'Perverse supply' as a rational behavior of smallholder livestock farmers in central Malawi, and implications for livestock *policy decisions

According to the West, a rational individual will always maximize cash returns by selling more livestock when their price goes up; contrary to this would be considered perverse. Accordingly, "perverse supply" of livestock refers to the inverse relationship between price and number of livestock sold at the market, as practiced by traditional agropastoralists, The purpose of the present study was to show that the marketing strategy practiced by agropastoralists is consistent with an optimization hypothesis. Ninety-four smallholder households and 76 business-owners were randomly selected from Kasungu-Chipala and Mponela Extension Planning Areas (EPAs), respectively, and interviewed during May and June, 2000. Also, biological and economic data were gathered from 1989 to 1999.;Agropastoralists grow crops and raise livestock in a mixed farming-System. Also, they produce agricultural output for consumption and the surplus is sold for cash. This implies that any model to be employed should capture both livestock and crop production, and also products produced partly for consumption and partly for sale. This study developed a household model that captures the aforementioned complexity of the smallholder households. The model predicts that in a good year, a smallholder household produces sufficient crop yield for consumption and the surplus is sold for cash. In consequence, the cash increases the demand for livestock consumption and therefore fewer livestock are sold in the market. Market price does not have any effect on number of livestock sold because of the effect of "residual income." Also, there is evidence that increasing herd sizes is not an irrational behavior for smallholder households in Central Malawi because livestock benefits increased as the number of livestock increased.;The study concluded that the role of the government and other organizations should be to strengthen agropastoralism through: decentralization of power and decision-making to the level of the user groups, especially over common property; participation of agropastoralists in problem identification and project implementation; recognition of indigenous knowledge and practices as a basis on which to develop a resource management system; and recognition of the need for flexibility in the use of natural resources, in order to adapt to ecosystem variability.