Concern has been expressed about the availability of commodities on the private market,
particularly with increasing withdrawal of ADMARC. In the short run this may increase
transactions costs in particular for maize purchasers. It is difficult to estimate the extent to which
thin markets are currently a problem, as conditions are changing quite rapidly.

 In some parts of the country, increased smallholder production of burley tobacco has
increased the demand for casual agricultural labour. In time, this may bring about some upward
pressure on rural wage rates, though as yet there is little evidence of this.

 As with all major changes, there are likely to be winners and losers, though market
liberalisation is by no means a zero-sum game. In the medium term, most households should gain
from increased opportunities, but some households are likely to bear short-term costs.

 The only survey work which sheds direct light on this process is Peters' work in Zomba
(Peters 1992, 1993). The first study looked at changes in the study area between 1986/87 and
1990/91, during the initial period of market liberalisation.

 There had been an average real increase in household income of 26 percent over the
period, but the average masked substantial gains for the top income households and losses for low
income groups. There had been an increase in maize harvests of 48 percent on average. All
households except those cultivating under 0.5 hectares had made maize production gains through
increased use of fertilizer and hybrid maize. Tobacco growers had, on average, over 50 percent
higher income than non-tobacco households, though they also cultivated more land. Peters
describes the overall picture as one of increased income specialisation and differentiation.
However, households in the bottom 25 percent appeared to have had to increase their effort in
order to maintain their average supply of maize.

 A follow-up survey in 1993 showed there had been an explosion in burley tobacco
growing. Income from burley tobacco was increasing demand for local goods and services and
some households were using their tobacco savings to fund entry into petty trading. Some growers
were paying a quasi-rent to use a part of the dimba for the establishment of tobacco nurseries.
Thus the process of specialisation and differentiation was continuing.

 Care must be taken not to extrapolate too much from these studies to the present situation.
The sample of households studied were better-off than average for the area, because of the need
to have representation of tobacco-growing households. More importantly, relative prices have
changed dramatically since 1993, due to devaluation and input market liberalisation.

 Profiles of five smallholder households have been developed to show the impact that
changes in relative prices have had on different household types. These profiles are not
statistically representative, but have been developed to illustrate the main combinations of land
area and cropping pattern.


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