Input Subsidy Programs Research Articles

Nutrition for all? Input subsidies and equitable diets

AbstractWhile agricultural input subsidies can improve productivity and nutrition, a key unanswered question is whether such government initiatives influence equitable nutrition access across genders. We study gender disparities in dietary diversity among 7783 smallholder farms in Zambia, evaluating the potential of subsidies to mitigate gaps. Using Oaxaca‐Blinder decomposition methods, results reveal female‐headed households (FHHs) have significantly lower dietary diversity than male‐headed ones, with gaps ranging from 6% to 12% along the distribution. Male‐headed households (MHHs) also show 9% higher input subsidy participation, influenced by education and agricultural extension access among others. Crucially, increased FHHs' participation in input subsidies could potentially close the gendered dietary diversity gap, even surpassing MHHs by 17.8%, underscoring the promise of targeted efforts to improve gender equity. However, achieving socioeconomic parity with MHHs further amplifies positive impacts. Given these findings, facilitating FHHSs' access to input subsidies can promote more equitable nutrition outcomes between genders. Broader participation could be enabled by strengthening agricultural extension and education to equip farmers, especially marginalized female‐headed and remote households, to leverage subsidized inputs. Overall, this study demonstrates that prioritizing female‐headed households' inclusion in input subsidy programs, alongside integrated support, holds strong potential to narrow gendered disparities in dietary diversity among smallholder farms in Zambia. It provides key insights to inform the design of nutrition‐sensitive, gender‐aware agricultural policies.

Closing the gaps in experimental and observational crop response estimates: a bayesian approach

Abstract A stylized fact of African agriculture is that crop responses to inorganic fertilizer application derived from experimental studies are often substantially greater than those from observational studies (e.g. surveys and administrative data). Recent debates on relative costs and benefits of expensive farm input subsidy programs in Africa, have raised the importance of reconciling these estimates. Beyond mean response differences, this paper argues for including parameter uncertainty and heterogeneity arising from variations in soil types, environmental conditions, and management practices. We use a Bayesian approach that combines information from experimental and observational data to model uncertainty and heterogeneity in crop yield responses. Using nationally representative experimental, survey, and administrative datasets from Malawi, we find that: (1) crop responses are low in observational data, (2) there are large spatial heterogeneities, and (3) based on sensitivity analysis, ignoring parameter uncertainty and spatial heterogeneity in crop responses can lead to questionable policy prescriptions.

Informality, rule-of-thumb consumers, and the effectiveness of monetary policy in emerging economies

This paper investigates how the presence of a large fraction of rule-of-thumb consumers and an informal sector and (henceforth, informality) impact on the effectiveness of monetary policy in developing/emerging economies. We develop a small open economy New-Keynesian model, which is estimated using data on selected Sub-Saharan African countries where the coexistence of these two frictions is widespread - Burundi, Malawi and Rwanda. The results reveal that (i) rule-of-thumb consumption enhances the dominance of demand shocks and makes inflation stabilization a challenge; (ii) the presence of an informal sector causes supply shocks to be dominant, creating a trade-off between stabilizing inflation and output; (iii) rule-of-thumb consumption weakens the transmission mechanism of monetary policy while its interaction with informality worsens the situation in most of the selected countries; (iv) informality amid a large population of rule-of-thumb consumers causes the nominal interest rate to counterintuitively decline in response to a contractionary monetary policy shock; (v) in some of the selected countries, a positive productivity shock counterintuitively triggers a nominal exchange rate appreciation when informality interacts with rule-of-thumb consumption behavior; (vi) the coexistence of informality and rule-of-thumb consumption behavior amplifies country-risk premium shocks and; (vii) rule-of-thumb consumption behavior is welfare enhancing. These findings are informative to policymakers, particularly in emerging economies, on the priority reforms as they transition to inflation targeting frameworks. Direct policy implications emerge regarding financial inclusion, the size of the informal sector, and farm input subsidy programs.

