VZCZCXRO0868
RR RUEHDU RUEHJO RUEHMR
DE RUEHLG #1062/01 3540944
ZNR UUUUU ZZH
R 200944Z DEC 05
FM AMEMBASSY LILONGWE
TO RUEHC/SECSTATE WASHDC 2140
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY

UNCLAS SECTION 01 OF 02 LILONGWE 001062 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
FOR AF/S (MALONEY) 
USAID FOR DCHA/FFP DWORKEN, ANDERSON, 
MUTAMBA, PETERSEN 
USAID FOR DCHA/OFDA ISAACS, GOTTLIEB, 
MARX, PRATT 
USAID FOR AFR/SA LOKEN, COPSON 
PRETORIA FOR DISKIN, HALE, SINK, AND 
USDA/REYNOLDS 
 
E.O. 12958: N/A 
TAGS: EAID ECON EAGR PGOV MI
 
SUBJECT: RE-ENERGIZED MUTHARIKA LAUNCHES IRRIGATION DRIVE 
 
 
¶1. (U) Summary: Fresh from his party's by-election victory, a 
newly confident President Mutharika has launched a major GOM 
initiative to expand irrigation and improve food security.  In 
a wide-ranging donor briefing on December 16, the president 
talked of plans for commercial farming, new dams and 
irrigation projects, extension services, and crop diversity. 
Although some of the proposed plans are unrealistic given 
current donor funding, the basic ideas are sound.  The 
initiative's success will depend on whether the GOM provides 
proper incentives to stimulate private sector production, or 
reverts to past command-economy practices of heavy government 
intervention.  End summary. 
 
Confident President Taking Action 
--------------------------------- 
 
¶2. (U) Visibly energized after his party's sweeping victory in 
recent parliamentary by-elections, President Mutharika called 
together donor heads of mission and his entire cabinet on 
December 16 for a lengthy briefing on irrigation and food 
security.  Stating his determination to end Malawi's chronic 
food security, the president announced a new action plan to 
promote irrigation and reform the agricultural sector. 
 
¶3. (U) Following several months of personal visits to rural 
communities and a review of agricultural policies, Mutharika 
said that he had reached several conclusions.  The first is 
that Malawi's economy will rely heavily on agriculture in the 
medium term, as the country has no other serious prospects for 
export-oriented sectors.  Rain-fed agriculture, however, is 
not sufficient to meet the country's needs, and he advocates a 
major shift to irrigation, to produce "a minimum of two crops 
per year."  The president asserted that Malawi has some 
400,000 hectares of arable land, of which only a third is 
currently under cultivation.  Acknowledging that most of the 
country's farmers are inefficient smallholders, Mutharika said 
that the country would never achieve food security if it did 
not encourage large-scale commercial farming and begin 
producing marketable surpluses.  He posited that Malawi at one 
time possessed some large commercial and prison farms, which 
proved that large-scale agriculture is feasible.  He went on 
promise that the GOM would re-open all of its agricultural 
research stations and made a pitch for donors to fund new 
grain storage facilities in all four regions of the country. 
He emphasized the importance of building new dams, improving 
farm-to-market roads, and bolstering agricultural marketing. 
Above all, he said, Malawians must have a "change of mindset" 
toward agriculture, both in terms of what foods they prefer to 
eat and how those foods are produced. 
 
Pie-in-the-sky Projects 
----------------------- 
 
¶4. (U) The Ministers of Irrigation and Agriculture both made 
lengthy presentations further detailing the president's 
remarks.  The irrigation minister read out proposed irrigation 
projects that total a whopping $3.1 billion, including eight 
projects that are already funded at approximately $57 million. 
In a more down-to-earth presentation, the agriculture minister 
spoke of the need to revitalize extension services, diversify 
cash crops, improve grain storage, encourage production of 
dairy and fisheries, and prompt Malawians to eat foods other 
than maize. 
 
Looking for Good Ideas 
---------------------- 
 
¶5. (SBU) Charge, World Bank country manager and EU ambassador 
dined with the president at a luncheon following the meeting, 
and discussed the proposals further.  All three envoys 
strongly advocated the need for market-based policies that are 
friendly to private sector-led growth.  The president was 
receptive to all comments, and seemed open to any good ideas 
that would achieve his overall goals of improving food 
security.  He again spoke passionately of the need to change 
mindsets, particularly for diversifying the Malawian diet away 
from maize. 
 
Good Intentions, but Will Policies Change? 
------------------------------------------ 
 
¶6. (SBU) Comment: With a by-election victory under his belt, 
 
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Mutharika is clearly feeling more self-assured politically and 
ready to launch a major new policy initiative after months of 
political paralysis.  While this proposal is quite safe 
politically, it is encouraging to see Mutharika once again 
actively pushing a reform agenda.  Many of the proposals are 
fanciful given current levels of donor support, but most of 
his prescriptions involve reasonable and legitimate functions 
for government in assisting the sector.  Absent from the 
discussion was any new grand scheme for massive input 
subsidies, such as that advocated by UN special envoy Jeffrey 
Sachs. 
 
¶7. (SBU) It is unclear whether the GOM understands the market 
incentives necessary to stimulate large scale commercial 
farming, particularly in maize production.  Both the president 
and agriculture minister made comments to the effect that 
government should guarantee a market for crops and buy 
farmers' produce.  Such government intervention in pricing has 
played a major role in distorting Malawi's agricultural 
markets up to now. 
 
¶8. (SBU) Other the other hand, if the GOM does understand what 
market reforms are needed, the Malawi public may not be ready 
for the changes necessary to make agriculture truly 
productive.  The head of British aid agency DFID was booed by 
cabinet members during the meeting, when he suggested that the 
GOM abandon its current policy of subsidizing fertilizer and 
maize sold through government outlets.  Malawians consider 
cheap fertilizer and maize to be an entitlement, and 
politicians touch them at their peril.  If Mutharika is 
determined to change mindsets, the biggest change will likely 
need to be among government policymakers themselves. 
GILMOUR