Quantitative Value Chain Analysis : An Application to Malawi

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.

Bibliographic Details

Main Authors:	Tchale, Hardwick, Keyser, John
Language:	English
Published:	2010-03-01
Subjects:	ACTUAL YIELDS, AGRICULTURAL COMMODITIES, AGRICULTURAL DEVELOPMENT, AGRICULTURAL ECONOMIST, AGRICULTURAL EXPORTS, AGRICULTURAL INPUTS, AGRICULTURAL OUTPUT, AGRICULTURAL PRODUCTION, AGRICULTURAL PRODUCTIVITY, AGRICULTURAL RESEARCH, AGRICULTURAL SECTOR, AGRICULTURAL SECTOR PERFORMANCE, AGRICULTURAL TECHNOLOGIES, AGRICULTURAL VALUE, AGRICULTURE, ANNUAL CROP, ARABLE LAND, AUCTION, BALING, BENCHMARK, BENCHMARKS, BOTTLENECKS, CASH CROPS, CASSAVA, CEREALS, CLIMATE, CLIMATE CHANGE, COARSE GRAINS, COFFEE, COMMERCIAL AGRICULTURE, COMMERCIAL FARMERS, COMMERCIAL SEED, COMMODITY, COMMODITY PRICES, COMPETITIVE ADVANTAGE, COMPETITIVENESS, CONGESTION, CONSERVATION FARMING, CONSUMERS, CONTRACT FARMING, CONTRACT FARMING ARRANGEMENTS, COOPERATIVE MARKETING, COST OF TRANSPORT, COTTON, COTTON PRICE, COTTON PRICES, COTTON PRODUCTION, COTTON SECTOR, COTTON YIELDS, COTTONSEED, COUPONS, CROP, CROP RESEARCH, CROP VARIETIES, CROP YIELDS, CROPPING, CROPPING PATTERNS, DECISION MAKING, DOMESTIC FOOD, DOMESTIC MARKETS, DOMESTIC TRANSPORT, ECONOMIC RATE OF RETURN, EXCISE DUTY, EXPENDITURE, EXPORT GROWTH, EXPORT MARKET, EXPORT MARKETS, FAO, FARM, FARM HOUSEHOLD, FARM INCOME, FARM MANAGEMENT, FARM PRODUCTION, FARMER, FARMER DECISION MAKING, FARMER GROUPS, FARMER INCOMES, FARMERS, FARMING, FARMS, FERTILIZER, FERTILIZER APPLICATION, FERTILIZER SUBSIDY, FERTILIZER USE, FINANCIAL CRISIS, FISCAL POLICY, FOOD BASKET, FOOD CROP, FOOD CROPS, FOOD PRICES, FOOD PRODUCTION, FOOD REQUIREMENT, FOOD SECURITY, FOOD SELF-SUFFICIENCY, FOOD SURPLUSES, FOUNDATION SEED, FREIGHT, FREIGHT COSTS, FUEL, FUEL PRICE, FUEL PRICES, FUEL TAX, FUEL TAXES, GDP, GRAIN, GROSS MARGIN, HERBICIDES, HIGH TRANSPORT, HYBRID RICE, HYBRID SEED, INFLATION, INPUT PRICES, INTERNATIONAL MARKET, INTERNATIONAL MARKETS, INTERNATIONAL TRANSPORT, IRRIGATION COSTS, LABOR COSTS, LABOR FORCE, LAND TRANSPORT, MAIZE, MAIZE PRODUCTION, MAIZE YIELDS, MARKET PRICE, MARKETING, MERCHANDISE, MERCHANDISE EXPORTS, MILLET, MINISTRY OF TRANSPORT, OPPORTUNITY COST, OVERHEAD COSTS, PADDY, PER CAPITA INCOME, PLANTING, POOR FARMERS, POOR HOUSEHOLDS, POTATOES, PRICE COMPARISON, PRICE INCREASE, PRICE LEVELS, PRICE TRENDS, PRODUCE, PRODUCER PRICE, PRODUCER PRICES, PRODUCTION COST, PRODUCTION COSTS, PROFIT MARGINS, PROFITABILITY, PUBLIC PARTNERSHIPS, PULSES, PURCHASE PRICE, REAL GDP, RETAIL, RETAIL PRICE, RICE BRAN, RICE PRODUCTION, RICE VARIETIES, ROAD, ROUTES, SALE, SALES, SEED, SEED COMPANIES, SEED COTTON, SEED MULTIPLICATION, SEED PRODUCTION, SMALL FARMER, SMALL FARMERS, SMALL-SCALE FARMERS, SOIL TYPE, SORGHUM, SUBSTITUTE, SUBSTITUTES, SUBSTITUTION, SUGAR, SUPPLIER, SUPPLY CHAIN, SUPPLY CHAIN MANAGEMENT, SUPPLY CHAINS, SURPLUS, SURPLUSES, TAX, TAX REVENUE, TEA, TOBACCO, TOTAL COSTS, TRADE COMPETITIVENESS, TRADE POLICY, TRANSPARENCY, TRANSPORT, TRANSPORT COSTS, TRANSPORT RATES, TRANSPORT SYSTEM, TRANSPORTATION, TRANSPORTATION COSTS, TRANSPORTS, TRUCKS, TUBERS, VALUE ADDED, VARIABLE COSTS, VEHICLE, VOLATILITY, WAREHOUSE, WAREHOUSES, WEED CONTROL, WHEAT, WHOLESALE PRICE, WHOLESALER,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100322091715 https://hdl.handle.net/10986/3730
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