Effect of input subsidies and extension services: Evidence from rice productivity in Bangladesh

This study examines the effect of agricultural input subsidy cards and extension services on Bangladesh’s rice productivity, using plot level panel data from three waves (2011–2019) of the Bangladesh Integrated Household Survey. To control for endogeneity of the two programs, instrumental variable and control function approaches are used. Findings reveal that access to input subsidy cards and extension services raise productivity in rice-planted plots by nearly 20% and 22%, respectively. Further, the channels and type of advisory services matter. Finally, access to input subsidy cards and extension services is more beneficial in areas prone to droughts and excessive rainfall. These findings underscore the value of complementary investments in robust extension systems, especially in vulnerable regions, to optimize the performance of input subsidy programs. Expanded extension services coupled with input subsidies can be an effective policy mix to raise productivity, strengthen climate resilience, and promote inclusive agricultural growth in Bangladesh.

Government fertilizer subsidies, input use, and income: The case of Senegal

Most Sub-Saharan countries implement input subsidy programs (ISPs) in an attempt to increase fertilizer use, crop yields and farmers’ income and to improve household food security. Senegal is no exception and has had an ISP in place for the last 15 years. This article assesses how access to subsidized fertilizer under the ISP is associated with changes in fertilizer and manure use and gross margin. Using household-level data from two agroecological zones, we employ an endogenous switching regression framework to control for the potential endogeneity of access to subsidized fertilizer. We find that access to subsidized fertilizer is associated with an increase in the total use of fertilizer of +39 % but also with a reduction in the use of commercial fertilizer of 18 %. Access to subsidized fertilizer is also associated with a reduction in the likelihood of using manure of 5 % and an increase in farmers’ total gross margin of 11 %. Results are heterogeneous across agroecological zones, with a strong crowding-out of commercial fertilizer where widely available to farmers. In this case, revising the design of the ISP could lead to improved efficiency.

The impact of smart input subsidy program on farm productivity: Evidence from Tanzania

Policymakers have a renewed interest in input subsidy programs in sub-Saharan Africa. However, the evidence of the program's impact is mixed. This paper uses the case of Tanzania's National Agricultural Input Voucher Scheme (NAIVS) to examine its effect on farm productivity. To account for the endogeneity problem arising from the non-random targeting of beneficiaries, this study employed a staggered difference-in-differences approach with a double robust estimator method on a three-wave panel survey. This approach is relevant because the treatment variable—NAIVS participation was gradually rolled out to households over multiple periods and groups. The results do not show evidence that the NAIVS program increased farm productivity. However, the group aggregate effects suggest that the group initially treated in 2010 experienced a positive and significant impact on maize production and income. This could indicate that during the early stages of the NAIVS program, extra effort was likely invested to ensure its effectiveness. Furthermore, the heterogeneous effect of farm size reveals that the NAIVS program increased the participation of beneficiary households with large-scale farms rather than small-scale farms. This suggests that the program did not effectively target resource-poor households. Finally, this paper calls for effective targeting and careful implementation of programs to improve farmer productivity.

Impact of agricultural input subsidy policy on market participation and income distribution in Africa: A bottom-up/top-down approach

Previous literature on the effects of agricultural input subsidy programs on smallholder market participation has only focused on partial equilibrium analysis, while ignoring important general equilibrium effects. Therefore, this study fills this gap by highlighting the critical role of targeting in the implementation of the agricultural input policy in the Malawian context. Specifically, we establish a bi-directional link between a farm household model and a general equilibrium model in order to explore the spillover effects of the input policy on market orientation and income distribution. Based on the findings, the partial equilibrium analysis underestimates the effect of the input policy and neglects important heterogeneities between farmers. More importantly, we find that extending the program to farmers who are excluded from the cereal and/or labor markets can lead to higher market participation, economic growth, and a reduction in poverty. Our findings suggest better targeting to increase the impact of agricultural input policy on market participation.

The politics of agricultural policy and nutrition: A case study of Malawi's Farm Input Subsidy Programme (FISP).

