Does Subsidizing Fertilizer Increase Yields? Evidence from Malawi

Despite their strain on government and donor budgets, fertilizer subsidies have once again become popular policy tools in several Sub-Saharan Africa countries as a potential way to increase yields in staple crops like maize. Policy makers often assume that farmers who receive the subsidy will achieve yield responses that are similar to those obtained by farmers who pay commercial prices for the input. This notion has not been verified empirically. Our study uses panel data from Malawi, a country that recently implemented a fertilizer subsidy program, to compare maize yield response to fertilizer from farmers who received subsidized fertilizer with yield responses from those who paid commercial prices for the input. Descriptive results indicate that maize plots using commercial fertilizer obtain higher yields per kilogram of fertilizer than maize plots that used subsidized fertilizer. Conversely, the results obtained using a fixed-effects estimator indicate that when other factors are controlled for, maize plots that use subsidized fertilizer obtain a higher yield response than other plots. The results seems to be influenced by a group of farmers who used no fertilizer before the subsidy program began, but used subsidized fertilizer after the program was implemented. This group of farmers obtained significantly higher yields in the year when they receive the subsidy than did the rest of the farmers in the sample during that year. These findings indicate that in order to be effective, government officials should specifically target fertilizer subsidies to farmers who lack access to commercial markets or would not otherwise find it profitable to purchase the input.Malawi, Fertilizer Subsidies, Production Function, Crop Production/Industries,

Old problems in the new solutions?

Despite their disappointing performance in the recent past, fertilizer subsidies have re-emerged as a tool in the agricultural strategies of many countries in Sub-Saharan Africa. The new paradigm for fertilizer subsidies calls for use of such mechanisms as vouchers to target benefits to poor smallholders and public–private partnerships to develop private markets. There is some belief that with these innovations, fertilizer subsidy programs will circumvent the deleterious consequences of the programs of the past. However, there has been a glaring lack of innovation in how to prevent politics from dominating the allocation of subsidy program benefits and exacerbating inefficiencies as was the experience in earlier programs. This paper studies how vouchers, which could be used towards the purchase of fertilizer, were distributed amongst districts in Ghana’s 2008 fertilizer subsidy program. We find that politics played a significant role in the allocation of vouchers. Higher numbers of 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 margin. A district received 2 percent more vouchers for each percentage point by which the ruling party had lost the previous presidential election - this amount is both statistically and numerically significant. The analysis also shows that district poverty levels, which should have been an important consideration in an economic efficiency motivated distribution, were not a statistically significant determinant of districts’ voucher allocation. The evidence that vouchers were targeted to areas in which the opposition party received strong support is suggestive of the vouchers being used for vote-buying. This finding raises the caution that despite innovations in implementing fertilizer subsidies, politically motivated allocation of subsidy benefits remains a major potential source of inefficiency.Fertilizer, politics, Subsidies,

Distribusi Pupuk Subsidi Kepada Petani Tebu Dalam Perspektif Manajemen Publik (Studi Pada Koperasi Unit Desa Di Sumberpucung Kabupaten Malang)

The main problem of the subject in the journal is the distribution of fertilizer subsidy in KUD Sumberpucung poor districts. The background of this research are raised to see how the process of distribution of fertilizer subsidy by KUD risen by referring to No. Permendagri. 17/M-DAG/PER/6/2011 about bersubsdi fertilizer procurement and distribution for the agricultural sector. This research uses descriptive study with a qualitative approach. Method of data analysis was data reduction, data presentation, and drawing conclusions. This research resulted in the conclusion that the distribution of subsidized fertilizer using a closed system by involving the government, private, and community in order to smooth the process of distribution of fertilizer. In fact, in this mechanism, there are still drawbacks such as socialization of the subsidy program has not run optimally, the availability of fertilizer among farmers is still scarce and weak oversight in response to the peyelewengan

Assessing the Market for Poultry Litter in Georgia: Are Subsidies Needed to Protect Water Quality?

