Fertilizer Subsidy Research Articles

Fertiliser Subsidies and Social Cash Transfers as Complementary or Competing Instruments for Reducing Vulnerability to Hunger: The Case of Malawi

Fertiliser subsidies and social transfers are complementary instruments for reducing vulnerability to hunger in poor agrarian countries. The former act on production and aim to reduce food insecurity through yield growth, while the latter tackle food‐entitlement failures directly, by providing either food itself or the cash to purchase food to selected beneficiaries. The policies compete for scarce public resources, and each represents an ‘opportunity cost’ compared to the other. Using Malawi to illustrate these comparisons, this article shows that a mix of policies can be affordable, allowing for strategic choice over the portfolio most likely to achieve a reliable consumption floor for the most vulnerable rural people.

The Political Economy of Agricultural Statistics and Input Subsidies: Evidence from India, Nigeria and Malawi

The political economy of agricultural policies – why certain interventions may be preferred by political leaders rather than others – is well recognized. This paper explores a perspective that has previously been neglected: the political economy of the agricultural statistics. In developing economies, the data on agricultural production are weak. Because these data are assembled using competing methods and assumptions, the final series are subject to political pressure, particularly when the government is subsidizing agricultural inputs. This paper draws on debates on the evidence of a Green Revolution in India and the arguments on the effect of withdrawing fertilizer subsidies during structural adjustment in Nigeria, and finally the paper presents new data on the effect of crop data subsidies in Malawi. The recent agricultural census (2006/7) indicates a maize output of 2.1 million metric tonnes, compared to the previously widely circulated figures of 3.4 million metric tonnes. The paper suggests that ‘data’ are themselves a product of agricultural policies.

Fertiliser Subsidies and Smallholder Commercial Fertiliser Purchases: Crowding Out, Leakage and Policy Implications for Zambia

AbstractFertiliser intended for government subsidy programmes is sometimes diverted and sold to farmers at or near market prices. Failure to account for such ‘leakage’ can upwardly bias econometric estimates of the effect of government fertiliser subsidy programmes on total fertiliser use. This paper extends the framework used in earlier studies on the crowding in/crowding out effects of subsidised fertiliser on commercial fertiliser purchases to account for leakage, and then applies it to the case of Zambia. Results suggest that each additional kg of subsidised fertiliser injected into the system increases total fertiliser use by 0.54 kg. Without controlling for leakage, the estimate would have been 0.87, an overestimate of 61%.

Understanding the Role of Research in the Evolution of Fertilizer Policies in Malawi

This study examines the role of research in agricultural policy making in Malawi at a time when the Africa Union and the New Partnership for Africa’s Development have been seeking to promote greater evidenced-based decision making in agriculture. Drawing on both theory and actual past experiences documented in the literature, results are intended to improve our understanding of the extent to which research has played any role in influencing policy change in Malawi. This is done in the context of the evolution of the country’s fertilizer subsidy policies. Results point to some general lessons. First, strengthening the Ministry of Agriculture’s capacity for policy analysis and becoming more proactive in the policy process proved critical in the earlier years of Malawi’s long history of fertilizer subsidies. Second, the government’s experience of bargaining with donors may have actually strengthened its own ability to position and assert its legitimacy in shaping policies. Third, while research may have played a historically marginal role, researchers have been able to influence policy choices whenever a window of opportunity arose for technical input — such as at times of crisis. However, researchers would also benefit from engaging more with the policy debates and policy making process. Finally, while the paper draws on existing theoretical frameworks to understand the role of research in the policy process more generally, a better framework still needs to be developed in describing the standard experiences and realities of the African agricultural policy landscape.

Optimal Choice of Cotton Subsidy Mode in China—Empirical Study Based on Principal Component Regression

Adopt principal component regression for researching the optimal subsidy mode of cotton production in China. The result indicates that, from the perspective of economic stimulatory effect, the optimal cotton subsidy in China is farm chemical subsidy rather than seed subsidy. The reason is that there are frequent pest disasters in cotton producing areas in China. So farm chemical subsidy is the most important factor ensuring cotton production. Meanwhile, cotton varieties must be optimized and improved to increase the ability to resist pests and diseases, and the forecasting for pests and diseases in cotton production areas must be enhanced, early warning mechanism and monitoring must be built, and in addition, it is strongly recommended that if financial resources allow, subsidies like seed subsidy, fertilizer subsidy, machinery subsidy and irrigation subsidy could also put into effect in China.

