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Going the Extra Mile: Farm Subsidies and Spatial Convergence in Agricultural Input Adoption

Author

Listed:
  • Naresh Kumar
  • Rolly Kapoor
  • Shilpa Aggarwal
  • Dahyeon Jeong
  • David Sungho Park
  • Jonathan Robinson
  • Alan Spearot

Abstract

Many countries subsidize agricultural inputs but require farmers to travel to retailers to access inputs, just as for normal purchases. What effect do travel costs have on subsidy take-up and input usage, particularly for remote farmers? We analyze Malawi's Farm Input Subsidy Program (FISP), and show that travel-cost-adjusted prices are substantially higher in remote areas. However, subsidy redemption is nearly universal. We make use of a policy change in 2017-19 which took centralized control of beneficiary selection and find that FISP eliminates the sizeable remoteness gradient that exists for non-beneficiaries. Our results demonstrate that subsidy programs may narrow spatial inequities.

Suggested Citation

  • Naresh Kumar & Rolly Kapoor & Shilpa Aggarwal & Dahyeon Jeong & David Sungho Park & Jonathan Robinson & Alan Spearot, 2023. "Going the Extra Mile: Farm Subsidies and Spatial Convergence in Agricultural Input Adoption," NBER Working Papers 31704, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31704
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    More about this item

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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