Malawi’s agrifood system has been gradually transforming, with off-farm components growing faster than primary agriculture GDP between 2009-2019. The system remains dominated by primary agriculture and employment. Growth has been driven by domestic market-oriented value chains like maize, cattle and dairy, and horticulture. Looking forward, jointly promoting value chains like cattle and dairy, horticulture, and fisheries could effectively achieve multiple development outcomes like reducing poverty and improving diets.

1. Malawi’s Agrifood System
Structure and Drivers of Transformation
Joachim De Weerdt, Xinshen Diao, Jan Duchoslav, Mia Ellis, Karl Pauw, and James Thurlow
International Food Policy Research Institute
This diagnostic analysis was conducted by IFPRI with financial support from USAID and funders of the CGIAR Research Initiative on Foresight.
July 2023

2. Four Parts to the Diagnostics
• Current structure
What does Malawi’s food system look like today?
• Decomposing value chains
How are different products contributing to the broader agrifood system?
• Growth and market structure
How is Malawi’s agrifood system growing and transforming?
• Future drivers of inclusive agricultural transformation
Which value chains could be most effective?
2019
2009-2019
2019+

3. Summary
Malawi’s agrifood system (AFS) diagnostic results
Malawi’s AFS has been gradually transforming
• Off-farm components growth was faster than primary agriculture GDP; its share in AgGDP+ rose during 2009–2019
• However, AFS is still dominated by primary agriculture that continues to be the largest sector for employment
AFS growth has been mainly driven by domestic-market-oriented value chains
• Domestic consumption patterns (and changing diets) are therefore important drivers of agricultural transformation
Looking forward, the structure of AFS growth will be crucial in driving development outcomes…
(e.g., poverty, dietary improvements, employment creation, and growth)
… but no single value chain is the most effective at driving all these development outcomes
• Cattle & dairy and maize are most effective at reducing poverty; horticulture and cattle & dairy are best for improving diet
quality; tobacco and oilseeds have strong employment effects; and fisheries and maize have large growth multipliers
Jointly promoting cattle & dairy, horticulture, and fishery value chains would offer an effective way to achieve
multiple development outcomes

4. Framework | Agrifood Systems (AFS)
Primary agriculture
Agroprocessing
Trade and transport
Food services
Trade and transport
Input supply Demand
Consumption of own-
produced goods
Purchase of primary
agricultural goods
Purchase of processed
agrifood goods
Purchase of ready-made
foods outside of home
Imports
A
C
B
D
E
Includes agriculture, plus all upstream/downstream sectors
• Five major components (A to E)
• Same format as standard economywide datasets (e.g., national accounts)
• Allows us to measure AFS structure and performance using actual data
Agrifood System GDP (AgGDP+)
Total value added generated by all agricultural
value chains (in constant dollars)
Agrifood System Employment (AgEMP+)
Total number of workers who are primarily
employed in an agricultural value chain

5. Structure2019 | Malawi’s Agrifood System Today
GDP
($ billions)
Employment
(millions of workers)
Total economy 10.4 100% 7.6 100%
Agrifood system 4.6 44.4% 5.9 77.3%
Primary agric. (A) 2.5 24.4% 4.8 63.5%
Off-farm AFS 2.1 20.0% 1.0 13.8%
Processing (B) 0.9 8.4% 0.2 3.1%
Trade & transport (C) 0.8 7.9% 0.1 8.4%
Food services (D) 0.1 0.8% 0.6 1.7%
Input supply (E) 0.3 3.0% 0.0 0.6%
Rest of economy 5.8 55.6% 4.3 22.7%
GDP and employment in Malawi’s agrifood system (2019)
• Part 1 focuses on the current size and
structure of the national agrifood system
• Latest AgGDP+ and AgEMP+ estimates
• Decomposed into five AFS components
• Situates AFS within the broader economy
• Uses official data sources
• GDP from national accounts
• Employment from various sources (i.e., population
census, labor force surveys, ILO, etc.)
• Malawi estimates indicate that
• AFS makes up 45% of GDP
($4.6 billion AgGDP+) …
• … and more than three-quarters of total
employment (5.9 million AgEMP+)
• Primary agriculture (A) is large, but off-farm
components (B–E) have been catching up
(45% of AgGDP+, less than 20% of AgEMP+) Notes: 1) GDP is at factor cost; 2) input supply (E) considers only value-added of domestically
produced inputs used in AFS and fertilizer subsidies are not part of it

