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Welfare Effect of Farm Input Subsidy Program in the Context of Climate Change: Evidence from Malawi

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  • Asfaw, Solomon
  • Carraro, Alessandro

Abstract

The Farm Input Subsidy Program (FISP) in Malawi was introduced in 2005/06 season against the background of bad weather affecting production, prolonged food shortages and high input prices in the absence of soft farm input loans for smallholder farmers. The primary purpose of the program was to increase resource-poor smallholder farmers’ access to improved agricultural farm inputs to achieve food self-sufficiency and increased income through increased maize and legume production. This paper uses a recently released panel data of nationally representative sample households combined with geo-referenced climate and administrative data to analyze FISP targeting effectiveness and the program’s impact on a broad set of welfare outcome variables including consumption, caloric intake, marketed surplus and crop productivity, within a context of climate variability. Our study finds that Malawi’s FISP targeting needs to improve if the primary target is to reach resource-poor and climate-constrained households. Moreover, results show that the program is positively associated with household welfare, food security and productivity. Heterogeneity analysis also suggests that the program benefits households residing in areas characterized by higher climate variability, with a stronger impact for a larger level of treatment.

Suggested Citation

  • Asfaw, Solomon & Carraro, Alessandro, 2016. "Welfare Effect of Farm Input Subsidy Program in the Context of Climate Change: Evidence from Malawi," 2016 Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 246281, African Association of Agricultural Economists (AAAE).
    • Handle: RePEc:ags:aaae16:246281
    DOI: 10.22004/ag.econ.246281
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    References listed on IDEAS

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    7. Mason, Nicole M. & Ricker-Gilbert, Jacob, 2013. "Disrupting Demand for Commercial Seed: Input Subsidies in Malawi and Zambia," World Development, Elsevier, vol. 45(C), pages 75-91.
    8. Jacob Ricker-Gilbert & Thomas Jayne & Gerald Shively, 2013. "Addressing the 'Wicked Problem' of Input Subsidy Programs in Africa," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 35(2), pages 322-340.
    9. Stein Holden & Rodney Lunduka, 2012. "Do fertilizer subsidies crowd out organic manures? The case of Malawi," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 303-314, May.
    10. Rodney Lunduka & Jacob Ricker-Gilbert & Monica Fisher, 2013. "What are the farm-level impacts of Malawi's farm input subsidy program? A critical review," Agricultural Economics, International Association of Agricultural Economists, vol. 44(6), pages 563-579, November.
    11. Fisher, Monica & Kandiwa, Vongai, 2014. "Can agricultural input subsidies reduce the gender gap in modern maize adoption? Evidence from Malawi," Food Policy, Elsevier, vol. 45(C), pages 101-111.
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    Cited by:

    1. Martin Mwale & Dieter von Fintel & Anja Smith, 2022. "School drop out and farm input subsidies: gender and kinship heterogeneity in Malawi," Working Papers 01/2022, Stellenbosch University, Department of Economics.

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    Agricultural Finance; Environmental Economics and Policy; Research and Development/Tech Change/Emerging Technologies;
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