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Input subsidies and demand for improved maize: Relative prices and household heterogeneity matter!

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  • Holden, Stein

    (Centre for Land Tenure Studies, Norwegian University of Life Sciences)

Abstract

This study uses simple non-separable farm household models calibrated to household, market, farming and policy context conditions in Central and Southern Malawi. The models are used to simulate how household characteristics, design and access to input subsidies affect the demand for improved maize seeds; how increasing land scarcity affects the cropping system and demand for improved maize; and how access to improved maize seeds affects household welfare with varying access to input subsidies. The model simulations demonstrate that a) there is a high risk that access to subsidized improved maize seeds can crowd out commercial demand for improved maize seeds but the effect is very sensitive to household characteristics, market characteristics and relative prices; b) increasing land scarcity increases the demand for improved maize seeds and improved maize facilitates intensification among others through intercropping of maize with legumes such as beans and pigeon peas; c) the welfare effects depend on households’ ability to utilize the potential of the improved varieties by combining them with complementary inputs.

Suggested Citation

  • Holden, Stein, 2013. "Input subsidies and demand for improved maize: Relative prices and household heterogeneity matter!," CLTS Working Papers 6/13, Norwegian University of Life Sciences, Centre for Land Tenure Studies, revised 10 Oct 2019.
    • Handle: RePEc:hhs:nlsclt:2013_006
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    References listed on IDEAS

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    1. Holden, Stein, 2014. "Agricultural Household Models for Malawi:Household Heterogeneity, Market Characteristics, Agricultural Productivity, Input Subsidies, and Price Shocks. A Baseline Report," CLTS Working Papers 5/14, Norwegian University of Life Sciences, Centre for Land Tenure Studies, revised 10 Oct 2019.

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    More about this item

    Keywords

    Improved maize varieties; input subsidies; impact on seed demand; land scarcity; intensification; cash constraints; household welfare;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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