6. Structure2019 | Comparing to Other Countries
• Importance and structure of the AFS varies at different stages of development
Malawi is a low-income country (LIC)
• A: Malawi’s AgGDP+ share of total GDP is close to the LIC average
• B: Malawi’s primary agriculture component in AgGDP+ is lower than in most LICs and close to the lower-middle-income county (LMIC)
average
• C: Malawi’s off-farm structure of AFS is close to the LIC average
Share of total GDP (%) Share of AFS GDP (%) Share of off-farm AFS GDP (%)
LIC = low-income countries | LMIC = lower-middle income | UMIC = upper-middle-income | HIC = high-income Source: IFPRI Agri-Food System Database
A B C
4.2
26.4
16.9
7.1
1.2
24.4
8.2
13.4
11.9
10.6
6.6
19.6
All LIC LMIC UMIC HIC Malawi
Primary agriculture Off-farm AFS
34.0
66.2
58.6
40.2
15.6
55.5
66.0
33.8
41.4
59.8
84.4
44.5
All LIC LMIC UMIC HIC Malawi
Primary agriculture Off-farm AFS
33.7 37.8 38.4
46.9
26.1
41.6
31.7
42.8 38.6 21.4
35.9
39.3
23.1
13.7
11.2
18.2 27.8
3.8
11.4 5.8 11.8 13.5 10.3 15.2
All LIC LMIC UMIC HIC Malawi
Processing Trade and transport
Food services Input supply

7. Structure2019 | Supply vs. Demand Sides of the Agrifood System
Agrifood GDP vs. consumption
Primary, processed, and other product shares (%)
• AgGDP+ defines the AFS on the supply side
• Household demand and trade (imports) capture AFS structure on the demand side
• Agrifood processing is more important on the demand side than the supply side in the AFS
AgGDP+ Household demand
Agrifood exports vs. imports
Primary and processed product shares (%)
Exports ($1.06 bil.) Imports ($0.23 bil.)
55.5%
18.5%
26.0%
$0.51 bil.
47.7%
$0.56 bil.
52.3%
Primary agriculture
Agrifood processing
$0.14 bil.
62.7%
$0.08 bil.
37.3%
39.5%
54.3%
6.2%
Primary agriculture
Agroprocessing
Other off-farm

8. Value Chains2019 | Contributions & Trade Orientation
• Part 2 decomposes the AFS across broad value
chain groupings
• Classify value chains based on trade orientation
• Exportable value chains have above-average export-output
ratios ( > 13.1%)
• Importable value chains have above-average import-
demand ratios (> 3.2%)
• Less-traded value chains make up the rest
• Domestic market dominates AgGDP+ (58.8%) – six less-
traded value chains; relatively smaller off-farm share
(48.2%) and larger on-farm (primary) share (67.4% of
total), with cattle & dairy a significant exception
• Exportable covers four value chain groups; oilseeds and
tobacco have much larger off-farm components than
on-farm GDP shares
• Two importable value chain groups account for a
disproportionate share of off-farm AFS (10.5%); these
value chains compete with processed agrifood imports
Promoting some exportable and importable value
chains and cattle & dairy (less traded) could be
effective in driving agricultural transformation by
boosting value added and employment in off-farm AFS
Breakdown of Malawi’s agrifood system (2019)
Share of total GDP (%) Exports /
output
(%)
Imports /
demand
(%)
Total
AFS
Primary
agric.
Off-farm
AFS
Total 100 100 100 13.1 3.2
Exportable 32.7 28.2 38.4 40.9 6.0
Pulses 5.8 9.1 1.6 32.2 0.2
Oilseeds 9.7 7.4 12.7 20.9 7.7
Tobacco 10.3 7.0 14.4 71.9 14.9
Other crops 6.9 4.7 9.6 25.6 2.3
Importable 7.1 4.4 10.5 0.7 12.0
Other cereals 6.1 3.8 8.9 0.8 10.3
Forestry 1.0 0.6 1.6 0.1 21.8
Less traded 58.8 67.4 48.2 1.3 1.1
Maize 22.6 23.9 20.9 1.4 0.4
Roots 6.1 8.9 2.5 0.5 0.6
Horticulture 13.1 21.2 3.0 4.7 1.5
Cattle & dairy 7.0 1.1 14.5 0.1 1.8
Other livestock 4.1 6.5 1.1 0.1 0.3
Fish 6.0 5.8 6.3 0.2 3.4

