IDEAS home Printed from https://ideas.repec.org/p/ags/iaae09/51606.html
   My bibliography  Save this paper

Do Fertilizer Subsidies Affect the Demand for Commercial Fertilizer? An Example from Malawi

Author

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

Abstract

Fertilizer subsidies are again becoming a popular policy tool in sub-Saharan Africa. Despite their potential, little empirical research has been undertaken on how subsidies affect a farmer’s decision to purchase commercial fertilizer. Because of this, there is a dearth of information on how fertilizer subsidy programs affect total fertilizer and commercial fertilizer use. This paper uses a double hurdle model with panel data from Malawi to answer these questions. It also uses a control function approach to deal with endogeneity of subsidized fertilizer in a commercial fertilizer demand equation. Our results indicate that subsidized fertilizer negatively impacts participation in commercial markets. Once the participation decision has been made however, demand for commercial fertilizer is driven by farm size, assets and fertilizer price and maize price rather than by whether a farmer received subsidized fertilizer. We calculate the average partial effects of subsidized fertilizer and find that on average, receiving one additional kilogram of subsidized fertilizer causes a farmer to purchase 0.20 fewer kilograms of commercial fertilizer. This indicates that fertilizer subsidies may adversely affect the demand for commercial fertilizer and also raise total fertilizer use by a somewhat smaller quantity than the quantity of fertilizer distributed through the subsidy program.

Suggested Citation

  • Ricker-Gilbert, Jacob & Jayne, Thomas S., 2009. "Do Fertilizer Subsidies Affect the Demand for Commercial Fertilizer? An Example from Malawi," 2009 Conference, August 16-22, 2009, Beijing, China 51606, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae09:51606
    DOI: 10.22004/ag.econ.51606
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/51606/files/IAAE_ref679_JRG_revised.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.51606?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Houssou, Nazaire & Zeller, Manfred, 2010. "Targeting the Poor and Smallholder Farmers Empirical Evidence from Malawi," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 49(4), pages 1-18.
    3. Kassie, Menale & Teklewolde, Hailemariam & Erenstein, Olaf & Jaleta, Moti & Marenya, Paswel & Mekurai, Mulugetta, 2015. "Technology diversification: Assessing impacts on crop income and agrochemical uses in Malawi," 2015 Conference, August 9-14, 2015, Milan, Italy 211838, International Association of Agricultural Economists.
    4. De Gorter, Harry & Tsur, Yacov, 2008. "Towards a Genuine Sustainability Standard for Biofuel Production," 14th ICABR Conference, June 16-18, 2010, Ravello, Italy 188419, International Consortium on Applied Bioeconomy Research (ICABR).
    5. William J Burke, 2019. "Evidence against Imposing Restrictions on Hurdle Models as a Test for Simultaneous versus Sequential Decision Making," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(5), pages 1473-1481.
    6. Tschirley, David L. & Flores, Luis & Mather, David, 2010. "Agricultural and Food Security Policy Analysis in Central America: Assessing Local Institutional Capacity, Data Availability, and Outcomes," Food Security International Development Working Papers 90991, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    7. Makau, Joyce Mumbua & Irungu, Patrick & Nyikal, Rose Adhiambo & Kirimi, Lilian Wambui, 2016. "An assessment of the effect of a national fertiliser subsidy programme on farmer participation in private fertiliser markets in the North Rift region of Kenya," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 11(4), pages 1-13, December.
    8. Ogunniyi Adebayo & Kehinde Olagunju, 2015. "Impact of Agricultural innovation on improved livelihood and productivity outcomes among smallholder farmers in Rural Nigeria," Working Papers 2015/07, Maastricht School of Management.
    9. Aberman, Noora-Lisa & Johnson, Michael E. & Droppelmann, Klaus & Schiffer, Eva & Birner, Regina & Gaff, Peter, 2012. "Mapping the contemporary fertilizer policy landscape in Malawi: a guide for policy researchers," IFPRI discussion papers 1204, International Food Policy Research Institute (IFPRI).
    10. De Groote, Hugo & Andam, Kwaw S. & Munyua, Bernard & Spielman, David J., 2010. "Market Segmentation Strategies And Seed Purchasing Decisions Among Smallholders: Preliminary Findings From Kenya," 14th ICABR Conference, June 16-18, 2010, Ravello, Italy 188084, International Consortium on Applied Bioeconomy Research (ICABR).
    11. Fitzpatrick, Natalie Bess, 2012. "Repercussions of Fertilizer Subsidy Programs on Private Sector Input Retailers: Evidence from Malawi and Proposal for Further Research," Graduate Research Master's Degree Plan B Papers 141117, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    12. Ton, Giel & Klerkx, Laurens & de Grip, Karin & Rau, Marie-Luise, 2015. "Innovation grants to smallholder farmers: Revisiting the key assumptions in the impact pathways," Food Policy, Elsevier, vol. 51(C), pages 9-23.

    More about this item

    Keywords

    Agricultural and Food Policy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:iaae09:51606. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.