How U.S. policy on marketing tobacco overseas fell through the cracks in Malawi

Introduction

The economically impoverished country of Malawi in southern Africa is an example of what fell through the cracks in U.S. tobacco policy abroad.

One of the most underdeveloped countries in the world, Malawi had a long history of growing tobacco. But for years, production of the country’s most lucrative export was concentrated in the big estates of the country’s elite. The approximately 2 million smallholder farms (less than 2 hectares/5 acres), which account for most of Malawi’s agricultural land, were generally barred from growing and selling their own tobacco crops.

Restrictions on smallholder farms growing their own tobacco were lifted in the early 1990s. And after a new government was elected in 1994 – following Malawi’s first democratic elections in 30 years – smallholder production of burley, the easiest and relatively cheapest type of tobacco to grow, took off.

But U.S. officials in Malawi were worried that a post-election economic crisis threatened the country’s nascent democracy and urged, government documents show, that “significant steps be taken to increase incomes, especially in rural areas.”

So in 1995, the U.S. Agency for International Development began implementing a five-year plan, whose “Strategic Objective Number One: Increased agricultural incomes on a per capita basis” included the goal of increasing the share of burley tobacco produced by smallholder farms from zero in 1990 to 40% in the year 2000. Other goals included raising real per capita incomes for smallholder tobacco producers from $153 in 1991 to $278 by 2000 and increasing the percentage of women smallholder farmers cultivating burley tobacco to 45 percent by 2000.

USAID hired Agricultural Cooperative Development International, a nonprofit association headquartered in Washington, D.C., to implement the “Malawi 2000” plan, which it did through its subsidiary in Malawi, the Smallholder Agribusiness Development Project. That project’s goals were to improve smallholder returns on sales of their crops, to support greater self-sufficiency through improved business know-how, and to promote collective action through commercially sound farmer-owned associations.

In the summer of 1997 – as Rep. Lloyd Doggett (D-Texas) was introducing his first legislation to curb tobacco overseas – the Smallholder Agribusiness Development Project was helping Malawi’s 12 burley tobacco farmer associations and two coffee cooperatives form the National Smallholder Farmers’ Association of Malawi. The same year, the Smallholder Agribusiness Development Project organized the Smallholder Tobacco Transport Program to help farmers get their tobacco leaf from the field to the auction floor.

At the end of the tobacco season in October 1997 – 23 days into the first Doggett ban – the amount of smallholder tobacco sold at auction was 31 percent higher than a year earlier, Agricultural Cooperative Development International’s 1997 annual report said. In its 1998 annual report, Agricultural Cooperative Development International said that the amount of tobacco sold for members of the National Smallholder Farmers’ Association of Malawi on the auction floor in late 1998 was 56 percent higher than in 1996.

The National Smallholder Farmers’ Association of Malawi is the only organization representing smallholders in Malawi and has nearly 40,000 farmers, who grow burley tobacco and other crops. (In all, according to U.S. agricultural reports, about 150,000 smallholder farmers in Malawi now grow burley tobacco.) The USAID contractor created a “comprehensive data storage-retrieval system for tobacco marketing,” according to its 1998 annual report, and most of the field reports and publications generated by the Smallholder Agribusiness Development Project / National Smallholder Farmers’ Association of Malawi have focused on tobacco farming and marketing.

USAID’s programs slipped through the Doggett ban on State Department and others’ promotion of tobacco overseas simply because the agency’s operations are funded separately. But the contrast between the guidelines’ intent and USAID’s tobacco programs stirred controversy within the agency in Washington and in Malawi, where tobacco was viewed as a viable cash crop for the country’s poor farmers.

Under pressure, USAID issued its own new policy on tobacco last March, saying the agency would halt its support for growing tobacco overseas by the end of 1999. “USAID will not support the growth of tobacco as a cash crop nor will it support agribusiness activities contributing to tobacco production, promotion, and use,” said the memo from then-USAID administrator Brian Atwood. (Tobacco-control advocates wonder what would happen to that “policy” under a different White House.)

USAID’s Africa bureau, in response to questions, said the Doggett ban did not “legally apply to USAID,” though it had “made every effort to respect the intent of the legislative language related to the Doggett amendment.” It added, in its statement, that the USAID mission in Malawi “accelerated its own efforts to disengage from assistance to tobacco production and succeeded in stopping all financial assistance before the end of calendar year 1998.”

