The objective of this article was to develop a deeper understanding of the interdependences between smallholder farming and the state of environmental management in rural Malawi. We examined the agricultural local governance framework in Malingunde Extension Planning Area (EPA), its contribution to food security and how it conflicts with overall land and forest resources management. The charcoal production process was discussed in line with its implications for agricultural production and environmental sustainability. The smallholder households employ inappropriate land management practices, engage in agricultural production on unsuitable land and use fertile soils, timber and firewood for brick production and construction and secondly engage in charcoal production (deforestation) as a coping mechanism against food deficiency. However, while detrimental in its own right, this environmental degradation in the area cannot be explicitly pinned to, for instance, the total charcoal supply being out of balance with wood stocks or insufficient land. It is, rather, usually due to failures to provide incentives to manage land and forest resources in a manner that allows regeneration of both the soils and wood stocks in the area. An improvement in the quality and quantity of the smallholder agriculture sector production would promote significantly the environmental management efforts.