Table 1. Political and Economic Changes In Malawi


Situation in 1985


One party, autocratic rule with limited political
freedom


Situation in 1995


Freely elected multi-party democracy


Centrally regulated smallholder sector with direct
state intervention, market based activity in estate
export sector only


Market-based economy for all crops except
maize, which has indirect state intervention to
stabilize its price


Development Policy


Smallholder sector used to subsidize investments
directed toward estate sector. Estate sector
expanding to capture lucrative export tobacco
market.


Movement toward redressing policy imbalance
between estate and smallholder sector while not
limiting overall economic growth


Economic Policy


All prices fixed and controlled by the state


Ethnic restrictions on areas of economic activity


All crop prices, except those for maize, fully
liberalized

Removal of all ethnic barriers on economic
activity


Agricultural Policy


Focus on maize as the primary food. Restrictions
on markets of all food and cash crops

Direct marketing of burley tobacco by estates
only. ADMARC cross subsidizes urban food
sales from smallholder tobacco monopsony and
other cash crops

State credit program dictates crop patterns for
smallholder


Growing focus on smallholder diversification
including drought resistant crops

Burley auction market opened to smallholder
clubs and intermediate buyers. ADMARC loses
tobacco monopsony for smallholders


Dynamic response of smallholders results in
flexible and diverse cropping patterns


Political


Economy