Farmers’ Production and Marketing Response to Rice Price Increases and Fertilizer Subsidies in the Office Du Niger.

Farmers' production and marketing response to rice price increases and fertilizer subsidies in the Office du Niger

Youth, Agriculture and Land Grabs in Malawi

Malawi has received international media attention as a potential model for a uniquely African green revolution following the success of its fertiliser subsidy programme. The role of young people has not featured at all in this success story, although more than half of the population is considered young. Meanwhile, the government's Green Belt Initiative is planning to give land to large‐scale local and foreign investors for irrigated agriculture along Lake Malawi and major rivers to consolidate food security gains. The concern is that vast tracks of land are being appropriated from smallholder farmers whose land ownership averages only 0.5 hectare. This article explores how young people are engaging with these initiatives in terms of their roles and what they perceive as potential alternative livelihood strategies within the agri‐food sector. It argues that young people are marginalised from these successes because of stalled land reforms and absence of a supportive policy environment.

Fertilizer Prices, Subsidy and Agricultural Prices: The Case of India

Fertilizer Prices, Subsidy and Agricultural Prices: The Case of India

Which policy would work better for improved soil fertility management in sub-Saharan Africa, fertilizer subsidies or carbon credits?

Why do many smallholder farmers fail to adopt improved land management practices which can improve yields and incomes? The reason is not always because these practices are uneconomical but sometimes it is because resource poverty prevents farmers from taking advantage of yield and income enhancing agricultural practices. In this study we examine the relative merits of using a carbon payment scheme compared to a subsidy policy to help reduce the cost of specific land management practices with productivity and ecosystem benefits such as carbon sequestration. Using a 30-year crop simulation model, we examine the impacts of different soil fertility management treatments (SFTs) on yields and soil carbon and proceed to compute discounted incremental revenue streams over the same period. We find that the SFTs simulated are on average profitable given the conditions assumed in our DSSAT simulations. When carbon was priced at $8 or $12/t CO2e, the increase in incremental incomes generated from a carbon payment were invariably higher than those imputed from a 50% fertilizer subsidy. When carbon was priced at $4/Co2e, the increase was almost similar and sometimes higher than that from the imputed income transfer from a 50% subsidy. If these indications hold in further research, it could imply that using fertilizer subsidies as the sole mechanism for stimulating adoption of improved soil fertility management practices may unnecessarily forgo other complementary and possibly superior alternatives. Depending on the specific economic equity considerations, we conclude that either of these instruments can be used to help farmers break through resource barriers that prevent them from adopting productivity-enhancing and environmentally beneficial agricultural practices. However, given the fiscal burden on public finances and possible opportunity costs of any substantial subsidy program, it is possible that a carbon payment system can be a reasonable alternative assuming the range of carbon prices used in this study and especially if accompanied by measures to ameliorate the costs of fertilizer to farmers.

Integrated assessment of agricultural land use policies on nutrient pollution and sustainable development in Taihu Basin, China

Abstract Water pollution in Chinese lakes is a major problem. To reduce nutrient pollution and enhance sustainable development in Taihu Basin, China, an integrated assessment of the impacts of agricultural land use policies has been performed, using the technical coefficient generator TechnoGIN and the bio-economic farm model FSSIM. Results show that although promotion of site-specific nutrient management (SSNM), the first policy, can improve regional objectives such as nutrient pollution reduction and food security, its adoption is constrained by labour productivity and availability at farm level. SSNM is more knowledge and labour intensive than conventional management, whereas labour availability is decreasing due to off-farm employment possibilities. In policy scenarios for 2015, environmental impacts are projected to decrease compared to 2008, partly due to the adoption of SSNM. However, the main reason is the decreasing labour availability towards 2015 which causes a switch from double to single cropping already in the baseline scenario for 2015. This leads to lower food production. Abolishing fertilizer subsidies for farmers that do not adopt SSNM, in combination with training appears to be the best way to stimulate SSNM adoption for improving the different land use functions. A second policy, stimulating mechanical transplanting of rice, reduces labour use and can become profitable when subsidized, but on most farm types it will not reverse the trend towards single cropping and has little influence on nutrient pollution. Thirdly, the regional policy of creating riparian buffer zones along water bodies appears to be promising, as it can strongly reduce nutrient leaching from farm land to rivers and lakes. Concluding, the integrated assessment performed in this study showed that policies can reduce nutrient pollution and improve sustainable development, but the changing labour context has a large impact on their impacts and on agriculture in the region.

