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Agricultural Household Models for Malawi:Household Heterogeneity, Market Characteristics, Agricultural Productivity, Input Subsidies, and Price Shocks. A Baseline Report

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  • Holden, Stein

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

Abstract

This report documents agricultural household models developed for agricultural policy analyses related to the assessment of impacts of agricultural input subsidies and maize technology choices in Malawi. The models have been calibrated to a typology of households in Central and Southern Regions of Malawi based on household survey data collected for the period 2005-2010. Households are assumed to be drudgery averse and rational given their preferences and the resource constraints and imperfect markets they face. The impacts of varying access to resources, input subsidies, off-farm employment opportunities, and prices during the period of study are simulated. The models in particular demonstrate the vulnerability of land-poor households and their dependence on non-farm income for them to meet their basic needs. Access to improved maize varieties and subsidies may facilitate land use intensification and survival on smaller farms. Price shocks in form of higher fertilizer prices and lower tobacco prices contribute to further impoverishment while the costs of the input subsidy program also reached nonsustainable levels during the period of study. The models give insights about some possible avenues for scaling down the subsidy program towards a more sustainable level. Reduction of subsidies from two bags to one bag of fertilizer per household and concentration of targeting towards more land-poor households can be two important mechanisms. Rather than providing free improved maize seeds it may be better to improve the availability of improved seeds in local markets.

Suggested Citation

  • 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.
  • Handle: RePEc:hhs:nlsclt:2014_005
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    File URL: http://www.umb.no/statisk/clts/papers/clts_wp_5_14.pdf
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    References listed on IDEAS

    as
    1. Stein T. Holden & Rodney W. Lunduka, 2014. "Input Subsidies, Cash Constraints, and Timing of Input Supply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(1), pages 290-307.
    2. Alwang, Jeffrey & Siegel, P. B., 1999. "Labor Shortages on Small Landholdings in Malawi: Implications for Policy Reforms," World Development, Elsevier, vol. 27(8), pages 1461-1475, August.
    3. 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.
    4. Andrew Dorward, 2006. "Markets and pro-poor agricultural growth: insights from livelihood and informal rural economy models in Malawi," Agricultural Economics, International Association of Agricultural Economists, vol. 35(2), pages 157-169, September.
    5. Mason, Nicole M. & Ricker-Gilbert, Jacob, 2013. "Disrupting Demand for Commercial Seed: Input Subsidies in Malawi and Zambia," World Development, Elsevier, vol. 45(C), pages 75-91.
    6. Holden, Stein & Mangisoni, Julius, 2013. "Input subsidies and improved maize varieties in Malawi: -What can we learn from the impacts in a drought year?," CLTS Working Papers 7/13, Norwegian University of Life Sciences, Centre for Land Tenure Studies.
    7. Jayne, T. S. & Jones, Stephen, 1997. "Food marketing and pricing policy in Eastern and Southern Africa: A survey," World Development, Elsevier, vol. 25(9), pages 1505-1527, September.
    8. Chibwana, Christopher & Fisher, Monica & Shively, Gerald, 2012. "Cropland Allocation Effects of Agricultural Input Subsidies in Malawi," World Development, Elsevier, vol. 40(1), pages 124-133.
    9. Jonathan Kydd, 1989. "Maize research in Malawi: Lessons from failure," Journal of International Development, John Wiley & Sons, Ltd., vol. 1(1), pages 112-144, January.
    10. Holden, Stein T., 1993. "Peasant household modelling: Farming systems evolution and sustainability in northern Zambia," Agricultural Economics, Blackwell, vol. 9(3), pages 241-267, September.
    11. Melinda Smale & Paul W. Heisey, 1994. "Maize research in Malawi revisited: An emerging success story?," Journal of International Development, John Wiley & Sons, Ltd., vol. 6(6), pages 689-706, November.
    12. Holden, Stein, 2013. "Amazing maize in Malawi: Input subsidies, factor productivity and land use intensification," CLTS Working Papers 4/13, Norwegian University of Life Sciences, Centre for Land Tenure Studies.
    13. Lunduka, Rodney & Fisher, Monica & Snapp, Sieglinde, 2012. "Could farmer interest in a diversity of seed attributes explain adoption plateaus for modern maize varieties in Malawi?," Food Policy, Elsevier, vol. 37(5), pages 504-510.
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    Cited by:

    1. Abay, Kibrom A. & Berhane, Guush & Taffesse, Alemayehu Seyoum & Koru, Bethlehem & Abay, Kibrewossen, 2016. "Understanding farmers’ technology adoption decisions: Input complementarity and heterogeneity:," ESSP working papers 82, International Food Policy Research Institute (IFPRI).
    2. Skjeflo , Sofie Waage & Holden , Stein, 2014. "Economy-wide effects of input subsidies in Malawi: Market imperfections and household heterogeneity," CLTS Working Papers 7/14, Norwegian University of Life Sciences, Centre for Land Tenure Studies.

    More about this item

    Keywords

    Agricultural household programming model; Malawi; production systems; market characteristics; impact of input subsidies; fertilizer and tobacco price shocks;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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