In Malawi, cotton is the fourth largest agricultural export after tobacco, sugar and tea. In 2013-14, over 320,000 Malawians were registered to grow cotton, demonstrating the important role the sector plays in the livelihoods of local farmers. Recognising the potential of the sector to generate both much-needed foreign trade and to reduce poverty, cotton was highlighted as a priority export crop in Malawi’s National Export Strategy.

However, for the sector to grow in a competitive global market, the strategy also stressed that it required significant reform. At the request of the government of Malawi, the UK Department for International Development (Dfid) is supporting the cotton sector by identifying and alleviating bottlenecks and promoting market reforms.

Adam Smith International, Dfid’s implementing partner, first identified a number of constraints which undermined the ability of Malawi’s cotton sector to deliver economic growth and poverty reduction. Among the most important was a lack of knowledge in producing quality cotton and coordination between key market actors. The three key actors in this failing market were seed companies, farmers and cotton processors; farmers were suffering low yields due to wasted and poor quality seeds, whilst seed companies and processors faced reduced profits.

Most seeds are wasted due to poor seed quality, weak farming techniques, inadequate storage methods and or lack of irrigation. Suppliers tend to invest in imported cotton products, rather than quality seeds. By facilitating dialogue on better farming techniques and getting companies to invest in cultivating and increasing seed quality, the wastage of cotton seeds in Malawi reduced by 30%. Due to more demand, over 14,000 farmers also increased their revenue. Seed companies no longer have to rely on expensive imports, cotton farmers have better access to quality seed and producers will benefit from increased quality and volume of cotton production.

What is perhaps most interesting about this project is that the results achieved did not rely on committing large amounts of funds. Instead, a relatively small investment to increase dialogue and persuading companies to transfer skills and knowledge on better farming practices, such as storing techniques, will help see the sector flourish.

This is a strong example of how poverty reduction can be delivered by using facilitation techniques embedded in market development, rather than relying on traditional direct delivery of pre-defined solutions or grant financing.

Content produced by Adam Smith International

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