Effects of the Maize Input Subsidy Program on Groundnuts Production in Zambia

Thomson Kalinda,Gelson Tembo,Peter Zulu

doi:10.5539/jas.v6n7p253

Abstract

This study uses a three-wave panel dataset from nationally representative surveys by the Central Statistical Office and Cragg's (1971) model for corner-solution problems to determine the effect of the government-sponsored maize input subsidy program on the production of groundnuts in Zambia. The results show that even though the maize subsidy programme, does not significantly affect the smallholder farmer’s decision to participate in groundnuts production, maize subsidies however do significantly influence the proportion of cultivated land area allocated to groundnuts production. This finding confirms that the current high subsidy levels targeted at maize are causing farmers to relocate their productive resources, particularly land, from other cropping enterprises towards maize production. The results also show that land allocation to groundnuts is also influenced by the household's labour endowment, level of activity of the Food Reserve Agency (FRA) in the district, the household's access to market information, and the price of groundnuts relative to prices of other related commodities like maize, mixed beans, cowpeas and soyabeans.

Highlights

Groundnuts are the second widely grown crop by smallholder farmers after maize in Zambia
The results indicate that subsidized maize inputs have a statistically significant effect only on the proportion of cultivated land allocated to groundnut production once the farmer has already decided to grow some
An increase in the quantity of subsidized fertilizer received is associated with a reduction in the proportion of cultivated land area allocated to groundnuts by 0.00004 hectares, ceteris paribus

Summary

Introduction

Groundnuts are the second widely grown crop by smallholder farmers after maize in Zambia. The crop is mostly grown in Eastern Province, where over 69 percent of the smallholder farmers produce 30 percent of total national production (CSO, 2011). Groundnuts are grown on a field intended for production of a cereal crop (mostly maize) in the season while in intercropping, groundnuts are grown side-by-side with a cereal crop such as maize, sorghum or millet In both above practices, the cereal crop grown after or side-by-side with groundnuts benefits from the nitrogen that groundnuts fix from the atmosphere, with the potential benefit of cutting down on the need for inorganic fertilizers and their associated water and soil pollution (Shaxson et al, 2008). 20 percent of the smallholder farmers use improved seed varieties with the remaining 80 percent relying on recycled seed (Ross & de Klerk, 2012)

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