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Fertilizer Subsidies and Smallholder Commercial Fertilizer Purchases: Crowding out, Leakage, and Policy Implications for Zambia

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  • Mason, Nicole M.
  • Jayne, Thomas S.

Abstract

Two key determinants of the effect of a fertilizer subsidy program on total fertilizer use are (a) the extent to which subsidized fertilizer “crowds out” or “displaces” farmers’ purchases of fertilizer from commercial retailers, and (b) the extent to which fertilizer intended for government subsidies leaks out of the government channel and is resold as commercial fertilizer.

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  • Mason, Nicole M. & Jayne, Thomas S., 2012. "Fertilizer Subsidies and Smallholder Commercial Fertilizer Purchases: Crowding out, Leakage, and Policy Implications for Zambia," Food Security Collaborative Policy Briefs 146933, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  • Handle: RePEc:ags:midcpb:146933
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    References listed on IDEAS

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    1. Nicole M. Mason & Robert J. Myers, 2013. "The effects of the Food Reserve Agency on maize market prices in Zambia," Agricultural Economics, International Association of Agricultural Economists, vol. 44(2), pages 203-216, March.
    2. Banful, Afua B. & Nkonya, Ephraim & Oboh, Victor, 2010. "Constraints to fertilizer use in Nigeria," IFPRI discussion papers 1010, International Food Policy Research Institute (IFPRI).
    3. Sitko, Nicholas J. & Bwalya, Richard & Kamwanga, Jolly & Wamulume, Mukata, 2012. "Assessing the Feasibility of Implementing the Farmer Input Support Programme (FISP) Through an Electronic Voucher System in Zambia," Food Security Collaborative Policy Briefs 123210, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    4. Vella, Francis, 1993. "A Simple Estimator for Simultaneous Models with Censored Endogenous Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(2), pages 441-457, May.
    5. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, July.
    6. 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.
    7. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
    8. Banful, Afua Branoah, 2011. "Old Problems in the New Solutions? Politically Motivated Allocation of Program Benefits and the "New" Fertilizer Subsidies," World Development, Elsevier, vol. 39(7), pages 1166-1176, July.
    9. Jacob Ricker-Gilbert & Thomas S. Jayne & Ephraim Chirwa, 2010. "Subsidies and Crowding Out: A Double-Hurdle Model of Fertilizer Demand in Malawi," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(1), pages 26-42.
    10. Stein Holden & Rodney Lunduka, 2012. "Do fertilizer subsidies crowd out organic manures? The case of Malawi," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 303-314, May.
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    Citations

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    Cited by:

