Dr. Deo Dhakal, DCID Senior Fellow and faculty in the Project Appraisal and Risk Management (PARM) program at Duke, recently completed a two-week consultancy project in Malawi, where he conducted a financial, economic and risk analysis of the country’s groundnuts and soybeans value chain. The project ran from Nov. 14-29.
Groundnuts have always been a cash crop for Malawi. Improving their production methods will help advance the generation potential of the farming families who are basically subsistence farmers, Dhakal said.
Groundnuts are traditionally exported to Europe, but recently this trade has virtually stopped because of the growth of aflatoxin, a chemical produced by certain molds, within the crops. There is currently informal trading occurring between Malawi and Eastern African countries, namely Tanzania and Kenya, who are emerging importers.
Soybeans on the other hand are produced in Malawi solely for domestic consumption. The demand is primarily linked to the growing poultry industry’s use of soybean cakes.
Changing weather patterns resulting from climate change are emerging as a major challenge for subsistence farmers, Dhakal said. Specifically, climate change has caused a great disruption in rainfall patterns, leading to huge losses for Malawian farmers.
“It seems the ultimate victims of the changing weather patterns fueled by climate change are going to be marginal farmers – unless the international community is ready to subsidize the crop insurance for rain failure,” Dhakal said. “The farmers are suffering because of the action of industrialized countries.”
The income from the groundnuts and soybeans allows the farmers to meet daily needs, including the purchase of inputs for the country’s primary crop, maize. How then are the farmers managing this risk of a changed value chain? Dhakal says that they are allocating land for different crops and are supplementing their income by selling charcoal harvested from local forests. This second solution, however, “should not be considered a substitute,” said Dhakal, “since it will lead to further environmental consequences because of man-induced deforestation.”
Originally from a farming family in Bhutan, Dhakal brings his personal experience, in addition to his formal training in the classroom, to the table when making recommendations for improving the value chain.
Dhakal states that it is necessary “to adopt a holistic approach” in order to aid these farmers in optimally managing manpower and land assets as well as to tackle the problem of year-round employment. A piecemeal approach, on the other hand, may give rise to a reduction in the poverty level income gap, but it will not work towards eliminating global poverty in rural areas.
Dhakal, who teaches cost-benefit analysis in the PARM program, states that the technique is the same whether he’s evaluating big projects or small rural farms in Malawi.
“I am excited to be a part of a team that uses the techniques covered in PARM to address the problems faced by the subsistence farmers,” he said. Dhakal hopes to return to Malawi in March 2016.