RE-ENERGIZED MUTHARIKA LAUNCHES IRRIGATION DRIVE

UNCLAS SECTION 01 OF 02 LILONGWE 001062 SIPDIS SENSITIVE SIPDIS FOR AF/S (MALONEY) USAID FOR DCHA/FFP DWORKEN, ANDERSON, MUTAMBA, PETERSEN USAID FOR DCHA/OFDA ISAACS, GOTTLIEB, MARX, PRATT USAID FOR AFR/SA LOKEN, COPSON PRETORIA FOR DISKIN, HALE, SINK, AND USDA/REYNOLDS E.O. 12958: N/A TAGS: EAID ECON EAGR PGOV MI SUBJECT: RE-ENERGIZED MUTHARIKA LAUNCHES IRRIGATION DRIVE ¶1. (U) Summary: Fresh from his party's by-election victory, a newly confident President Mutharika has launched a major GOM initiative to expand irrigation and improve food security. In a wide-ranging donor briefing on December 16, the president talked of plans for commercial farming, new dams and irrigation projects, extension services, and crop diversity. Although some of the proposed plans are unrealistic given current donor funding, the basic ideas are sound. The initiative's success will depend on whether the GOM provides proper incentives to stimulate private sector production, or reverts to past command-economy practices of heavy government intervention. End summary. Confident President Taking Action -------------- ¶2. (U) Visibly energized after his party's sweeping victory in recent parliamentary by-elections, President Mutharika called together donor heads of mission and his entire cabinet on December 16 for a lengthy briefing on irrigation and food security. Stating his determination to end Malawi's chronic food security, the president announced a new action plan to promote irrigation and reform the agricultural sector. ¶3. (U) Following several months of personal visits to rural communities and a review of agricultural policies, Mutharika said that he had reached several conclusions. The first is that Malawi's economy will rely heavily on agriculture in the medium term, as the country has no other serious prospects for export-oriented sectors. Rain-fed agriculture, however, is not sufficient to meet the country's needs, and he advocates a major shift to irrigation, to produce "a minimum of two crops per year." The president asserted that Malawi has some 400,000 hectares of arable land, of which only a third is currently under cultivation. Acknowledging that most of the country's farmers are inefficient smallholders, Mutharika said that the country would never achieve food security if it did not encourage large-scale commercial farming and begin producing marketable surpluses. He posited that Malawi at one time possessed some large commercial and prison farms, which proved that large-scale agriculture is feasible. He went on promise that the GOM would re-open all of its agricultural research stations and made a pitch for donors to fund new grain storage facilities in all four regions of the country. He emphasized the importance of building new dams, improving farm-to-market roads, and bolstering agricultural marketing. Above all, he said, Malawians must have a "change of mindset" toward agriculture, both in terms of what foods they prefer to eat and how those foods are produced. Pie-in-the-sky Projects -------------- ¶4. (U) The Ministers of Irrigation and Agriculture both made lengthy presentations further detailing the president's remarks. The irrigation minister read out proposed irrigation projects that total a whopping $3.1 billion, including eight projects that are already funded at approximately $57 million. In a more down-to-earth presentation, the agriculture minister spoke of the need to revitalize extension services, diversify cash crops, improve grain storage, encourage production of dairy and fisheries, and prompt Malawians to eat foods other than maize. Looking for Good Ideas -------------- ¶5. (SBU) Charge, World Bank country manager and EU ambassador dined with the president at a luncheon following the meeting, and discussed the proposals further. All three envoys strongly advocated the need for market-based policies that are friendly to private sector-led growth. The president was receptive to all comments, and seemed open to any good ideas that would achieve his overall goals of improving food security. He again spoke passionately of the need to change mindsets, particularly for diversifying the Malawian diet away from maize. Good Intentions, but Will Policies Change? -------------- ¶6. (SBU) Comment: With a by-election victory under his belt, LILONGWE 00001062 002 OF 002 Mutharika is clearly feeling more self-assured politically and ready to launch a major new policy initiative after months of political paralysis. While this proposal is quite safe politically, it is encouraging to see Mutharika once again actively pushing a reform agenda. Many of the proposals are fanciful given current levels of donor support, but most of his prescriptions involve reasonable and legitimate functions for government in assisting the sector. Absent from the discussion was any new grand scheme for massive input subsidies, such as that advocated by UN special envoy Jeffrey Sachs. ¶7. (SBU) It is unclear whether the GOM understands the market incentives necessary to stimulate large scale commercial farming, particularly in maize production. Both the president and agriculture minister made comments to the effect that government should guarantee a market for crops and buy farmers' produce. Such government intervention in pricing has played a major role in distorting Malawi's agricultural markets up to now. ¶8. (SBU) Other the other hand, if the GOM does understand what market reforms are needed, the Malawi public may not be ready for the changes necessary to make agriculture truly productive. The head of British aid agency DFID was booed by cabinet members during the meeting, when he suggested that the GOM abandon its current policy of subsidizing fertilizer and maize sold through government outlets. Malawians consider cheap fertilizer and maize to be an entitlement, and politicians touch them at their peril. If Mutharika is determined to change mindsets, the biggest change will likely need to be among government policymakers themselves. GILMOUR