The policy analysis matrix (PAM) framework was employed to analyse the comparative
economic advantage in production and explore the impact of policy distortions on agricultural
competitiveness in Malawi. The study demonstrated that Malawi has strong comparative
advantage in the production of tobacco, paprika, macadamia nuts, cotton, tea, phaseolous beans,
groundnuts and hybrid maize. Notably, Malawi has weak comparative advantage in the
production of open pollinated maize and soybeans, both produced using low input technology. Of
interest though, is the fact that low input producers are more efficient users of domestic resources
in the production of some major cash crops such as tobacco and paprika. The study also revealed
a large disparity between net private and net social profitability. This wide gap is mainly
attributed to suppressed market prices over the long years of controlled commodity pricing in
Malawian agriculture. Input market prices in Malawi were found to be higher than their
equivalent social prices, thus forming an indirect tax on farmers. High transportation costs due
to poor road infrastructure and the sales tax imposed on inputs such as chemicals are major
factors behind the high input market prices. Elimination of such bottlenecks and policy
distortions, improved access to credit and modern technology research investments should
contribute to improved competitiveness in agricultural production, especially among small
holders given their existing potential.
