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The Impact of Fertilizer Subsidies on National Fertilizer Use: An Example from Malawi

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  • Ricker-Gilbert, Jacob
  • Jayne, Thomas S.

Abstract

This paper examines the impact of government funded fertilizer subsidize on national level fertilizer use. We use panel data to investigate how the 2006/07 fertilizer subsidy program in Malawi impacted farmers' decisions to purchase commercial fertilizer. Using a fixed effects estimator to control for time invariant unobservables, we find that when farmers' ability to acquire subsidized fertilizer is treated as exogenous, it has a significant negative impact on commercial fertilizer purchases. We also find that wealth and social networks have a significantly positive impact on who receives subsidized fertilizer. We then use instrumental variables to control for the endogeneity of subsidized fertilizer acquisition affecting commercial purchases. Using a fixed effects estimator on this model demonstrates that acquiring subsidized fertilizer does not have a significant impact on commercial purchases.

Suggested Citation

  • Ricker-Gilbert, Jacob & Jayne, Thomas S., 2008. "The Impact of Fertilizer Subsidies on National Fertilizer Use: An Example from Malawi," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6464, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea08:6464
    DOI: 10.22004/ag.econ.6464
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    References listed on IDEAS

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    1. Warjiyo, Perry & Huffman, Wallace E., 1997. "Dynamic input demand functions and resource adjustment for US agriculture: state evidence," Agricultural Economics, Blackwell, vol. 17(2-3), pages 223-237, December.
    2. Dorward, Andrew & Chirwa, Ephraim & Kelly, Valerie A. & Jayne, Thomas S. & Slater, Rachel & Boughton, Duncan, 2008. "Evaluation Of The 2006/7 Agricultural Input Subsidy Programme, Malawi. Final Report," Food Security Collaborative Working Papers 97143, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    3. Zhiying Xu & William J. Burke & Thomas S. Jayne & Jones Govereh, 2009. "Do input subsidy programs “crowd in” or “crowd out” commercial market development? Modeling fertilizer demand in a two‐channel marketing system," Agricultural Economics, International Association of Agricultural Economists, vol. 40(1), pages 79-94, January.
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    Citations

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    Cited by:

    1. Holden, Stein T. & Lunduka, Rodney, 2012. "Input Subsidies, Cash Constraints and Timing of Input Supply:-Experimental Evidence from Malawi," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 131460, International Association of Agricultural Economists.
    2. Keita, Moussa, 2012. "Impact of subsidized inputs credits on land allocation and market-oriented agriculture in rural households in Mali," MPRA Paper 57542, University Library of Munich, Germany.
    3. L. Christiaensen, 2009. "Revisiting the Global Food Architecture. Lessons from the 2008 Food Crisis," Review of Business and Economic Literature, Intersentia, vol. 54(3), pages 345-362, September.
    4. Tschirley, David L. & Theriault, Veronique, 2013. "On the Institutional Details that Mediate the Impact of Cash Crops on Food Crop Intensification: The Case of Cotton," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151263, Agricultural and Applied Economics Association.
    5. repec:mth:jas888:v:7:y:2019:i:1:p:82-102 is not listed on IDEAS
    6. Luc Christiaensen, 2009. "Revisiting the Global Food Architecture. Lessons from the 2008 Food Crisis," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(3), pages 3345-3361.
    7. Theriault, Veronique & Tschirley, David L., 2014. "How Institutions Mediate the Impact of Cash Cropping on Food Crop Intensification: An Application to Cotton in Sub-Saharan Africa," World Development, Elsevier, vol. 64(C), pages 298-310.
    8. Wouter Zant, 2014. "Do Organic Inputs in African Subsistence Agriculture Raise Productivity? Evidence from Plot Data of Malawi Household Surveys," Tinbergen Institute Discussion Papers 14-114/V, Tinbergen Institute.
    9. Chibwana, Christopher & Shively, Gerald & Fisher, Monica & Jumbe, Charles & Masters, William A., 2014. "Measuring the impacts of Malawi’s farm input subsidy programme," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 9(2), pages 1-16, April.

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    Agricultural and Food Policy; Crop Production/Industries;

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