The Agricultural Development and Marketing Corporation, usually known as ADMARC, was formed in Malawi in 1978 as a government-owned corporation or parastatal to promote the Malawian economy by increasing the volume and quality of its agricultural exports, to develop new foreign markets for the consumption of Malawian agricultural produce and to support Malawi's farmers. It was the successor of a number of separate marketing boards of the colonial-era and early post-colonial times, whose functions were as much about controlling African smallholders or generating government revenues as promoting agricultural development. At its foundation, ADMARC was given the power to finance the economic development of any public or private organisation, agricultural or not.
In its first decade of operation, ADMARC was considered to be more business-like and less bureaucratic than similar parastatal bodies in other African nations, but from its formation it was involved in the diversion of resources from smallholder farming to tobacco estates, often owned by members of the ruling elite. This led to corruption, abuse of office and inefficiency in ADMARC and, as the result of declining world tobacco prices, it had become insolvent by 1985. To obtain World Bank loans, ADMARC had to be partially privatised, but the neo-liberal economic policies imposed on it by the World Bank forced it to cut fertilizer subsidies, which contributed to severe food shortages in Malawi in 1992. Following the 1992 shortages, international aid donors demanded a return to multi-party politics by 1994, and President Banda, who had ruled since 1964, was peacefully removed from office during this transition.
In the aftermath of these imposed changes, ADMARC's role was reduced to that of a buyer of last resort and to promoting food security by maintaining a strategic reserve of maize, to be created through domestic and foreign purchases. In 1996, the World Bank again intervened, criticising ADMARC's import of maize as an unjustified subsidy, and requiring it to give up control of grain imports. ADMARC's record of promoting food security and maintaining a strategic reserve from domestic purchases after 1996 was patchy: its intervention prevented a famine in 1998, but financial pressures in 2000 and 2001 forced it to sell much of its maize reserves just before a poor harvest in 2002, resulting in food shortages and famine. A third round of World Bank intervention in 2002 forced ADMARC to reduce its financial losses by reducing its trading operations and to allow private sector competition. This market liberalisation had mixed results: ADMARC survived in a changed form, and by 2009 it was growing again. In 2003, ADMARC's legal form ceased to be that of a parastatal corporation following the repeal of the legislation that created it as such, becoming a limited liability company, and it still exists because it has not been possible to create a comprehensive private-sector marketing system. However, ADMARC is criticised by donors as inefficient, wasteful and not sufficiently independent of government control.
Forerunners of ADMARC
From the 1920s to 1951 The two forms of colonial-era produce marketing boards had different aims. Some, as in the Rhodesias, supported white commercial farmers; others as in Nyasaland and Tanganyika controlled African smallholders and restricted competition between them and white settlers.T S Jayne, S Jones and Others, (1997). Maize Marketing and Pricing Policy in Eastern and Southern Africa, p. 217. The declared objectives of Nyasaland's colonial legislation on the production, control and marketing of economic crops were to increase the quantity and improve the quality of these crops, and to stabilise the income of farmers through periods of price fluctuation. Restrictions were imposed on the number of growers and their output to improve produce quality, and to match production to market demand. This was done by registering growers and refusing to register those deemed unsuitable, fixing producer prices, licensing buyers and exporters and establishing commodity boards, which often had exclusive responsibility for controlling the production and marketing, initially of individual crops. For most of the colonial period, statutory interference in the production and marketing of the crops grown on European-owned estate was kept to a minimum, and controls in the estate production if tea and tobacco were introduced at the request, or with the consent, of the settler associations responsible for these crops.C Ng'ong'ola, (1986), Malawi's Agricultural Economy and the Evolution of Legislation on the Production and Marketing of Peasant Economic Crops, p. 241. The use of marketing controls allowed the Nyasaland government to increase its revenues by offering smallholders prices that were lower than prevailing world market prices. The colonial state also indirectly taxed the smallholders by retaining a significant part of the profits of sale from their produce. Market regulations were extended to food crops after the Second World War and, by the mid-1950s, marketing boards controlled the buying and sale of most African smallholder produce.E Green, (2007). Modern Agricultural History in Malawi: Perspectives on Policy-Choice Explanations, p. 121.