9. Growth2009-2019 | Agrifood System Performance
Malawi’s AFS has been gradually transforming
• Shares of agriculture GDP in total GDP fell between 2009 and 2019 (27.6% to 24.4%)
• Off-farm component’s growth was faster than primary agriculture GDP; its share in AgGDP+ rose (39.3% to 44.5%)
Share of agricultural employment fell but still at an extremely high level (69% to 64%)
• An indication of a slow change in the country’s economic structure and less improved agricultural labor productivity
Agricultural GDP, agrifood system GDP, and employment shares (2009–2019)
• Part 3 analyzes structural change in the AFS and the contribution of different value chains to AFS growth
27.6
45.4
39.3
68.6
24.4
44.1 44.5
63.5
Agricultural GDP share AgGDP+ share Off-farm share of AgGDP+ Agricultural employment
share
Share
(%)
2009 2019

10. Growth2009-2019 | Value Chain Performance
• Modest AgGDP+ growth (4.1% p.a.) during
2009–2019
• Most value chains with above-average
AgGDP+ growth rates (*) ( > 4.1%) are in less-
traded groups
• Less-traded value chains grew fastest (5.0%),
accounting for near three-quarters of total AFS
growth
• Export-oriented value chains fared worst (2.4%
growth rate), mainly because of poor
performance of the pulses and tobacco value
chains
• AgGDP+ growth driven by strong growth in off-
farm AFS (5.4%), including processing (6.3%)
• Most fast-growing value chains experienced
faster off-farm growth
Indicative of increased market orientation of
the AFS; associated with increased demand for
trade, transport, and processing
Value chain growth in Malawi (2009-2019)
Average annual GDP growth rate (%)
Total
AFS
Primary
agric.
Off-farm
AFS
Process-
ing
Total AFS 4.1 3.2 5.4 6.3
Exportable 2.4 1.3 3.5 5.0
Pulses -2.3 -2.5 -0.5 6.7
Oilseeds* 7.8 8.3 7.5 8.3
Tobacco 0.0 0.6 -0.3 0.5
Other crops* 6.5 4.2 8.3 7.2
Importable 5.5 7.7 4.5 6.3
Other cereals* 7.1 8.0 6.6 6.2
Forestry -0.6 5.9 -2.4 8.3
Less traded 5.0 3.8 7.4 7.2
Maize* 6.1 5.1 7.7 8.1
Roots* 6.1 5.7 8.5 10.0
Horticulture* 4.3 4.3 4.8 -1.3
Cattle & dairy* 6.6 1.8 7.2 6.4
Other livestock 2.7 2.6 3.5 9.4
Fish 2.0 -1.4 8.8 8.2

11. Future Drivers2019+ | Modeling Faster Growth
• IFPRI’s RIAPA model is used to analyze different sources of agricultural growth
• Expand production in different value chains
• Increase on-farm productivity growth rates in targeted value chains
• Achieve same overall growth in agriculture GDP (e.g., 1.0%)
• Track linkage effect within value chain and spillover effects to other value chains
• Assess outcomes
• Poverty – Poverty-growth elasticity in percentage points based on $2.15-a-day
• Hunger – Hunger-growth elasticity in percentage points based on prevalence of undernourishment
• Diet – Diet quality to growth elasticity in % derived from Reference Diet Deprivation index (REDD)
• Jobs – Employment multiplier in thousand employed persons associated with US$1 million growth in targeted value chain
• GDP – GDP growth multiplier in US$ millions associated with US$1 million growth in targeted value chain
• Average across outcomes
• The value of outcome indicators (elasticity or multiplier) is expected to differ across value chain growth; not all value chains are
equally effective at achieving all outcomes
• Normalizing the individual outcome scores
• The values of each outcome indicator are scaled so that the most effective value chain is given a score of one and the leasteffective is given a
score of zero. A value chain with adverse impact is also given a score of zero.
• An average score with equal weights is used to measure the total impacts across all value chains

