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Value chain analysis of Paprika and Bird's Eye Chillies in Malawi

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Author Info

  • Makoka, Donald
  • Chitika, Rollins
  • Simtowe, Franklin

Abstract

Total LandCare Malawi (TLC) is implementing a three-year USAID-funded Spice Promotion in Commercial Enterprises (SPICE) project in collaboration with NALI Limited and ASSNAP. The main aim of the project is to link small-scale spice producers to high-value markets and develop the competitiveness of bird’s eye chillies and paprika through commercial upgrading of the major players in their respective value chains. Under the SPICE project, TLC commissioned the paprika and bird’s eye chillies’ value chain study in February 2010 with the overall objective of providing technical guidance, professional expertise and knowledge on the current status of the paprika and bird’s eye chillies sector in Malawi and the prospects for value addition of the two crops in Malawi. The study covered Dowa, Dedza, Ntcheu, Salima, Nkhotakota, Nkhatabay, Mzimba and Thyolo districts. A value chain approach was used to identify the main players in paprika and bird’s eye chillies sub-sectors, the governance of the respective value chains, the vertical and horizontal linkages along the value chains and opportunities for value chain upgrading. A review of the different policies that relate to agriculture was also done to highlight the extent to which different policies promote or inhibit paprika and bird’s eye chillies production and marketing in Malawi. An analysis of the institutional framework was also conducted to determine the degree of coordination between different institutions in the paprika and bird’s eye chillies sub-sector. Among the major findings of the study, male farmers dominate the production of both paprika and bird’s eye chillies in Malawi and the two crops are largely sold to large-scale traders, most of whom are also exporters of the commodities. The smallholder farmers allocated relatively less land (18 percent) to paprika production in 2009/2010 season, compared to 40 percent of land to bird’s eye chillies. Although production is dominated by small-scale farmers, a number of commercial producers are also involved, such as Africa Invest Malawi. Some of the commercial producers are also engaged in out-grower schemes with the smallholder farmers. It was also observed that a large proportion of the farmers of both paprika and chillies access their seed through market-based sources. Among the major constraints facing the smallholder farmers is access to market information, especially as it relates to prices. Gross margins for bird’s eye chillies were found to be significantly higher (MK79,057/Ha) than that of paprika in the study areas (MK11,553/Ha). The Malawi paprika value chain has a number of actors. Paprika is mostly grown by smallholder producers, with Africa Invest Malawi being the only commercial producer. Apart from NALI LTD that buys fresh paprika as an ingredient into its Mango achar, most of the paprika is sold to large-scale traders/players as de-seeded pods. Most of the Malawi paprika is exported to spice manufacturing companies and brokers in South Africa. The brokers then export the product to Europe and USA, among other markets. The governance of the Malawi paprika value chain rests with the final buyers. In this buyer-driven chain, the quality demanded by the international buyers is enforced through prices. Similarly, the bird’s eye chilli value chain also has few players. The producers are mostly smallholder farmers, who sell their dry chillies to large-scale traders (Nali LTD, Africa Invest Malawi, Cheetah Malawi LTD, and Duconti Produce, among others). The large-scale traders export the commodity mostly to brokers in South Africa, and to end-users in Europe, the United Kingdom and others parts of the developed world. In this buyer-driven chain, prices are dictated by the final consumers. In order to improve the paprika and bird’s eye chillies sector in Malawi, there is an urgent need to substantially increase the production levels and the productivity of the two crops. Specifically, there is need to improve the paprika and bird’s eye chillies seed system; improve farmer’s agronomic practices through the provision of quality agricultural extension services and also improve the organization of farmers into groups. In order to improve marketing of the two commodities there is need to promote legally-binding contracts between producers and buyers, promote value-adding activities and processes so that different players experience value chain upgrading, promote domestic demand for chillies and paprika, promote vertical linkages among the buyers of paprika and chillies, and also improve the quality, timeliness and utilization of market information. On the policy front, there is an urgent need to develop a horticultural policy, as the sector is operating without a policy, an institutional framework or a legislative framework. It is expected that the three-year SPICE project will help the targeted farmers to address the major constraints and challenges highlighted in this report.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27785.

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Date of creation: 01 Jul 2010
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Handle: RePEc:pra:mprapa:27785

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Keywords: value chain analysis; paprika; bird's eye chillies; Malawi;

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