structure there is little incentive for the private sector to move maize around the country or to
 tore maize throughout the season. In the last year, this disincentive has been somewhat
 diminished by ADMARC's financial inability to enter the market to the extent it would like.
 However, although the situation is changing very rapidly, and more and more private traders are
ea entering the market, there is some way to go before Malawi has a competitive and efficient private
 0 z .,maize trade.

 S There has been concern expressed both by government and some sections of the donor
 community about the implications of this transitional state of the market for food security. There
 have been suggestions that the pace of reform is too fast, and that ADMARC has still an important
 social role to play. In other words, ADMARC should form part of a safety net qpprnach While
 not denying the importance of the role ADMARC has played in the past, the mission would put
 forward two observations.

 Firstly, for the very poorest section of the rural population. ADMARC's role appears to
 be marginal. Their main source of maize is own production. When that runs out, maize is .
 usually obtained directly through ganyu, i.e. in kind or through the barter of vegetableTffi7r
 maize. Cash incomes are very low, and when they are used to buy maize, this is often in very
 small amounts on local markets where the ADMARC price is only an indirect influence. Of
 course, many more smallholders are net consumers of maize, and will be adversely affected by
 higher maize prices and scarce supplies on the market. However, maintenance of the current
 ADMARC structure is a very costly way to implement a safety net programme, and is likely to
 have little direct effect on the very poorest.

 Secondly, as has been stated many times already, the food security problem is one of
 household income. Certainly this is affected by the level of maize prices, but if it is felt that this
 is a sufficiently important factor to warrant intervention, it should take the form nf a targeted AJ
 resource transfer, not a price intervention. If there are serious problems of local food availability
 in the transitional state of the market, the resource transfer could be in the form nf fnro e.g. food
 for work programs.

 The new government has shown strong commitment to poverty reduction, as evidenced
 in the launch of the Poverty Alleviation Programme in 1994. In conjunction with this, the World
 Bank is funding the Malawi Social Action Fund (MASAF) to the amount of $56 million over a.
 five year period. The overall objective of MASAF is to contribute towards poverty reduction
 through funding the creation of village level assets which will be directly beneficial to the _por",
 particularlyjn primary education, peripheral health services and safe water. The monitoring and
 assessment of this will be assisted by a Poverty Monitoring Support Facility. The MASAF
 project is long-term in nature. It will take time for community-level benefits to manifest
 themselves in increased incomes for poor households. Recognising this, the MASAF project also
 contains a public works component, targeted at poor and fnd-deficient areas in the country. This
 program, which is discussed at greater length in Annex G, is estimated to cost $19.47 million,
 of which $16.8 million is funded from the IDA loan.