Regulations introduced for Tobacco in 1926 and Cotton in 1934 required the registration of African peasant growers on Native Trust Land; the first also created the Native Tobacco Board (NTB). Settler demands for the regulation of the peasant tobacco and cotton sectors were partly motivated by fears that profitable smallholder farming could reduce the availability of cheap African labour for their estates. The Nyasaland administration did not encourage independent peasant tobacco production in the Southern Province, where most settler estates were located, and it allowed the Native Tobacco Board to operate in a way that preserved and promoted settler tobacco interests there.C Ng'ong'ola, (1986), Malawi's Agricultural Economy and the Evolution of Legislation on the Production and Marketing of Peasant Economic Crops, p. 248. The formation of the Native Tobacco Board did stimulate African production in the Central Region, but registered growers paid heavily for its operations. At first, the Board charged African growers a levy of thirty pence a hundred pounds of tobacco, 10% of the price it paid them. In 1930, this was raised to one third of the price paid to meet increased administrative costs. In the Second World War and after the Board more than recovered its costs while it underpaid growers, retaining between 25% and 35% of the auction prices it obtained to meet costs equal to only 15% to 20% of those prices. In 1930-1931, the Native Tobacco Board had 29,515 registered growers in the Central Region, where it purchased 4.9 million pounds of tobacco. The number of growers varied with demand until the Second World War when it expanded markedly. The Board had fewer growers in the Southern Province, partly because of European growers’ opposition, although the climate in that province was also less suitable.J McCracken, (1984). Share-Cropping in Malawi: The Visiting Tenant System in the Central Province c. 1920-1968, p. 36. The Native Tobacco Board (later renamed the African Tobacco Board) limited tobacco growing by smallholders by imposing heavy dues until demand and prices rose after the war, when these levies became proportionately lower.J McCracken, (1984). Share-Cropping in Malawi: The Visiting Tenant System in the Central Province c. 1920-1968, pp. 37-8.
Compared with the Rhodesias, Nyasaland in the 1940s lacked a developed system for producing and distributing food surpluses. Its estates did not grow food commercially for local consumption, as towns were few and small, and transport was limited and expensive. It was left to the African smallholders to supply the domestic markets locally.E C Mandala, (2006) Feeding and Fleecing the Native: How the Nyasaland Transport System distorted a New Food Market, 1890s to 1920s, pp. 50, 513-4. Commercial maize growing in Malawi was not feasible without government support, but its Maize Control Board did little to promote smallholder maize growing and it aimed to create a market of less than 5% of the estimated annual crop.J McCracken, (1984). Share-Cropping in Malawi: The Visiting Tenant System in the Central Province c. 1920-1968, pp. 43-4.
The Maize Control Board (MCB) formed in 1947 was supposed to ensure that Malawi's maize supplies were maintained and to guarantee minimum prices to farmers. It was given wide powers of control over maize marketing, but as maize could be grown or almost anywhere, its objectives were unattainable with the limited organisation it had.C Ng'ong'ola, (1986), Malawi's Agricultural Economy and the Evolution of Legislation on the Production and Marketing of Peasant Economic Crops, pp. 251-2. The MCB was hampered by lack of funds; it was reluctant to promote higher maize production for the local market on grounds of cost, and up to 1949 it also discouraged growing for export. To cover the cost of a country-wide network, the Board fixed a very low buying price and sold maize at double this price. The low prices that the MCB paid in the period 1945-1951 discouraged farmers from growing maize in excess of their own requirements, and inhibited the development of commercial grain markets. By paying the same price in remote areas as in accessible ones and by maintaining price floors in years of surplus, the MCB hoped to create grain reserves. However, as it paid only a penny for two to three pounds of maize against a market price of at least a penny a pound, growers lacked any incentive to produce for it and withheld their surpluses from the board's markets. The quantities of maize available for the home market dropped significantly at a time of growing demand caused by poor harvests in the run up to the major famine in 1949.T S Jayne, S Jones and Others, (1997). Maize Marketing and Pricing Policy in Eastern and Southern Africa, p. 217.M Vaughan, (1987). The Story of an African Famine: Gender and Famine in Twentieth-Century Malawi, Cambridge University Press, pp. 92-3, 95-7.
After the 1949 famine, the MCB promoted maize production and exports, but when world prices fell in the 1950s, it abandoned the import and export trade, and the Nyasaland administration discouraged maize production in agriculturally unsuitable areas. By 1960, government intervention in maize marketing was limited to purchasing sufficient maize for the government's own use and for a small food reserve. The deregulation of maize marketing was later extended to other types of food produce in 1959.C Ng'ong'ola, (1986), Malawi's Agricultural Economy and the Evolution of Legislation on the Production and Marketing of Peasant Economic Crops, p. 252.
The late Colonial and post-Colonial periods