The Malawi rice market
Malawi has been producing rice for more than 40 years, encouraged by the appropriate weather conditions and supportive government policies. In the past, with organised producers and state assisted marketing systems, Malawi was renowned as a supplier of rice to the Southern African region. The unique, consumer-acclaimed, aromatic qualities of some Malawi varieties were well known and appreciated. However, in recent years, Malawi rice has lost market share in the region and been eclipsed by cheaper East Asian products.
Formal rice exports have of late been dwindling to be almost insignificant; however, informal exports remain significant, especially from the Northern Region. Some 3,107 MT of rice were exported informally in 2011 (FEWSNET), of which 71 percent was to Tanzania through the border posts of Songwe and Mbirima from Karonga and Chitipa Districts. Formal exports on the other hand fell from 4,700 MT in 2007 to 1,283 MT in 2011 (FAOSTAT, 2014). There are no statistics of either formal or informal exports beyond 2011, but the major exporters contacted by BIF have indicated that they no longer export for various reasons, the main one cited as being outcompeted on price by rival products, mainly from East Asia.
The price difference between Malawi and Asian imported rice is attributed to low productivity by Malawian smallholders. Smallholders demand a high price to offset their low productivity and relatively high unit cost of production. The low productivity is mainly due to use of recycled seed, poor agronomic practices and lack of investment in other inputs and appropriate technology. The Government also weighs in with a recommended price that is usually well above competing paddy prices across the world which encourages smallholders to ask for high prices rather than to focus more on improving productivity.
Exporters cite an unpredictable and volatile exchange rate as another constraint hampering exports. High transport costs and other weaknesses in the market system have also contributed to low net income for the poor. In the rice market, the poor are mainly producers, small-scale traders / vendors and consumers. Alongside this research, BIF is pursuing interventions that aim to increase productivity with the goal of enabling more competitive paddy prices and more net income for the poor.
The purpose of the report
In order to ensure that heightened productivity does not result in a price decrease due to the increased supply, it is important to ensure that processors and/or exporters of Malawian rice are both aware of and exploit opportunities to command a higher price for their products. Therefore, this report is aimed at assisting Malawian rice processors with market information that can help them re-gain a foothold in regional markets, whilst assessing the potential for Malawi rice in Zambia, Zimbabwe and South Africa. The information gathered will include the general structure of the market in terms of product requirements, packaging, distribution channels, promotional methods and pricing. Such information is vital to the formulation of viable export strategies to tackle market competitiveness issues, helping expand the market for Malawian rice.