has to target a larger population of beneficiaries would inevitably attract, and require the public interest of government and indeed the donor community. To harness this inevitable public interest without encouraging a return to government controlled markets, it would be imperative that the general principles of a public-private partnership be involved. In this partnership one would perceive private sector (seed stockists, manufacturers, agencies, distributors) being implementers while government would retain the role of facilitator and policy guider.

The country reports further show that one way to make the vouchers or coupons more effective is for governments to consider percentile coupons. Such coupons can indicate for example that 75% of the value is for fertilizer, 10% for seed, 5% for chemicals and 10 % for labor. In this way vouchers canhelp a government to achieve social objectives through commercial means. Alternatively, efforts should be made to ensure that if the voucher value is less than the cost of the inputs, then farmers should be allowed to redeem the difference for cash or for other necessities. Flexi-vouchers can be redeemed for inputs or for other basic needs from shops.

Thus, the input voucher study has qualitatively and quantitatively confirmed that it is possible to use a voucher system to integrate the commercial and non-commercial input distribution systems in Malawi, Mozambique and Zambia while also targeting those most in need. This will in turn help to create employment, enable the private sector to extend its distribution network into the rural areas and reduce the burden on government budget of distributing inputs to rural poor households. However to ensure success of the program, it is important to address registration, fraud and corrupt practices, poor timing, poor quality inputs and transportation bottlenecks.

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