The Effect of Fertilizer Subsidies on Investment in Soil and Water Conservation and Productivity among Ghanaian Farmers Using Mechanized Irrigation

Godwin Kofi Vondolia,Håkan Eggert,Jesper Stage

doi:10.3390/su13158242

Abstract

The fertilizer subsidies reintroduced in various sub-Saharan African countries from 2007 aim to increase agricultural production and assist in the development of fertilizer markets. The present study evaluates the impact of a fertilizer subsidy program among farmers in Ghana who employ highly mechanized irrigation systems. The results indicate that farmers who received fertilizer under the subsidy program used 45% more fertilizer. However, they did not use more weedicide and were likely to reduce investment in soil and water conservation. Thus, the income gains resulting from the subsidy programs were not invested in such non-targeted inputs. Moreover, the program beneficiaries’ reduced investment in soil and water conservation may explain the finding that the subsidy did not improve their productivity. Thus, since fertilizer subsidy programs alone may not improve productivity, it may be necessary to target spending explicitly on complementary inputs such as investing in soil and water conservation.

Highlights

IntroductionThe principal objective of this paper is to empirically evaluate the impact of fertilizer subsidies on investments in soil and water conservation (SWC), on the adoption of commercial inputs, and on productivity among farmers in Ghana using highly mechanized irrigation
While the program increased fertilizer use, it did not lead to increased use of other commercial inputs; it led to reduced investment in soil and water conservation (SWC), with little overall change in productivity
Given the potential endogeneity of the fertilizer subsidy beneficiaries, we identify the distance from the farm plot to the voucher center to be inversely correlated with the subsidy

Summary

Introduction

The principal objective of this paper is to empirically evaluate the impact of fertilizer subsidies on investments in soil and water conservation (SWC), on the adoption of commercial inputs, and on productivity among farmers in Ghana using highly mechanized irrigation. While the program increased fertilizer use, it did not lead to increased use of other commercial inputs; it led to reduced investment in SWC, with little overall change in productivity. The use of modern inputs such as inorganic fertilizer in SSA is low on average, farmers show significant variation in this regard [4]. There is, a need to assess what this diversity implies for attaining the objectives of fertilizer subsidy programs in SSA

Objectives

Methods

Results

Discussion

Conclusion