12. Individual outcomes
(per unit change in agriculture GDP, ordered by poverty outcome)
Future Drivers2019+ | Prioritizing Agricultural Growth
Poverty
(change in %-point)
Hunger
(change in %-point)
Jobs
(change in 1,000)
Diet quality
(change in %)
Average across outcomes
(averaged normalized scores, reordered)
GDP
(change in mil. $)
1.06
2.19
2.38
1.35
0.92
0.83
1.37
0.57
0.54
1.19
0.15
0.01
-0.03
0.07
0.20
0.31
0.51
0.56
0.74
0.12
Cattle & dairy
Maize
Fish
Root crops
Horticulture
Pulses
Other crops
Oilseeds
Tobacco
Other livestock
0.72
0.14
0.17
0.03
0.76
0.15
0.00
0.03
0.00
0.12
Cattle & dairy
Maize
Fish
Root crops
Horticulture
Pulses
Other crops
Oilseeds
Tobacco
Other livestock
0.04
-0.49
0.04
-0.03
0.01
-0.01
-0.02
-0.01
-0.01
0.29
-0.39
-0.37
-0.26
-0.19
-0.16
-0.14
-0.14
-0.05
-0.05
0.07
Cattle & dairy
Maize
Fish
Root crops
Horticulture
Pulses
Other crops
Oilseeds
Tobacco
Other livestock
0.62
0.52
0.49
0.45
0.41
0.32
0.29
0.28
0.27
0.18
Cattle & dairy
Maize
Fish
Horticulture
Other crops
Tobacco
Root crops
Pulses
Oilseeds
Other livestock
Total
Cattle & dairy
Maize
Fish
Horticulture
Other crops
Tobacco
Root crops
Pulses
Oilseeds
Other livestock
Poverty Growth Jobs Diets

13. Future Drivers2019+ | Key Messages
AFS growth is pro-poor
• Growth led by most value chains reduces poverty, but cattle & dairy are most effective
AFS growth is effective in improving food security (hunger) and diet quality
• Most value chains reduce hunger; maize is most effective
• Most value chains improve diet quality; horticulture and cattle & dairy are most effective
Agricultural growth creates jobs but not necessarily on-farm
• All value chains are associated with an increase in total employment, but most AFS jobs are created off-farm
• Tobacco is the most effective value chain in creating jobs in the overall economy while other livestock including poultry and
small ruminants is more effective in creating off-farm jobs within AFS
Agricultural growth has strong growth multiplier effects, generating income beyond agriculture
• Fishery value chain has strongest growth multiplier effect for total GDP
In conclusion, promoting multiple value chains can achieve broad impact
• No single value chain group is the most effective in achieving all the development outcomes we consider
• Cattle & dairy, maize, fish, and horticulture rank highly in the combined outcome scores for poverty, diet, jobs, and growth
• Promoting these value chains jointly would offer an effective way to achieve broad-based outcomes

14. Note: Value Chain Groups and Agricultural Sectors in Individual
VC Groups
Value chain group and their
share of AgGDP+
Individual products and their share of group’s agriculture GDP
Maize (22.6%) Maize 100%
Other cereals (6.1%) Sorghum & millet 37.1% | Rice 62.9%
Oilseeds (9.7%) Groundnuts 75% | Soybeans 20.5% | Other oilseeds 4.5%
Pulses (5.8%) Pulses 100%
Roots (6.1%) Cassava 42.7% | Irish potatoes 21.0% |Sweet potatoes 36.2%
Horticulture (13.1%)
Leafy green vegetables 53.2% | Other vegetables 22.9% | Nuts 1.8%| Fruit bananas 7.2%
|Plantains 2.4%| Other fruits 12.6%
Tobacco (10.3%) Tobacco 100%
Other crops (6.9%) Sugarcane 48.6% | Cotton & fibers 4.9% | Tea 35.7% | Coffee 5.2% | Other crops 5.6%
Cattle & raw milk (7.0%) Cattle meat 33.9% | Raw milk 66.1%
Other livestock (4.1%) Poultry meat 52.1% | Eggs 13.8% | Small ruminants 8.9% | Other livestock 25.2%
Fish (6.0%) Aquaculture 4.7% | Capture fisheries 95.3%
Forestry (1.0%) Forestry 100%
Notes: Forestry includes forestry and logging according to the country’s national accounts.