First release: August 27, 2021
Retail prices for commonly used fertilizers have risen 60-75% in Malawi versus one year ago, threatening the Government's planned level of support via the Agricultural Inputs Program and adding to farmers' burdens. In this brief we examine the root causes driving up fertilizer prices. We estimate at least 90% of the increases can be attributed to changes in global markets for food, fuel, and fertilizer. We explain why we believe the fertilizer price surge is most likely a temporary phenomenon but one that will not recede before the upcoming agricultural season. We outline near-term and longer-term options we believe are feasible to distribute the burden of high prices and reduce Malawi's vulnerability going forward. We also highlight some options - such as circumventing the private sector - that are not likely to succeed given global nature of price drivers.