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Fertilizer Subsidy, Political Influence and Local Food Prices in Sub-Saharan Africa: Evidence from Nigeria

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  • Takeshima, Hiroyuki
  • Liverpool-Tasie, Lenis Saweda O.

Abstract

We investigate the effects of previous fertilizer subsidy program on local grain prices in Nigeria. The program has been considered ineffective in targeting and stimulating demand for fertilizer, with potentially rampant leakages. If the program has reduced food price, however, it can still be partly justified regardless of targeting efficiency. We exploit the panel structure of Living Standard Measurement Survey – Integrated Survey on Agriculture (LSMS) collected in 2010 post-planting season and 2011 post-harvesting season. Our methods use Euclidian distance between each district and state governors’ origin district in each state to identify fertilizer subsidy distribution. We also use proxy variable that accounts for both direct subsidy provision and indirect leakage effects to measure the effective size of subsidy. Fertilizer subsidy generally had no effect on maize and sorghum price. In northern Nigeria, fertilizer subsidy might have lowered district level price of local rice, but only to a limited extent. Low market orientation of many subsidy recipients, crowding out of commercial fertilizer, and political influence in subsidy allocations may explain such low impact. We also discuss how our methods minimize potential biases due to errors-in-variable and sample selection.

Suggested Citation

  • Takeshima, Hiroyuki & Liverpool-Tasie, Lenis Saweda O., 2013. "Fertilizer Subsidy, Political Influence and Local Food Prices in Sub-Saharan Africa: Evidence from Nigeria," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150327, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea13:150327
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    File URL: http://purl.umn.edu/150327
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    Cited by:

    1. repec:eee:jfpoli:v:69:y:2017:i:c:p:190-206 is not listed on IDEAS
    2. Oseni, Gbemisola & McGee, Kevin & Dabalen, Andrew, 2014. "Can agricultural households farm their way out of poverty ?," Policy Research Working Paper Series 7093, The World Bank.
    3. Takeshima, Hiroyuki, 2015. "Identifying the effects of market imperfections for a scale biased agricultural technology: Tractors in Nigeria," 2015 Conference, August 9-14, 2015, Milan, Italy 211937, International Association of Agricultural Economists.
    4. Liverpool-Tasie, Lenis Saweda O. & Omonona, Bolarin T. & Sanou, Awa & Ogunleye, Wale, 2015. "Is increasing inorganic fertilizer use in Sub-Saharan Africa a profitable proposition ? evidence from Nigeria," Policy Research Working Paper Series 7201, The World Bank.
    5. Liverpool-Tasie, Lenis, 2015. "Is fertilizer use really suboptimnal in sub-Saharan Africa? The case of rice in Nigeria," 2015 Conference, August 9-14, 2015, Milan, Italy 212053, International Association of Agricultural Economists.
    6. Mogues, Tewodaj & Erman, Alvina, 2016. "Institutional arrangements to make public spending responsive to the poor—(where) have they worked?: Review of the evidence on four major intervention types," IFPRI discussion papers 1519, International Food Policy Research Institute (IFPRI).
    7. Sibande, Lonester & Bailey, Alastair & Davidova, Sophia, 2015. "The impact of farm input subsidies on household welfare in Malawi," 2015 Conference, August 9-14, 2015, Milan, Italy 212830, International Association of Agricultural Economists.
    8. Liverpool- Tasie, Lenis Saweda O. & Adjognon, Serge & Kuku-Shittu, Oluyemisi, 2015. "Productivity Effects of Sustainable Intensification: The Case of Urea Deep Placement for Rice Production in Niger State, Nigeria," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 10(1), March.
    9. Houssou, Nazaire & Andam, Kwaw S. & Collins, Asante-Addo, 2017. "Can better targeting improve the effectiveness of Ghana's Fertilizer Subsidy Program? Lessons from Ghana and other countries in Africa south of the Sahara," IFPRI discussion papers 1605, International Food Policy Research Institute (IFPRI).
    10. Sibande, Lonester & Bailey, Alastair & Davidova, Sophia, 2017. "The impact of farm input subsidies on maize marketing in Malawi," Food Policy, Elsevier, vol. 69(C), pages 190-206.

    More about this item

    Keywords

    fertilizer subsidy; food price; fiscal federalism; political influence; Nigeria; Agricultural and Food Policy; Demand and Price Analysis;

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