goods to markets thus limiting entry into the market by traders and transporters. Regulated
transportation rates limit entry into the sector resulting in monopolistic behavior and excessive
transportation costs. Restriction on export of maize results in revenue loss to government
through illegal border trade and both lower, prices to producers and higher prices to consumers
than would be the case with more open cross-border markets.

 The manner in which the so called free inputs part of the Drought Recovery Program was
implemented is another example of how programs intervene in markets rather than use them. By
giving out predetermined packages of fertilizer and seed primarily through ADMARC, the input
program retarded the development of the private input market. The extent of this distortion is
now being studied, but preliminary data indicate that the program was a significant blow to the
private seed market and was non-supportive of the fertilizer market. To be fair, it should be noted
that this free input program was created at the last minute in response to what was perceived as
an emergency situation. In situations of urgency the governmental response is to fall back onto
traditional methods of implementation and intervene directly into the market. As long as this sort
of reaction occurs, market development is going to be delayed.

 This does not mean that there is not a legitimate role for government in the food security
area. A laissez faire approach to markets is not the answer to Malawi's food security problems.
As seen in Section 1.2.4, there is an essential role for government in facilitating the market. In
addition, government has to protect those in society who cannot protect themselves.

 Market intervention by government is a role that for many policy makers is a traditional
and comfortable one that satisfies a perceived duty of government. Such intervention also can be
pointed to as helping, in the short term, vulnerable sections of the society. In the past markets
could play only a very limited role in the society and that only for a selected segment. Today,
markets and market mechanisms are a viable and important tool for government in achieving
policy objectives. The old approach, which never was valid, is no longer necessary. Market
intervention by the state is not sustainable and is dependent, ultimately, on donor financial
support. This donor support, in turn, bolsters donor dependence. Even worse, continual
government intervention into the market perpetuates an inefficient economic structure with
distorted allocation of resources.

5.2 Encourage Market Development

 Within the context of solving chronic food insecurity within a market economy, three
priorities stand out markets, exchange mechanisms, and technology. Markets are the
foundation of this approach. Exchange mechanisms both facilitate market development and allow
specialization in the economy which, in turn, leads to productivity growth. Technology is the
fuel that makes this whole system work.

 The basic premise of this report is that chronic food insecurity can be solved only through
increasing productivity and through growth of the national economy. The answer to food