The overview of Government subsidies to agriculture sector in India

The agriculture subsidies are integral part of the farmers life in India. The agriculture subsidies plays very important role in agriculture sector in every country. The every year's government of India spends lot of money in various agriculture subsidies for growth of agriculture sector. The total arable & permanent cropland is 169,700 thousand hectors in India. The authors used only secondary data for research. This paper basically focuses on overview of agriculture subsidies in India with help of provisions of funds for agriculture in five years plans and annual budget. The authors also study types of agriculture subsidies and distribution criteria in India. Last few years the percent investment in agriculture sector is increases & percent of agriculture subsidies is decreases in India. To know the percentage agriculture subsidies in developed countries and developing countries, also number of dependent on agriculture sector. Keyword- Agriculture, Annual budget, Five years plan, Investment & Subsidies I. Introduction Indian Government play vital role in agriculture sector development. The government role is diverse and varied. Some of the cited reasons for vital role are self-sufficiency, employment creation, support to small- scale producers for adopting modern technologies and inputs, reduction of price instability and improvement of the income of farm households. This vital role can take a number of forms such as import-export policies and domestic policies like price support programmes, direct payments, and input subsidies to influence the cost and availability of farm inputs like credit, fertilizers, seeds, irrigation water, etc. Of all the domestic support instruments in agriculture, input subsidies and product price support are the most common. Various benefits are cited in justifying input subsidies: economic, environmental and social (World Bank 2008). Input subsidies can bring economic benefits to society. Inputs like fertilizers, irrigation water and electricity have a significant share in agricultural subsidies in India and fertilizer subsidy has attracted much attention of policymakers, and researchers in the recent past. An agricultural subsidy is a governmental financial support paid to farmers and agribusinesses to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such commodities. A subsidy, often viewed as the converse of a tax, is an instrument of fiscal policy. Derived from the Latin word subsidium, a subsidy literally implies coming to assistance from behind. The objective of subsidies, by means of creating a wedge between consumer prices and producer costs, lead to changes in demand/ supply decisions. The forms of subsidies are a cash payment to producers/consumers is an easily recognizable form of a subsidy. However, it also has many invisible forms. Thus, it may be hidden in reduced tax-liability, low interest government loans or government equity participation. If the government procures goods, such as food grains, at higher than market prices or if it sells as lower than market prices, subsidies are implied 1.1) Review of Indian Agriculture Sector Indian agriculture has an extensive background which goes back to 10 thousand years. At present, in terms of agricultural production, the country holds the second position all over the world. In 2009, agriculture and it contributed 16 % of the Gross Domestic Product of the country. In addition, the sector recruited about 52% of the entire manpower. In spite of the fact that there has been a gradual fall in its contribution to the gross domestic product of the country, agriculture is currently the biggest industry in India.

English

The agriculture sector recorded satisfactory growth due to improved technology, irrigation, inputs and pricing policies. Livestock, poultry, fisheries and horticulture are surging ahead in production growth in recent years and will have greater demand in the future. Industrial and service sectors have expanded faster than agriculture sector resulting in declining share of agriculture in national accounts. Despite the structural change, agriculture still remains a key sector, providing both employment and livelihood opportunities to more than 70 percent of the country's population who live in rural areas. The contribution of small farmers to the national and household food security has been steadily increasing. The water availability for agricultural uses has reached a critical level and deserves urgent attention of all concerned. The debate on fertilizer subsidy, as well as all other agricultural subsidies in India, should be examined against the backdrop of India's overall economic situation, the prominence farmers and the agricultural sector in India's political economy, and recent trends in the Indian agricultural economy. This paper presents socioeconomic data on the Indian economy, particularly its farm sector, and discusses issues related to fertilizer production and use. It also provides an overview of the growth rate, holding size, and indebtedness of the farm sector in India. Keywords- subsidy, agricultural, political, socioeconomic, farm sector, production