The concept of food and nutrition policy has broadened from simply being an aspect of health policy, to policy interventions from across a wide range of sectors, but still with potentially important impact on nutritional outcomes. This wider and more complex conceptualisation involves policy with multiple objectives and stakeholder influences. Thus, it becomes particularly important to understand the dynamics of these policy processes, including policy design and implementation. To add to this literature, we apply the Kaleidoscope Model for understanding policy change in developing country contexts to the case-study of an agricultural input subsidy (AIS) programme in Malawi, the Farm Input Subsidy Programme (FISP), exploring the dynamics of the FISP policy process including nutritional impact. Over a three-month period between 2017 and 2019 we conducted in-depth interviews with key stakeholders at national and district levels, and focus groups with people from rural districts in Malawi. We also undertook a review of literature relating to the political economy of the FISP. We analysed the data thematically, as per the domains of the Kaleidoscope Model. The analysis across the FISP policy process including policy design and implementation highlights how stakeholders' ideas, interests and influence have shaped the evolution of FISP policy including constraints to policy improvement-and the nutritional impacts of this. This approach extends the literature on the tensions, contradictions and challenges in food and nutrition policy by examining the reasons that these occur in Malawi with the FISP. We also add to the political science and policy analysis literature on policy implementation, extending the concept of veto players to include those targeted by the policy. The findings are important for consideration by policymakers and other stakeholders seeking to address malnutrition in rural, food-insecure populations in Malawi and other low-income settings.

Food choice responses to changes in the price of a staple crop: a discrete choice experiment of maize in rural Malawi

Price and affordability are important drivers of food choice, particularly for rural smallholder farming households in Malawi, experiencing extreme poverty, food insecurity, and lack of dietary diversity. Lowering the cost of staple crops such as maize targeted by agricultural input subsidy programmes (AISPs) may potentially increase consumption of the staple crop, but it might also lead to consumption of a more diverse range of foods. Using a discrete choice experiment, this study investigated food choice responses to changes in maize price in rural Malawi. Study participants (n = 400) were given a series of choice tasks for which they were asked to choose between food baskets with varying cost, reflecting local prices and with maize at both high and low price. Baskets contained different types of foods including maize, rice, cabbage, small-dried fish, and/or a soft drink. The data were analysed using mixed logit models including investigation of heterogenous effects based on socio-demographic characteristics, food security and actual market purchases. Individuals revealed a preference, as expected, for lower cost food baskets. Small-dried fish and cabbage were the highest valued food products. At a low cost of maize, the expected utility from a basket with maize was greater than a basket with other items, particularly among households with high- and low-food purchases, low socioeconomic status, living in Phalombe District, and experiencing food insecurity, indicating that among such populations a low price of maize will not necessarily lead to increases in dietary diversity. In contrast, among households living in Lilongwe District, with high SES and food secure, a lower maize price will not lead to a loss in dietary diversity as they prefer a basket containing non-maize products over maize. The findings suggest that achieving food security and dietary diversity may require a range of policy approaches addressing different pathways of impact as opposed to relying on subsidizing inputs for staple crop production.

Farmer responses to an input subsidy and co-learning program: intensification, extensification, specialization, and diversification?

Sustainable intensification aims to increase production and improve livelihoods of smallholder farmers in sub-Saharan Africa. Many farmers, however, are caught in a vicious cycle of low productivity and lack of incentives to invest in agricultural inputs. Moving towards sustainable intensification therefore requires support such as input subsidies and learning about new options through, for instance, co-learning approaches. Yet such support is not straightforward as agricultural developments often diverge from the envisaged pathways: extensification may occur instead of intensification and specialization instead of diversification. Understanding of farmers’ responses to incentives such as input subsidies and new knowledge is lacking. Our overarching aim was to improve this understanding, in order to better support future pathways for agricultural development in smallholder farming. Over five seasons, we compared the responses of farmers in western Kenya taking part in a novel co-learning program we developed, which included provision of an input voucher, with the responses of farmers who only received a voucher. We also assessed the differences before and during the program. We used diverse indicators that were related to the different agricultural development pathways. Farmer responses were mainly a result of the input voucher. Farmers increased maize yields (intensification) and maize area (specialization) for maize self-sufficiency. Increased farm and maize areas in combination with relatively low N application rates also pointed to extensification coupled with the risk of soil N mining. Diversification by increasing the soybean and groundnut area share was facilitated by the integrated co-learning approach, which thereby supported relatively complex farm management changes. Our results highlight the difficulty of enabling yield and production increases, while also meeting environmental and economic goals. The diversity of farmer responses and constraints beyond the farm level underlined the importance of wider socio-economic developments in addition to support of sustainable intensification at farm level.

