MARKET ANALYSIS

This Report presents the study findings of the Market Analysis for the Market Oriented Smallholder Horticulture Empowerment and Promotion (MA-SHEP) Project in Malawi. The study was commissioned by JICA and DAES. The market analysis study was undertaken to determine the market needs, market size, linkages, and competition for specific horticultural commodities. These commodities can be promoted and focused by horticultural farmers in the MA-SHEP target Districts. JICA, in conjunction with DAES recruited Creativity Entrepreneurs to conduct the Market Analysis Study. The study focussed on the project sites namely Salima, Nkhotakota, Mchinji, Dowa East, Dowa West, Ntchisi, Kasungu, Mzimba South, Mzimba North, Nkhatabay, Rumphi, Karonga and Chitipa.

The overall objective of the market analysis study was to provide an accurate assessment of existing and potential markets of the major targeted horticultural commodities with a high potential for a livelihood improvement in the target districts.

The study used a combination approach of quantitative and qualitative methods. An analysis of key documents and relevant data were analysed to build the background for the study. This was followed by field work. Horticultural farmers, both MASHEP and non-MASHEP were engaged in the in-depth quantitative interviews in all targeted districts. In addition, key informant interviews and focus group discussions were conducted with key sections of the community including traditional leaders, project staff and district agricultural officials. The following are the results found by the study:

Characteristics of the Sample
• A total of 967 respondents were interviewed in the household survey where 404 (44%) were males and 523 (56%) were females. Amongst the respondent, a total of 484 (52%) were part of MASHEP project while 443 (48%) were non-MASHEP individuals’ farmers.
• A total of 243 horticultural farmers from 26 EPAs took part in FGDs where 128 (52.7%) were males and 112 (47.3%) were females. Also, a total of 52 Key Informants were interviewed during the study.
• Majority (84%) of the households were male headed with an average of 6.7 people living in a household.
• The average size of land holding ranged from 1.2ha in Chitipa to 2ha in Kasungu and Ntchisi. The farmers reported cultivating almost all the land (81%) owned during the 2019/20 season.



