# **6. Conclusion and policy recommendations**

The analysis in this study suggests that export bans are associated with lower domestic prices in Malawi as well as lower relative prices and reduced seasonality in prices after accounting for harvest levels. A 10 kg per capita increase in harvest, for example, is associated with a 6 percent decrease in domestic maize prices during a period of an export ban, compared to the response of prices for a comparable increase in harvest during a period without an export ban. Similarly, a 10 kg per capita increase in harvest is associated with 0.68 pp decrease in price dispersion (that is, decrease relative price in Malawi) between a market in Malawi and a market across the border when there is an export ban, compared to a period with no export ban. Export bans are also associated with lower seasonality in prices.

A static welfare analysis shows that, because the majority of Malawians are net-buyers of maize, lower maize prices associated with the export bans could lead to a small welfare gain in the short-term, especially for the net-buyers. In the short run, welfare gains from low maize prices are estimated to be equivalent to 0.8 percent of household consumption. The gains also accrue mostly to the poor and net-buyers. Even though net-buyers enjoyed benefits equivalent to 1.1 percent of their consumption, the net-seller farmers experienced a welfare loss of 0.9 percent of their consumption. The poverty reduction impact of an export ban is also limited. In addition, these short-term gains and losses do not account for dynamic investment decisions by farmers.

These gains might not materialize in the long-run when bans remain imposed over an extended period, and accordingly, producers adjust their production decisions. The short-term gains could dissipate when surplus farmers, dissatisfied with market outcomes, reduce their effort to produce maize for the market. Therefore, the first and minimum policy actions that could help attenuate the adverse impacts of export bans on net producers is to make the policy actions predictable. Export bans depress prices further during periods of good harvest. Policymakers should make export ban imposition and lifting decisions more transparent and responsive to harvest conditions. Clearer rules surrounding restrictions on maize exports could reduce some of the uncertainties that presently starve the agriculture sector of investment. This would encourage investment by farmers to boost food production and productivity.

A second key policy action that could support surplus farmers as well as protect consumers without compromising long-term investment in agriculture is enhancing the bargaining power of smallholder farmers. Strengthening the position of small farmers relative to traders could raise farm incomes and reduce rural poverty. This could partly be achieved by improving farmers’ access to production, price, and market information, all of which enable farmers to get the best price for their crop and reduce the risk of exploitation by traders. Associations and cooperatives of producers could be strengthened to increase the bargaining power of smallholders.

A third, rather long-term policy intervention, is increased investment in accessible rural infrastructure such as transport, storage, and processing facilities. Such investment would support farmers and lower production and marketing costs—by enabling them to take advantage of seasonal variations in prices. One of the reasons why farmers currently sell the entirety of their crop immediately after the harvest when food is plentiful, and prices are at their lowest is a lack of warehouses where crops can be stored without incurring significant post-harvest losses. Warehouse-receipt schemes that allow farmers to store their surplus and 27