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Commercialisation of Agro-business Enterprises in Malawi : An Analysis

Aston Oliver Mulwafu, Jayasree Krishnankutty and S. Krishnan

Abstract

Malawi is a small, developing country located in Southern Africa. Agriculture is the mainstay of its fragile economy, providing livelihood to 80 per cent of the population and generating 35 to 45 per cent of GDP. The rural poor, largely women are the players in informal sector in agriculture, as cultivators, vendors and buyers of agro-based products. The sector is informal in the sense that the units involved are mostly unregistered, not recorded in official statistics, and have little or no access to formal markets. The sector plays central function in addressing challenges of rampant unemployment and small incomes. This study was conducted to understand the commercialisation status of the informal sector farmers and identify the factors contributing to transition between different levels of commercialisation. The study was conducted in Balaka district and Ntcheu district in Malawi. Four local markets were purposively sampled considering the volume of agro-based businesses carried out. Thirty farmers involved in the informal sector were randomly selected from each of the markets as respondents, making a total sample size of 120 farmers. The computed household commercialisation index (HCI) revealed existence of three levels of commercialisation among respondents; subsistence, semi-commercial and commercial and also that the largest chunk was in subsistence level. Computation of crop commercialisation index (CCI) indicated that vegetables were the best option for commercialisation. Ranked second, third and forth were tubers, fruit and food grains in that order. Multinomial logistic regression revealed that credit facilities, farmer business orientation, innovativeness, commodity transportation, monthly income and information source utilization were the significant factors influencing the transition from subsistence to semi-commercial. Education and extension services were significant factors contributing to the transition from semi-commercial farming to commercial

Keyword: Informal sector; Income;Commercialisation; Food security;

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