Production and Productivity of Horticultural Commodities
• On average, horticulture farmers allocated to small pieces of farm land, both for winter (0.3ha) and rainfed (0.3ha).
• A total of 870 farmers cultivating horticultural crops during winter was almost three times the number of farmers (n=265) cultivating the crops during rainy season.
• Commonly cultivated crops included tomato (35%), leafy vegetables (35%), potatoes (35%), green maize (31%) and onions (30%). The popular crops in the rain season included green maize (24%), sweet potato (24%), cassava (22%), tomato (21%), potatoes (18%) and leafy vegetable (17%).
• Almost all districts grew Tomatoes. Other preferred crops were green maize (grown in 5 out of the 11 districts) and potatoes (grown in 4 out of the 11 districts), followed by onions, leafy vegetables, green peeper among others.
• Farmers had different reasons fostering their preferred horticultural crops as follows: they are on high demand, easy to sell, have a higher value compared to most field crops, good source of income, well adaptable to the ecology and cheaper to produce.
• Some crops such as cassava, bananas and plantains are staple food in the northern region of Malawi. Farmers also reported having considerable experience in cultivating some of the crops over the years.
• A distribution across 1580 responses showed that farmers had challenges in processing to change form of harvested products (33.2%), use of herbicide in some horticultural commodities (32.4%), pest and disease management (28.5%), marketing of their commodities (26.8%), Land preparation (24.5%), production decision (19.9%), harvesting (18.6%), planting patterns and methods (16.8%), sourcing planting materials (15.2%) and weeding (8.7%).
• The national productivity of tomatoes, bananas, cabbages, cassava, potatoes increased while that of Leafy Vegetables, water melons, green peas and spices was stagnant over the past decade.
Product and Market Analysis of Horticultural Commodities
• Horticultural commodities are sold directly at the farm gate to consumers and vendors. Sometimes farmers themselves takes their commodities to distance markets.
• The average distance to markets for crops like potatoes (12.3km), green beans (8.5km), sweet potatoes (7.5km) and onions (7.3km) was longer than crops like green maize (3.4km) and leafy vegetables (4.4km).
• The dominant approach for determining prices for all horticultural crops adopted by farmers was negotiating with buyers.
• Horticultural commodities mentioned in study are highly demanded both at local and national level as they are source of food and income.
• Most farmers (95%)  are not aware of any formal production, processing marketing standards as they just harvest their produce, clean and sort them without following any guide.
• Farmers (22%) indicated that they engaged in market linkages to allow them negotiate for better prices.
Viability and Profitability of Horticultural Commodities
• Cultivation of Tomato, Onion, and Bananas was viable and are highly profitable as they were demanded and supplied all year round.
• On the other hand water melon and garlic proved to be a viable enterprise were in other districts.
• The act of intermediaries entering into cheap contractual agreements with smallholder farmers forced farmers to oblige to sell their products at lower prices hence made profits.
• Transaction costs included, communication expenses, expense on security as the commodities are on transit, Security in storage at the market as the commodity awaits the market day.
Production and Marketing Constraints
These included:
• Lack of Storage Facilities in Markets and at Central Level
• Perishability and low Processing capacity of raw horticultural Produce.
• High cost of farm inputs
• Horticulture is lobour Intensive and demand some equipment to ease the pressure.
• Rain fed horticulture production competes with field crops for labour and other resources and sometimes suffer.
• Low access to loans.
• Weak Policies
• Poor production data system
• Obsolete production technology.
• Low participation of smallholder farmers in export markets
• Lack of specialized packaging and appropriate transportation modes.
• Coming of Covid-19 has led to scarcity of some inputs.
• Lack of contractual agreements
• Packaging options are very limited in Malawi
• Influx of imported horticultural products in some shops.
• Transport infrastructure
Conclusions
• The study exposed that production, processing and marketing of horticultural produce in Malawi is still underdeveloped despite some interventions that have taken place in the sector. Even though the horticultural products have the potential to contribute to household food security, and income and also economic growth, absence of policy and regulatory framework in the sector in general impedes the development of horticultural production, processing and Marketing.
• The absence of policy and regulatory frameworks seems to be the root cause of other weaknesses and constraints in the horticultural production.
• The study found that Tomatoes, Green Maize, Potatoes, Onions, Leafy Vegetables, Green Pepper, Bananas, Cabbage, Cassava, and Water Melons are the key high value crops for the study districts.
• The study has revealed that preference to produce crops was based on several variables which include: market availability, profitability, easy accessibility of the market, Access and availability of inputs (seeds, fertilizer pesticides and among others), amount of input, consumption, and degree of demand.
• Most of the selling is done at farm gate hence no requirement for sorting and grading, and most of the growers prefer selling as such since less work is required. However, there is a tradeoff between transport costs and lower prices. Selling the produce at the farm gate attracts prices that are lower than taking the produce to the local market where prices are relatively higher. But taking the produce to the market implies that there are transportation costs attached.
• Farmers are not aware of existing local and international markets standards. The also lack appropriate skills and facilities for storage, packaging and transportion of horticultural horticultural commodities. These skills and approaches are commodities specific and are handled.
• Lack of commodity aggregators. Most of the horticulture commodities are sold directly to consumers and middlemen who later take the commodities to major trading centers and cities respectively. This is unlike grains and cereals whereby there are agro-dealers aggregating the commodities.
Recommendations
• There is need to create an enabling policy and regulatory environment for the promotion,
production, processing and marketing horticultural products through a clear policy on
horticulture and its sub-sectors
• There is a need to promote the value chains for Tomatoes, Green Maize, Potatoes, Onions, Leafy Vegetables, Green Pepper, Bananas, Cabbage, Cassava, and Water Melons among the farmers in the study districts. These crops are preferred by the farmers and are also profitable.
• Farmers should be acquainted of existing local and international markets standards. Thereafter, they should be linked to well established markets. Additionally, farmers should know the processing and packaging requirements that meet the standards. This will add value to their horticultural commodities.
• There is need to improve the marketing infrastructure and access to the infrastructure through establishment of specialized markets (physical infrastructure) with necessary facilities for...