First release: May 31, 2021
Malawi is arguably the world’s most tobacco dependent economy, yet its future as a major tobacco producer is uncertain. We use nationally representative data, along with time series data on tobacco prices, we assessed the profitability of Malawian tobacco and its potential alternative crops such as groundnuts, soybeans, pigeon pea and maize. We find that that the percentage of smallholder farmers growing tobacco declined over the past 10 years from 16% in 2009/10 to 5% in 2018/19. We find that smallholder households who left tobacco cultivation shifted their land into maize cultivation and to a lesser extent groundnuts and soybean. However, for the 5% of households who remain in tobacco farming, the crop remains profitable compared to other alternatives such as maize and grain legumes. Our policy scenarios clearly indicate that it will be very expensive to induce the remaining 5% of households to move away from tobacco. Therefore, we suggest that improving value chains for other high value crops is more cost-effective than focusing on moving the remaining 5% of smallholder farmers out of tobacco cultivation.
A soya harvest - legumes are one possible alternatives to tobacco.