    1. Mason, Nicole M. & Wineman, Ayala & Kirimi, Lilian & Mather, David, 2016. "The Effects of Kenya’s ‘Smarter’ Input Subsidy Program on Smallholder Behavior and Incomes: Do Different Quasi-Experimental Approaches Lead to the Same Conclusions?," Working Papers 233674, Egerton University, Tegemeo Institute of Agricultural Policy and Development.
    2. Liverpool-Tasie, Lenis Saweda O., 2014. "Farmer groups and input access: When membership is not enough," Food Policy, Elsevier, vol. 46(C), pages 37-49.
    3. repec:bla:worlde:v:40:y:2017:i:9:p:1989-2006 is not listed on IDEAS
    4. Liverpool-Tasie, Lenis Saweda O. & Omonona, Bolarin T. & Sanou, Awa & Ogunleye, Wale O., 2017. "Is increasing inorganic fertilizer use for maize production in SSA a profitable proposition? Evidence from Nigeria," Food Policy, Elsevier, vol. 67(C), pages 41-51.
    5. repec:eee:wdevel:v:97:y:2017:i:c:p:251-265 is not listed on IDEAS
    6. Kaiyatsa, Stevier, 2015. "Does the farm input subsidy program displace commercial fertilizer sales? Empirical evidence from agro-dealers in Malawi," Theses-Masters 252977, AgEcon Search.
    7. Mason, Nicole M. & Jayne, Thomas S. & Walle, Nicolas van de, 2013. "Fertilizer Subsidies and Voting Patterns: Political Economy Dimensions of Input Subsidy Programs," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149580, Agricultural and Applied Economics Association.
    8. repec:bla:jageco:v:68:y:2017:i:1:p:45-69 is not listed on IDEAS
    9. Mason, Nicole M. & Tembo, Solomon T., 2014. "Do input subsidies reduce poverty among smallholder farm households? Evidence from Zambia," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170617, Agricultural and Applied Economics Association.
    10. Takeshima, Hiroyuki & Liverpool-Tasie, Lenis Saweda O., 2015. "Fertilizer subsidies, political influence and local food prices in sub-Saharan Africa: Evidence from Nigeria," Food Policy, Elsevier, vol. 54(C), pages 11-24.
    11. Mason, Nicole M. & Tembo, Solomon T., 2015. "Do Input Subsidy Programs Raise Incomes and Reduce Poverty among Smallholder Farm Households? Evidence from Zambia," Food Security Collaborative Working Papers 198702, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    12. Resnick, Danielle & Mather, David, 2016. "Agricultural inputs policy under macroeconomic uncertainty: Applying the kaleidoscope model to Ghana’s Fertilizer Subsidy Programme (2008–2015):," IFPRI discussion papers 1551, International Food Policy Research Institute (IFPRI).
    13. Jayne, T.S. & Chamberlin, Jordan & Traub, Lulama & Sitko, N. & Muyanga, Milu & Yeboah, Kwame & Nkonde, Chewe & Anseeuw, Ward & Chapoto, A. & Kachule, Richard, 2015. "Africa’s Changing Farmland Ownership: Causes and Consequences," Miscellaneous Publications 208576, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    14. Resnick, Danielle & Mason, Nicole M., 2016. "What drives input subsidy policy reform? The case of Zambia, 2002–2016," IFPRI discussion papers 1572, International Food Policy Research Institute (IFPRI).
    15. Jacob Ricker-Gilbert & T. S. Jayne, 2017. "Estimating the Enduring Effects of Fertiliser Subsidies on Commercial Fertiliser Demand and Maize Production: Panel Data Evidence from Malawi," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 70-97, February.
    16. Resnick, Danielle & Mason, Nicole, 2016. "What Drives Input Subsidy Policy Reform? The Case Of Zambia, 2002-2016," Miscellaneous Publications 246951, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    17. 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.
    18. 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).
    19. Houssou, Nazaire & Asante-Addo, Collins & Andam, Kwaw S., 2017. "Improving the targeting of fertilizer subsidy programs in Africa south of the Sahara: Perspectives from the Ghanaian experience," IFPRI discussion papers 1622, International Food Policy Research Institute (IFPRI).
    20. Lenis Saweda O. Liverpool-Tasie, 2014. "Fertilizer subsidies and private market participation: the case of Kano State, Nigeria," Agricultural Economics, International Association of Agricultural Economists, vol. 45(6), pages 663-678, November.
    21. Ricker-Gilbert, Jacob & Jones, Michael, 2015. "Does storage technology affect adoption of improved maize varieties in Africa? Insights from Malawi’s input subsidy program," Food Policy, Elsevier, vol. 50(C), pages 92-105.
    22. Murray, Anthony G & Mills, Bradford F, 2014. "Estimating the Resiliency of Zambian Smallholder Farmers: Evidence from a Three-Wave Panel," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170234, Agricultural and Applied Economics Association.
    23. Mofya-Mukuka, Rhoda & Kabwe, Stephen & Kuteya, Auckland N. & Mason, Nicole M., 2013. "How Can the Zambian Government Improve the Targeting of the Farmer Input Support Program?," Food Security Collaborative Policy Briefs 146939, Michigan State University, Department of Agricultural, Food, and Resource Economics.

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