The impact of tobacco production liberalisation on smallholders in Malawi

This paper carries out an assessment of the impact of tobacco production liberalisation on smallholders in Malawi. It shows which smallholders began producing Burley tobacco after liberalisation and which smallholders still continue to produce it. <br /><br />The analysis shows that that only smallholders who had adequate farm size and adequate funds could start to produce the crop. With regard to the farm size requirements, only smallholders who had enough acreage to sell tobacco on the auction floors and who had enough acreage to rotate crops could start to produce. With regard to the financial requirements, only smallholders who could procure funds through informal institutions or who possessed their own capital to meet the necessary agricultural expenditures could start. Therefore, it was only the wealthy households which could start to produce tobacco after liberalisation and continue to produce it. <br /><br />Key points include that:<br /> Burley tobacco production by smallholders started in 1990, and the amount of production increased gradually until 1998. There are no formal statistics which show the change in the number of households which produce burley tobacco, but it is assumed from the amount of production that the number of households increased from 1990 to 1998 and then stagnated or decreased after 1998&nbsp; the profitability of burley tobacco production is very high, but as demonstrated by the analysis, not all smallholders started to produce it after liberalisation. According to the 1997 household survey, 22 percent of households produced it, and according to the 2004 survey, only 13 percent produced it&nbsp; after 1997, the price of tobacco decreased, so many households stopped producing tobacco. Only about 10 percent of smallholders continued to produce burley tobacco in 2004, and they were the wealthy households. <br />