ABSTRACT

During the course of the Bank modelling mission to Malawi, the Malawi Government requested that the team develop a reduced-form version of the model to be programmed and run on Ministry of Agriculture Planning Division's microcomputers. The resulting reduced-form model covered only the smallholder sub-sector and incorporated five principal crops - maize, tobacco, cotton, groundnuts and rice and one input - fertiliser. The net budgetary effects of the various policy scenarios are the combined result of policy impact on Agricultural Development and Marketing Corporation's (ADMARC's) net cash flow and the net cash flow of the Smallholder Fertiliser Revolving Fund (SFRF). The cost of zero compliance and higher maize production, however, not only takes the form of deterioration in ADMARC's and the SFRF's cash flow, and lower smallholder income levels in latter years, but also lower production of smallholder exportable cash crops.