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Economy-wide effects of input subsidies in Malawi: Market imperfections and household heterogeneity

Listed author(s):
  • Skjeflo , Sofie Waage

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

  • Holden , Stein

    ()

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

The potential bene ts of providing subsidized inputs to farm-households in developing coun- tries may reach well beyond the targeted households. More speci cally, increased food production and demand for rural labor may bene t poor households through lower food prices and higher rural wages. However, two recent studies of a large input subsidy program in Malawi nd that these e ects are smaller than expected based on anecdotal evidence and previous studies using simulation models. In this paper we provide a potential explanation for this nding by using six farm-household programming models to show how market imperfections limit households' ability to take advantage of cheaper inputs. Our ndings suggest that input subsidy programs could be combined with improved market infrastructure and market access in order to increase non-bene ciary households' bene ts from input subsidies.

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File URL: http://www.umb.no/statisk/clts-no/clts_wp_07_14.pdf
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Paper provided by Centre for Land Tenure Studies, Norwegian University of Life Sciences in its series CLTS Working Papers with number 7/14.

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Length: 35 pages
Date of creation: 19 Nov 2014
Handle: RePEc:hhs:nlsclt:2014_007
Contact details of provider: Postal:
Centre for Land Tenure Studies, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Aas, Norway

Phone: (+47) 6496 5700
Fax: (+47) 6494 3012
Web page: http://www.umb.no/clts

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  1. Harrigan, Jane, 2003. "U-Turns and Full Circles: Two Decades of Agricultural Reform in Malawi 1981-2000," World Development, Elsevier, vol. 31(5), pages 847-863, May.
  2. 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, Centre for Land Tenure Studies, Norwegian University of Life Sciences.
  3. 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.
  4. 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.
  5. 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.
  6. World Bank, 2014. "World Development Indicators 2014," World Bank Publications, The World Bank, number 18237, December.
  7. Ellis, Frank & Manda, Elizabeth, 2012. "Seasonal Food Crises and Policy Responses: A Narrative Account of Three Food Security Crises in Malawi," World Development, Elsevier, vol. 40(7), pages 1407-1417.
  8. Jacob Ricker-Gilbert & Nicole M. Mason & Francis A. Darko & Solomon T. Tembo, 2013. "What are the effects of input subsidy programs on maize prices? Evidence from Malawi and Zambia," Agricultural Economics, International Association of Agricultural Economists, vol. 44(6), pages 671-686, November.
  9. 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.
  10. Harrigan, Jane, 2008. "Food insecurity, poverty and the Malawian Starter Pack: Fresh start or false start?," Food Policy, Elsevier, vol. 33(3), pages 237-249, June.
  11. Bezu, Sosina & Kassie, Girma T. & Shiferaw, Bekele & Ricker-Gilbert, Jacob, 2014. "Impact of Improved Maize Adoption on Welfare of Farm Households in Malawi: A Panel Data Analysis," World Development, Elsevier, vol. 59(C), pages 120-131.
  12. Ricker-Gilbert, Jacob & Mason, Nicole M. & Darko, Francis & Jayne, Thomas S. & Tembo, Solomon, 2013. "What are the Effects of Input Subsidies on Maize Prices? Evidence from Malawi and Zambia," Food Security Collaborative Working Papers 154938, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  13. Jacob Ricker-Gilbert, 2014. "Wage and employment effects of Malawi's fertilizer subsidy program," Agricultural Economics, International Association of Agricultural Economists, vol. 45(3), pages 337-353, May.
  14. Jayne, Thomas S. & Sitko, Nicholas J. & Ricker-Gilbert, Jacob & Mangisoni, Julius H., 2010. "Malawi’s Maize Marketing System," Food Security Collaborative Working Papers 62162, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  15. C. Mark Blackden & Quentin Wodon, 2006. "Gender, Time Use, and Poverty in Sub-Saharan Africa," World Bank Publications, The World Bank, number 7214, December.
  16. Dorward, Andrew & Chirwa, Ephraim & Kelly, Valerie A. & Jayne, Thomas S. & Slater, Rachel & Boughton, Duncan, 2008. "Evaluation Of The 2006/7 Agricultural Input Subsidy Programme, Malawi. Final Report," Food Security Collaborative Working Papers 97143, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  17. World Bank, 2007. "Malawi - Poverty and Vulnerability Assessment : Investing in Our Future," World Bank Other Operational Studies 7909, The World Bank.
  18. Diagne, Aliou & Zeller, Manfred, 2001. "Access to credit and its impact on welfare in Malawi:," Research reports 116, International Food Policy Research Institute (IFPRI).
  19. Blackden, Mark & Wodon, Quentin, 2006. "Gender, Time Use, and Poverty: Introduction," MPRA Paper 11080, University Library of Munich, Germany.
  20. Ricker-Gilbert, Jacob E. & Mason, Nicole M. & Jayne, Thomas S. & Darko, Francis Addeah & Tembo, Solomon, 2013. "What are the effects of input subsidy programs on equilibrium maize prices? Evidence from Malawi and Zambia," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149259, Agricultural and Applied Economics Association.
  21. 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.
  22. T.S. Jayne & Shahidur Rashid, 2013. "Input subsidy programs in sub-Saharan Africa: a synthesis of recent evidence," Agricultural Economics, International Association of Agricultural Economists, vol. 44(6), pages 547-562, November.
  23. Rodney Lunduka & Jacob Ricker-Gilbert & Monica Fisher, 2013. "What are the farm-level impacts of Malawi's farm input subsidy program? A critical review," Agricultural Economics, International Association of Agricultural Economists, vol. 44(6), pages 563-579, November.
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