Do subsidies on seed and fertilizer lead to child labour? Evidence from Malawi

SummaryMotivationSub‐Saharan African governments have subsidized farm inputs—fertilizer and seed especially—to increase food production by small‐scale farmers to improve food security. A potential drawback of such schemes is that they may encourage farmers to put their children to work in the fields, harming their education.PurposeDid the Malawi Farm Input Subsidy Programme that began in 2005/2006 increase child labour on the holdings of beneficiary smallholders?Methods and approachThe article analyses data from the Malawi Integrated Household Panel Survey to examine the effect of seed and fertilizer subsidies on child labour. The study employs a correlated‐random‐effects‐control function regression, using district coupon allocation as an instrumental variable for coupons received by households.FindingsThere was statistically significant evidence that the Farm Input Subsidy Programme (FISP) increased child labour. The effect, however, was relatively small. At the sample mean, it was estimated that the programme led to a 12 percentage point increase in the likelihood that children would work on the farm and that the children would work an additional 72 minutes a week on the fields. The FISP, however, did not affect the enrolment of children in school.Effects varied socially: children in male‐headed, uneducated, and smallholder households were the most affected.Policy implicationsAlthough the observed effects are not large, they are unwelcome. Two policy corrections could eliminate them. One, the award of subsidy coupons could be made conditional on children's school performance. Two, given that the effects barely applied in households where parents had been to school, agricultural training should stress the importance of children attending school and not working in the fields.

How effectively might agricultural input subsidies improve nutrition? A case study of Malawi’s Farm Input Subsidy Programme (FISP)

How effectively might agricultural input subsidies improve nutrition? A case study of Malawi’s Farm Input Subsidy Programme (FISP)

Improving wasting among children under-5 years in Malawi: The role of farm input subsidies.

Wasting among children under-5 years remains a public health problem in Malawi, despite the quest to improve food availability through Farm Input Subsidy Program (FISP). As such, the study examined the link between FISP and child wasting. Using Malawi Integrated Household Panel Surveys for 2013, 2016, and 2019, two-stage least squares approach was employed to run a Cobb Douglas production function and a correlated Random Effects (CRE) Model to account for endogeneity challenges and an unbalanced panel dataset. The study hypothesized the role of FISP to dietary diversity at the household level on child wasting [weight-for-height (WHZ)]. Based on the analysis, the study found that household access to FISP coupons was not a stand-alone predictor for low wasting among children under-5 years. However, increased maize production due to FISP coupon access significantly correlated with lower wasting likelihood incidences at the household level. Worth to note, that in 2015/16, households that had accessed FISP coupons and were in the central region had higher wasting probabilities among the children under-5 years in Malawi compared to other counterparts panels. This implies challenges to addressing wasting among children under-5 years– which can be attributed to higher redemption costs of the FISP coupon. Therefore, the current study suggests that input subsidies can improve the reduction of wasting among children under-5 years through specific pathways, among them, increased maize production and considering appropriate targeted approaches to ensure households access the inputs for sustained food availability, which in turn enhances improved the children under-5 years health dividends in Malawi.

Child nutrition and farm input subsidies: The complementary role of early healthcare and nutrition programs in Malawi

Despite significant efforts to improve under-nutrition, the prevalence of low height-for-age in the world’s population remains high. It is highest in sub-Saharan Africa, where extensive early childhood nutrition programs, and the reintroduction of the farm input subsidy program have not significantly altered under-nutrition. Empirical evidence shows that early-life nutrition interventions have limited effects in the long-term. Even though subsidy programs are aimed at enhancing food security, they only improve nutrition outcomes that are sensitive to intervention typically in the short-run, weight-for-age and weight-for-height, but not height-for-age, which is the outcome of a range of interventions and circumstances that effect nutrition cumulatively over the life cycle. We argue that farm input subsidies only support height-for-age as part of a set of in utero and early life investments in nutrition that are complemented by post-infancy community nutrition programs. We use the 2010–2013 Malawi Integrated Household Panel Survey and the 2010 Malawi Demographic and Health Survey for our analysis. We find a positive impact of farm input subsidy vouchers on height-for-age only when maternal health and child nutrition interventions during the in utero and early-life phases have first taken place. When the results are considered by age group, they show that the subsidy positively relates to height-for-age amongst children younger than three years when complemented by maternal access to a WHO-recommended level of maternal healthcare. We find some support to show that the maternal investment only sustains beyond three years of age conditional on a child also participating in a nutrition enhancement program. Increasing long-run child nutrition demands coordinating agricultural and healthcare policies. The sustained impact of investments made during early-life requires follow-up nutrition interventions in later years and financial liquidity to activate the benefits of health policies. Policy coordination is not a ”nice to have”. Rather, co-ordinating a range of responses that target multiple life stages and policy domains is essential for unlocking the benefits of earlier investments later in children’s lives.

