Cynthia Kazembe

Can cooperatives commercialize farming in Malawi?

Smallholder farmers constitute the largest group of economic actors in Malawi and there is increasing recognition that the small scale at which they operate does not offer for most a pathway out of poverty, let alone to prosperity. Increasingly the idea is gaining traction that by joining forces through primary agricultural cooperatives, smallholder farmers across Malawi can reap many of the benefits that larger farmers on commercial estates have been able to realize, such as  negotiating better price for agricultural inputs through bulk purchases;  negotiating better prices for agricultural outputs through aggregation and storage;  adding value to raw agricultural products;  accessing professional equipment, such as tractors or irrigation;  hiring professional services, such as a farm or business manager; or  pooling contiguous pieces of land for more efficient farming. In this brief we summarize the findings of a detailed report (Davis et al., 2022) on research conducted to assess the current status of cooperatives in the country and what project implementers and policymakers can do to enable cooperatives to contribute to increased commercialization and professionalization of smallholder farming in Malawi.

Primary agricultural cooperatives in Malawi: Structure, conduct, and performance

Primary agricultural cooperatives in Malawi, in contrast to other farmer-level organizations, have legal status and can own assets, borrow money for their operations, and sign contracts, making it easier for them to do business for the profit of their members. Conceptually, such cooperatives enable their member-farmers to achieve economies of scale for their commercial activities. By joining together in a cooperative, members can obtain commercial inputs at lower prices closer to wholesale prices than if they purchased the inputs as individuals. In selling their output, by aggregating their crops and other products into larger lots that the cooperative then negotiates to sell on their behalf, buyers can achieve greater efficiency in buying from them and can be expected to offer a premium over the prices that they would offer farmers selling those products individually. Cooperatives can also serve farmers in providing an important channel for obtaining information and advice to increase their productivity and the profitability of their farming. Moreover, by joining together to achieve common objectives in primary agricultural cooperatives, member-farmers can exercise greater influence on local and national policy issues of concern to them, while also building social cohesion, solidarity, and trust within their communities.

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