Agricultural subsidies in a political economy: Can collective action make smallholder agriculture contribute to development?

Malawi’s economy is heavily dependent on agriculture, of which a majority are smallholder farmers. With smallholder farmers constituting more than 80% of the population, the government’s policies have mainly focused on achieving redistribution goals of the society, minding less about the inefficiencies in smallholder farming. The current study assessed and compared the efficiency levels of large scale and small-scale farmers amidst huge government expenditures in agricultural subsidies on smallholder farmers. Through a SWOT analysis and literature review approach that dwelt much on the qualitative case study approach, the study found that it is only through attaining economies of scale that small farms can attain the efficiency levels of large-scale farms. Following this finding that large farmers are more efficient; the study proposes models that would mimic the behaviour of large farmers. In this study, we evaluated the strengths, weaknesses, opportunities and threats of various models proposed to improve efficiency of small farms. Three models were evaluated namely, contract farming, cooperative development and land consolidation models. These models were selected for review because the theory of collective action ensures that they mimic the farm behaviour of a large farmer. The paper recommends a hybrid of land consolidation model with selected elements of contract and cooperative development models.