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,

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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