Resource information
The Government of Malawi has since 2005
been pursuing a growth strategy mainly based on increasing
the volume of agricultural exports. This entails that Malawi
should endeavor to improve the competitiveness of its
agricultural commodities so as to gain an increasing share
of the regional and international markets. This paper
analyzes the competitiveness of the country's key
agricultural commodities -- tobacco, maize, cotton, and rice
-- using prices that prevailed in the 2007/08 agricultural
season. The paper employs a quantitative value chain
methodology to assess the country's prospects for
competitiveness and suggest weak links along the value chain
that require attention in order to improve trade
competitiveness. The results indicate that Malawi has some
competitive advantage in the production and exportation of
tobacco and cotton, and that this mostly derives from its
low labor cost advantage. However, the results indicate that
based on 2007/08 prices and costs, Malawi does not have
competitive edge in maize and rice production for export. As
such, Malawi would better pursue an import substitution
strategy in these cereals, and perhaps only aim at the
export market when regional market opportunities arise. Key
factors that underpin Malawi's narrow competitiveness
include the high cost of inorganic fertilizer and other
inputs, low productivity, and the higher trader margins and
intermediation costs along the value chains. Furthermore,
farm gate prices in Malawi are higher than in other
countries, and this undercuts its trade competitiveness.
