Malawi Plays a First-World Game

The Globe and Mail

Malawi has long been dependent on foreign aid to feed it's people, however, a new policy of subsidizing farms has created a crop surplus. Foreign donors have long stipulated that Malawi not subsidize its farms because it would create instabilities. While it's true that subsidies distort the market and create inefficient resource allocations, the market is already distorted by the fact that most First-World countries subsidize agriculture in their countries. This has led to deflated market prices that poor African farmers cannot compete with.

These subsidies are costly, $62 million, but that's almost half what the government was spending on food aid. Also, the cost of the subsidies is offset by a massive food surplus creating a new source of revenue for Malawi.

The best solution for everyone is for First-World countries to stop subsidizing their own farms, but until then I hope more poor countries follow Malawi's example.