A briefing paper comments on a recently introduced fertilizer subsidy in Malawi. The subsidy garnered wide-spread support within Malawi, but was viewed with skepticism by some donor agencies.
 
Reclaiming Policy Space: Lessons from Malawi's Fertiliser Subsidy Programme, published by the Future Agricultures Consortium, a partnership between research-based organisations in Africa and the UK, explains that a severe food crisis in Malawi in the 1990s led to a political consensus within Malawi on the need to subsidize fertilizers. In 2005, a coupon-based distribution system was implemented through state-owned organisations and overseen by local government.
 
"The national political consensus - fuelled by the maize politics of Malawi - was seen in some quarters are a regressive, potentially disastrous step," writes Blessings Chinsinga. "It ran against all the efforts at liberalisation and reform that had been on-going over many years. Many technical experts and donors were appalled."
 
Donors feared that the subsidy was fiscally unsustainable, that it would lead to wastage and corruption, and would hinder private-sector investment in agriculture, says Ms. Chinsinga.

So far, however, the subsidy has been well distributed, says the author. This fact, combined with good rains in 2005-06, has led to a significant improvement in food security for the time being.

The author suggests that the case of the Malawi's fertilizer subsidy shows that "domestic political economy context matters in any agricultural policy process."

"There are unique circumstances of each country that have to be taken into account in policy formulation. A strident policy against subsidies (or any other policy measure) is inappropriate.