Diagnosis for ecological intensification of maize-based smallholder farming systems in the Costa Chica, Mexico

Enhanced utilization of ecological processes for food and feed production as part of the notion of ecological intensification starts from location-specific knowledge of production constraints. A diagnostic systems approach which combined social-economic and production ecological methods at farm and field level was developed and applied to diagnose extent and causes of the perceived low productivity of maize-based smallholder systems in two communities of the Costa Chica in South West Mexico. Social-economic and production ecological surveys were applied and complemented with model-based calculations. The results demonstrated that current nutrient management of crops has promoted nutrition imbalances, resulting in K- and, less surprisingly N-limited production conditions, reflected in low yields of the major crops maize and roselle and low resource use efficiencies. Production on moderate to steep slopes was estimated to result in considerable losses of soil and organic matter. Poor crop production, lack of specific animal fodder production systems and strong dependence on animal grazing within communal areas limited recycling of nutrients through manure. In combination with low prices for the roselle cash crop, farmers are caught in a vicious cycle of cash shortage and resource decline. The production ecological findings complemented farmers opinions by providing more insight in background and extent of livelihood constraints. Changing fertilizer subsidies and rethinking animal fodder production as well as use of communal lands requires targeting both formal and informal governance structures. The methodology has broader applicability in smallholder systems in view of its low demand on capital intensive resources.

Rethinking Agricultural Input Subsidy Programmes in Developing Countries.

Recent years have seen a resurgent interest in large scale input subsidies, and particularly fertilizer subsidies, in agricultural development and food security policies in Africa. Very high global grain prices in the first part of 2008 appeared to make such subsidies even more attractive, but this was complicated by even more dramatic rises in fertilizer prices. Global grain and fertiliser prices have subsequently fallen back, but high grain prices persist in many domestic markets, and future prices are very uncertain.This paper considers the roles of input subsidy programmes in poor rural economies in Africa in these difficult times. It begins with a brief review of historical changes in experience with and views of input subsidies, and of the factors behind resurgent interest in input subsidy programmes, particularly with a new generation of so called ‘smart subsidies’. It then describes how particular features of smart subsidies demand a rethinking of some aspects of economic analysis of the benefits of subsidies implemented in different ways and contexts. This provides the foundation for a conceptual framework for considering the key issues affecting the performance of subsidy programmes in discussion of recent experience of specific input subsidy programmes.The final part of the paper considers how current grain and fertiliser prices, and uncertainty regarding future prices, impacts on subsidy programmes, and asks what roles input subsidy programmes may have under different price regimes in different contexts in the future, and what critical factors will determine their performance.

Analysis of fertilizer subsidy programs and ecosystem services in Malawi

AbstractThis paper evaluates the delivery of ecosystem services under different regimes of agricultural input subsidy in post-independent Malawi using (1) the protocol of the Millennium Ecosystem Service to characterize the services; and (2) the panarchy framework to describe the relationships among the political regimes, economic growth [gross domestic product (GDP)] and food security. Ecosystem services are the benefits that humans obtain from ecosystems that support, directly or indirectly, human survival and quality of life. Panarchy is a nested set of adaptive cycles that provides a tool to explore the conductivity of ecological and social-cultural systems. The Malawian temporal political landscape has experienced several reorganizations since independence, in which the governments of Malawi have initiated socio-economic growth of the economy through implementation of different farmer input subsidy programs with variable success. The most recent agricultural subsidy program (2005–2009) appears to have shown an improvement in food security for the people of Malawi. However, this may be at the expense of an increased rate of decline in other ecosystem services, especially arable land resources and forestry. If agricultural subsidies continue to be implemented without a holistic understanding of all ecosystem services delivered to the whole country, then the system will be unsustainable. We recommend the ecosystem service approach and the panarchy framework as potentially useful tools for policy makers.