Impact of the farmer input support policy on agricultural production diversity and dietary diversity in Zambia

There is conflicting evidence on the association between farm production diversity and dietary diversity, worldwide. Notwithstanding this, farmer input subsidy programmes aimed at promoting both agricultural production diversity and dietary diversity as the gateways for improving household nutritional status, have been a major agricultural policy thrust in most countries in sub-Saharan Africa, including Zambia. However, information on the effects of Zambia’s Farmer Input Support Policy (FISP) on farm production diversity and household dietary diversity appears to be scanty. The aim of this study therefore was twofold; first to assess the link between FISP and agricultural production diversity and secondly, the association between agricultural production diversity and dietary diversity in Zambia. To estimate these relationships, Matching algorithm strategies and Poisson regression were applied to a nationally representative sample of 7934 households that participated in the 2015 Rural Agricultural Livelihoods Survey conducted by Zambia’s Central Statistical Office (CSO) and Indaba Agricultural Policy Research Institute (IAPRI).The relationship between FISP and production diversity was found to be positive in all the diversity measures (crop count, agricultural income diversity and household income diversity) except the Simpson crop production index. During the period under consideration (2013/14 season), FISP had a significant impact on household dietary diversity as well. However, mixed results were obtained on the efficacy of FISP on monthly food inadequacy. There was also no evidence to support the link between production diversity and household dietary diversity. The inconclusive result on the ability of FISP to increase monthly food availability, and zero effect on crop area diversification, may indicate a limitation of the chemical fertilizers. There may be a need to equally subsidise the use of non-chemical fertilization inputs which are sustainable in the long run.

Subsidizing improved legume seeds for increased household dietary diversity: Evidence from Malawi’s Farm Input Subsidy Programme with implications for addressing malnutrition in all its forms

Many sub-Saharan African countries implementing agricultural input subsidies programmes (AISP) concentrate on fertilizers and staple food crops which may have little or no effect on consumption of diverse nutrient dense non-staple foods. The programme in Malawi – the Farm Input Subsidy Programme (FISP) – includes legume seeds, but little research has been undertaken to evaluate the effects of this strategy on household dietary diversity. In this study, we used two waves of integrated household panel survey data of 2013 and 2016 to examine the dietary diversity gains from inclusion of legume seed coupons in the programme. The control function approach for dealing with selection bias into a programme is used in Poisson regression of panel data. The results show that access as well as redemption of legume coupons is positively associated with diversified diets. This is especially through location fixed effects in the southern region of Malawi, higher production diversity, greater land holding sizes and the sale of maize. Further, households that had less need to satisfy hunger through the growing of maize were those likely to redeem legume coupons. The results suggest a more nuanced pathway of impact from coupon access, redemption or type of crop produced to dietary diversity than the pathway that might be expected, and have implications for how best to understand and conceptualise the tensions and synergies between addressing different aspects of malnutrition in all its forms – and suggest the importance of addressing food insecurity constraints that potentially limit the growing of nutrient-rich legume crops as well as wider increases to dietary diversity. The results also point to the importance of the income pathway and food markets in facilitating greater dietary diversity. Further consideration of these issues by policymakers and the wider agri-nutrition community will be important to advance the discussion and research of how best to design AISP and other public policy to address malnutrition in all its forms.

Does subsidizing legume seeds improve farm productivity and nutrition in Malawi?

