An approach of Comparative Economic Advantage (CEA) was employed to evaluate the economic efficiency of the country’s resources in producing some crops: tobacco, paprika, macadamia, tea, cotton, hybrid and local maize, groundnuts, phaseolous beans and soyabeans. These crops were selected using a multiple objective table. The following is a list of objectives from which the research team’s scores were based: area covered by the crop, tolerance to drought, employment generation, contribution to nutrition, contribution to foreign income generation and value to land ratio. The crops were ranked based on the scores accorded and the top ten were selected for the study.
As part of the trade studies in eastern and southern Africa, this study was conducted to investigate the comparative economic advantage in agricultural trade and production. The study was aimed at achieving the following specific objectives:
• Evaluate the CEA of alternative agricultural production activities in the various agro-ecological zones, different technological levels and land tenure systems in Malawi;
• Analyze the potential impact of removing the existing price and policy distortions on the economic efficiency of the alternative productive uses of the country’s resources;
• Identify areas of policy, technology and institutional intervention to enhance economic efficiency and direct agricultural resources to their most productive uses; and
• Build the Malawi country data component needed for conducting the regional analysis of CEA and trade of agricultural commodities from southern Africa.
The study considered two levels of production technology: low input and high input technologies. Low input technology included smallholder farmers operating mainly under customary land tenure. High input
technology was comprised of large estates operating exclusively under leasehold or free hold land tenure system. The study utilized GIS to generate the agro-ecological zones for the various crops. The agro-ecological zones were placed in their respective Agricultural Development Divisions (ADD) to facilitate estimation of the domestic transport costs. Three major market nodes were identified: Blantyre in the south, Lilongwe in the center and Mzuzu in the north. The eight ADDs were thus linked to these market nodes based on their distance from a particular node.
It has been demonstrated in this study that most of the zones have a comparative advantage in production of most of the crops which were selected for study. In the areas of production, the following crops have exceptionally strong domestic resource cost ratios: cotton, paprika, macadamia, tobacco and groundnuts in all areas of production. These crops, with exception of tobacco which is now experiencing declining world demand due to the anti-smoking campaigns, need to be emphasized as the country’s major export crops. All these crops have a very strong demand on the world market and exceptionally attractive social prices (world market prices). Therefore, it would be worthy to invest in these commodities as a viable option to widen the export basket of the country.
There is a reasonable comparative economic advantage in the production of hybrid maize with domestic resource cost ratios ranging between 0.35 and 0.88; 0.42 and 0.76, growing under high and low input technological levels, respectively. However, the comparative advantage in hybrid maize production is lost in zones far from the exit/entry port, i.e., Nacala, due to huge transportation costs borne in those areas. There is no comparative advantage in local maize and soyabean production in most zones. Only Ngabu has a comparative advantage in soyabeans produced as an export crop. Lack of comparative advantage in these crops are traced from low world market prices, especially for soyabeans, and low productivity (yield per hectare) on the world market