Subsidies and Crowding Out: A Double‐Hurdle Model of Fertilizer Demand in Malawi

This article uses a double‐hurdle model with panel data from Malawi to investigate how fertilizer subsidies affect farmer demand for commercial fertilizer. The article controls for potential endogeneity caused by the nonrandom targeting of fertilizer subsidy recipients. Results show that on average 1 additional kilogram of subsidized fertilizer crowds out 0.22 kg of commercial fertilizer, but crowding out ranges from 0.18 among the poorest farmers to 0.30 among relatively nonpoor farmers. This indicates that targeting fertilizer subsidies to the rural poor is likely to maximize the contribution of the subsidy program to total fertilizer use.

ELASTICITY OF CORN PRICE TRANSMISION AND ITS IMPLICATION TO FARMERS

Corn has important roles to Indonesian economy both for staple foods and for price transmission to other products. The high domestic demand for corn compared to its domestic production has made corn imports continue to grow. This research is aimed to know the elasticity of price transmission and its implication to corn’s farmers. The results of analysis show that corn price transmission is inelastic. The coefficient shows that corn market is oligopsony under the imperfect competition market. To help the corn farmers, the government has to provide fertilizer subsidy and farm credit with low interest rates, as well as impose import tariff on corn. Keywords: Corn, Elasticity of price transmission, oligopsony, imperfect competition market JEL classification numbers: Q00, Q12, Q18

Old Problems in the New Solutions? Politically Motivated Allocation of Program Benefits and the “New” Fertilizer Subsidies

Fertilizer subsidies have been reinstituted in many African countries with innovations seeking to avoid the downsides of past programs. The new subsidy paradigm however does not address how to curtail political manipulation which exacerbated inefficiencies of previous programs. This paper analyzes whether politics affected voucher allocations in Ghana’s 2008 fertilizer subsidy program. We find that more vouchers were targeted to districts that the ruling party had lost in the previous presidential elections and more so in districts that had been lost by a higher percentage margin. This evidence shows that a significant threat to the efficiency of fertilizer subsidies remains.

Fertilizer Policy Development in Nepal

Fertilizer is a vital input for agriculture production. With the growing popularity of modern agriculture, fertilizer consumption in Nepal has been increasing over the years. Since, Nepal does not produce any fertilizers, demand for fertilizers are being met through formal and informal imports. Over the years, fertilizer policy changes have been observed several times in a bid to satisfy farmers' demand for quality fertilizers. While fertilizer policy change of deregulating the fertilizer trade initially produced positive impact in overall supply situation, deregulation policy could not largely ensure the supply of quality fertilizers in required quantity and time. Re-introducing subsidy regime in chemical fertilizer by the government's recent decision could be considered as a positive development towards meeting farmers demand for quality fertilizer. However, given the quota of subsidized fertilizer, which is far less than the actual demand, the problem of supply is likely to continue. To address current problem of short supply government should increase the quota at least up to three hundred thousand metric tons. Moreover, Ministry of Agriculture and Cooperatives should come up with a long-term plan aiming at sustainable management of soil fertility.Key words: Fertilizer subsidy; Fertilizer deregulation; Fertilizer importThe Journal of AGRICULTURE AND ENVIRONMENTVol. 11, 2010Page: 126-137Uploaded date: 16 September, 2010

Does encouraging the use of wetlands in water quality trading programs make economic sense?

This paper examines a proposal to incorporate the use of wetlands in water quality trading (WQT) programs in order to meet national wetlands goals and advance WQT. It develops a competitive WQT model wherein wetland services are explicitly considered. To participate in a WQT program, an agricultural producer could employ wetlands as his nutrient management practice. Unlike most other management practices, wetlands not only remove nutrients from agricultural runoff but also provide ancillary benefits like wildlife habitat and flood control that do not exclusively accrue to the farmer. Thus, when appropriate, a WQT program should be coupled with additional incentives for wetland creation and restoration, such as using a wetland subsidy. Despite the water quality enhancement properties of wetlands, the model reveals that implementing a wetland subsidy will not necessarily translate into water quality improvements. While wetland creation is externally incentivized, the farm's opportunity cost of fertilizer usage in the WQT market is also reduced. In this sense, a wetland subsidy acts like a fertilizer subsidy. Conditions under which a wetland subsidy will help expand WQT include some degree of farmland area fixity, which is resembled in some, but not all, watersheds, and high efficiency of the wetland abatement technology.