Over the last two decades, most African governments have been implementing agricultural input subsidy programs (ISPs) aimed at increasing crop yields, and incomes, and reducing hunger, nutritional insecurity, and poverty. Although ISPs are popular policy interventions, it remains unknown whether they improve the productivity of nutrient-dense crops such as legumes, dietary quality, and child or adolescent nutrition. We address this gap by testing the hypothesis that subsidizing legume seeds (SLS) improves farm productivity, dietary quality, and child or adolescent nutrition. To do this, we use decade-long nationally representative panel data from Malawi and panel regression models with an instrumental variable approach to address endogeneity. We found that SLS increases area planted with legume crops, groundnut yield, gross value of crop production, along with production and consumption (dietary) diversity, calories, and micronutrient—vitamin A and zinc—consumption. We further found that SLS is positively correlated with child or adolescent weight-for-age Z-score but not height-for-age Z-score. These novel findings emphasize that SLS could be among the key policy interventions to address malnutrition in the Malawian small farm sector.

Administration of Rice Input Subsidy Programme on Quality Life of Farming Communities in North B District, Unguja

This study investigated the administration of rice input subsidy on the quality life of farmers among farming communities in North B, District, Unguja. Four objectives guided this study which included examining the correlation between rice farming subsidies and the quality of life, examining the impact of seeds subsidies and farmers’ quality life, determining the impact of fertilizers subsidies on farmers’ quality of life as well as to examine the impact of pesticides subsidies on farmers’ quality of life in North B District, Unguja. The study used a cross-sectional survey design where questionnaires were used to collect data from 87 rice farmers of North B, district Unguja through simple random sampling. The study reveals a moderate correlation between rice input subsidies and farmers’ quality life (r = 0.475, p < 0.01). Moreover, a standard multiple regression indicates that the independent variables rice input subsidies (fertilizers, seeds and pesticides) accounted for 25% of the variability in predicting quality life among farming communities in North B district, Unguja (R2 = 0.247). Primarily, pesticide subsidy, has a significant effect or impact on farmers’ quality life (β = 0.352, t = 2.183, p < 0.05). However, the results also indicate that two independent variables that are fertiliser subsidy (β = 0.050, t = 0.201, p > 0.05) and seeds subsidy (β = 0.119, t = 0.470, p > 0.05) do not have any significant impact on farmers’ quality life. With this result, the study recommends that the government support rice farmers by increasing the provision of more rice input subsidies such as fertilizers, pesticides, and seeds to rice farmers of Northern, B District of Unguja timely manner to improve their quality of life.

Exploring adoption effects of subsidies and soil fertility management in Malawi

AbstractFarm input subsidies and integrated soil fertility management (ISFM) technologies are popular policy interventions in sub‐Saharan Africa, often with the stated goals of increasing crop yields and incomes while reducing hunger and poverty. However, little is known about the combined adoption effects of input subsidies and ISFM technologies on farm productivity and household nutrition in developing countries. Using a decade of nationally representative panel data from Malawi, we analyse joint adoption effects of input subsidies and ISFM technologies on smallholder household welfare. We use multivariate probit, dynamic random effects probit, and multinomial endogenous treatment effects models to account for selection bias and endogeneity originating from both observed and unobserved heterogeneity. We find that participation in a farm input subsidy programme is strongly associated with a 15–29 percentage point increase in the probabilities of adoption of three ISFM technologies: conservation agriculture, soil and water conservation, and organic fertiliser. Furthermore, we find that the joint use of input subsidies and ISFM technologies increased crop income and micronutrient consumption by at least 12%. Our findings suggest that the joint use of input subsidies and ISFM technologies are among potential strategies to address low productivity and nutritional insecurity through improvements in soil health.

Effect of Nigeria’s e-voucher input subsidy program on fertilizer use, rice production, and household income

Nigeria introduced an e-voucher fertilizer subsidy program that distributes vouchers directly to a beneficiary’s mobile phone for enhancing agricultural productivity and food security by changing land use from extensive to intensive farming. By using panel data on rice-growing households in 2012 and 2014 and applying a household fixed effects approach and inverse probability weighting methods, we assess whether and how much the e-voucher program increases fertilizer application on rice production. We do not find evidence that the program results in higher fertilizer application. This is because there is a strong crowding-out effect in the study areas in which the private fertilizer market is active. This finding suggests that introducing a potentially innovative device is not sufficient to boost agricultural production and food security.