Old Wine in a New Bottle? Impact of the ISPAAD Input Subsidy Programme on the Subsistence Economy in Botswana

This paper estimates the impact of the ISPAAD input subsidy programme on cultivated area, output and productivity in Botswana’s subsistence economy, using panel data for five agricultural regions and the cropping seasons of 1978/79 to 2013/14. The paper also assesses programme cost effectiveness and draws implications for programme sustainability. Results show that the programme has induced increases of 78%, 87%, 40%, 168% and 46% in total acreage, cereal acreage, non-cereal acreage, cereal output and cereal yields, respectively. Therefore, the programme may have impacted positively on food security and welfare among subsistence households. However, it was found to not be cost effective in that the value of crops produced was equivalent to only 51% of public expenditure on land cultivation and seasonal inputs. Moreover, the ratio of the value of incremental cereals produced to programme expenditure on cereals was estimated at 26%. Therefore, public expenditure patterns suggest that ISPAAD’s positive impacts on crop production and food security will not be sustained beyond the programme implementation period. Some farmers would exit farming if production costs on land cultivation alone were to be privatised, rather than being borne by Government. The main conclusion is therefore that ISPAAD is not cost effective, and is fiscally and economically unsustainable.