In February 1999, the National Smallholder Farmers’ Association of Malawi – the USAID-created association – ran an ad in the Malawi newspaper, The Nation, calling for tender offers to transport association members’ tobacco to auction.

And Emmet Murphy, Africa project coordinator at Agricultural Cooperative Development International , the USAID contractor, said its Malawi operations are fully funded through October 2000, but that the approximately $5 million phase one ended in October 1998.

Given that USAID’s new tobacco policy was drafted after the agency said it had stopped all assistance to Malawi’s tobacco program, it was not clear what other countries had USAID tobacco programs. Agency officials did not answer that question, despite three queries.

The legacy of USAID’s program in Malawi is mixed.

Production of burley, the second most popular type of tobacco, has increased – from 58 percent of all tobacco grown in 1990 to 80 percent by 1996, according to the U.S. Agriculture Department’s Foreign Agricultural Service. Real per capita incomes for smallholder tobacco producers have also increased, from $153 in 1992 to $255 in 1997, according to AID’s 1998 funding request to Congress.

But prices for tobacco, which accounts for more than 70 percent of Malawi’s foreign exchange earnings, have fluctuated wildly the last several years. The Malawi kwacha (43 kwacha equal $1) has been devalued nearly 50 percent since 1997, and the government had a 2 billion kwacha deficit last year, according to local news reports. The “hungry season,” which refers to the time period when there is not enough food for Malawians, used to be about three months but is now much longer, by some accounts twice as long, forcing the government to pay high import prices for maize, a staple of the country’s diet. Malawi’s agricultural woes have been exacerbated by drought and farmers defaulting on high-interest loans for agricultural inputs, such as fertilizer.

Frank Giarrizzo, an American who has worked in Malawi for 10 years and runs his own agricultural development program there that USAID has not funded, has been a vocal critic of AID’s support for tobacco. He contends that farmers have converted land to tobacco they once used for growing maize and diverted precious, and costly, fertilizer from food crops to tobacco.

“The simple message I am trying to put across is that this is a donor-managed famine caused by an unholy alliance of the tobacco industry and the Africa Division of USAID,” Giarrizzo said.

Malawi is the world’s leading burley tobacco exporter, according to U.S. Department of Agriculture statistics, with more than 95 percent of the country’s tobacco being exported. The world’s three largest tobacco leaf purchasers in Malawi, all U.S. companies (one is a US-Malawi joint venture), also own all the processing facilities in Malawi. The United States took in more of Malawi’s tobacco than any other country in 1996 and 1997, according to most-recent USDA figures. And most of Malawi’s tobacco has gone to what had been the three multinational tobacco companies – Philip Morris, British-American Tobacco, and R.J. Reynolds, according to U.S. agricultural reports.

USAID insists its programs have helped, not worsened, the plight of Malawians. And, despite the five-year plan that called for a 40% increase in the number of smallholder tobacco farmers, an agency official said that AID’s program never focused on tobacco, adding, “I don’t think we told them to grow that (tobacco). That’s what they wanted to grow.”

Those involved in USAID’s Malawi program say it has begun focusing on other alternative cash crops, such as coffee, cotton, and chilies and spices – a contention supported by future plans outlined in Agricultural Cooperative Development International’s latest annual report. But a 1998 USDA report on Malawi noted: “The dominant crops are only two – maize as the food crop and tobacco as the cash crop.”

Agricultural Cooperative Development International received a $3.5 million, two-year grant extension from USAID through October 2000 to try to make the National Smallholder Farmers’ Association of Malawi sustainable and to persuade farmers to grow other cash crops, Murphy said. But he conceded that it would probably take years to convert tobacco farmers to other crops and that the choice was ultimately theirs.

Doggett called USAID’s support for tobacco “outrageous.”

“No directive from Congress should be necessary for AID to promote public health instead of tobacco-related death and disease,” he said. “AID should long ago have ceased encouraging the production of any type of tobacco.”

The Malawi example illustrates the need for comprehensive tobacco legislation, said Doggett. “This policy should not be dependent on the annual appropriations process and the changing tobacco policies of different administrations,” he added.