Concerns about nutrient loads into our waters have focused attention on poultry litter applications. Like many states with a large poultry industry, Georgia recently designed a subsidy program to facilitate the transportation of poultry litter out of vulnerable watersheds. This paper uses a transportation model to examine the necessity of a poultry litter subsidy to achieve water protection goals in Georgia. We also demonstrate the relationship between diesel and synthetic fertilizer prices and the value of poultry litter. Results suggest that a well functioning market would be able to remove excess litter from vulnerable watersheds in the absence of a subsidy.fertilizer, phosphorous, poultry litter, subsidy, transportation model, water quality, Environmental Economics and Policy, Marketing, Q12, Q13, Q25, Q53,

Overview of the agricultural input sector in Ghana

Knowledge of the characteristics and size of the agricultural input sector of a country is critical for policymakers to design appropriate interventions that not only foster growth in the sector, but also support the agricultural development goals of the country. In 2009, the International Food Policy Research Institute and the International Fertilizer Development Center jointly conducted a census of agricultural input dealers in Ghana to fill a critical data gap on the nature of the country’s agricultural input sector. This paper presents a detailed description of the sector’s structure, market practices, and supply chain. It also assesses the sector’s response to recently implemented fertilizer subsidies, and findings show that, despite the government’s goal of making the subsidy program supportive of the private market, the majority of fertilizer retailers were excluded from participating.agricultural input sector, fertilizer, agro-dealers network, vouchers, subsidies,

Effects of maize fertilizer subsidies on food security in Malawi

This study employs spatial analysis to examine the impact of smallholder fertilizer subsidies on national and household food security in Malawi. It illustrates that at national level, food security is positively linked to fertilizer subsidies. However, at household level, maize production is heavily skewed with the south lagging behind the centre and the north. In the short-to-medium term, replacing the current countrywide subsidy program with a more targeted one is highly recommended. Furthermore, by diversifying into other crops or smallscale businesses, smallholders may be able to increase their income and hence food buying power

Initial Conditions and Changes in Commercial Fertilizers under the Farm Input Subsidy Programme in Malawi: Implications for Graduation

The government of Malawi has been implementing agricultural input subsidies since 2005/06 as an intervention aimed at improving food security among resource poor smallholder farmers. Although the issue of graduation is not articulated in the design of the programme, this study investigates the determinants of changes in the demand for commercial fertilizers in the presence of the subsidy programme. The increase in purchase of commercial fertilizers by subsidized households may indicate prospects of graduation from the subsidy programme in future. Using panel data between the 2004/05 and 2008/09 seasons, we find that 6 percent of households that did not purchase ommercial fertilizer in 2004/05 could afford to purchase fertilizers commercially in subsidy years. Relative to those that never purchase fertilizers, these households tend to have higher per capita expenditure and higher values of durable assets. The econometric results show that initial conditions matter, with initial household size, per capita expenditure, agricultural output, and existence of business enterprise all playing a positive role in the changes in demand for commercial fertilizer. We also find that commercial fertilizers decreases with initial commercial fertilizers, land holdings and existence of ADMARC. The results suggest that the poor may have low prospects of graduation and less involvement of ADMARC and greater participation of the private sector can help in improving the ‘potential graduation conditions’

Promoting Fertilizer Use in Africa: Current Issues and Empirical Evidence from Malawi, Zambia, and Kenya

This study was funded jointly by the Regional Strategic Agricultural Knowledge Support System (Re-SAKSS) for Southern Africa, based at International Water Management Institute, Pretoria, South Africa, and by the United States Agency for International Development's Africa Bureau. Much of the data and analysis reported in this study was carried out under the Tegemeo Agricultural Monitoring and Policy Analysis Project, funded by USAID/Kenya; the Food Security Research Project/Markets, Trade and Enabling Environment (MATEP) Program, funded by USAID/Zambia and the Swedish International Development Agency; and by the DFID and USAID offices in Lilongwe, Malawi.fertilizer, Africa, Malawi, Zambia, Kenya, Crop Production/Industries, Q18,