This article uses a double-hurdle model with panel data from Malawi to investigate how fertilizer subsidies affect farmer demand for commercial fertilizer. The article controls for potential endogeneity caused by the nonrandom targeting of fertilizer subsidy recipients. Results show that on average 1 additional kilogram of subsidized fertilizer crowds out 0.22 kg of commercial fertilizer, but crowding out ranges from 0.18 among the poorest farmers to 0.30 among relatively nonpoor farmers.This indicates that targeting fertilizer subsidies to the rural poor is likely to maximize the contribution of the subsidy program to total fertilizer use.

This paper assesses improved maize adoption in Malawi and examines the link between adoption and household welfare using a three-year household panel data. The distributional effect of maize technology adoption is also investigated by looking at impacts across wealth and gender groups. We applied control function approach and IV regression to control for endogeneity of input subsidy and improved maize adoption. We found that modern maize variety adoption is positively correlated with the household's own maize consumption, income and asset holdings.We found evidence that improved maize adoption has stronger impact on welfare of femaleheaded households and poorer households.

This article provides a critical analysis of the current frontier of research evaluating Malawi's Farm Input Subsidy Program (FISP), whose main objectives are increasing maize production, promoting household food security, and enhancing rural incomes. We focus on farm‐level studies in Malawi, identifying consistent and contrasting research results in order to draw important policy lessons and provide suggested avenues for future research. While national production estimates suggested dramatic increases in maize production and productivity during the years of the FISP, the farm‐level studies found relatively modest increases in maize production and yields over the same period. Consistent with the farm‐level results of modest maize production increases, there has been a relative increase in real maize prices and the country continued to import maize during most of the subsidy program years. Furthermore, there is evidence that better‐off households gained substantially more than poorer households when they participated in the program. Together these findings cast some doubt on the FISP's ability to reduce food insecurity and poverty. We propose a number of policy lessons and suggestions for rigorous investigation, including research that directly measures the causal impacts of the FISP program on poverty in Malawi.

We use nationally representative household‐level panel survey data in two neighboring countries in Southern Africa—Zambia and Malawi—to characterize the current status of rural land rental market participation by smallholder farmers, and their subsequent welfare impacts. Rural rental market participation is much higher in densely‐populated Malawi than in lower‐density Zambia, reflecting the role of land scarcity in driving rental market development. Consistent with previous literature, we find evidence that rental markets contribute to efficiency gains within the smallholder sector by facilitating the transfer of land from less‐able to more‐able producers, on average, in both countries. Furthermore, we find that rental markets serve to re‐allocate land from relatively land‐rich to land‐poor households. We examine the impacts of participation on a number of welfare outcomes and find evidence for generally positive returns to renting in land in both countries, on average. However, our analysis also indicates that the returns to renting in land vary strongly with scale of production: tenants who produce more have larger returns to renting in, and many of the smaller producers who rent in do so at an economic loss. The impacts of renting out (i.e., participating in markets as landlords) are decidedly more mixed, with overall negative returns to landlords in Malawi and negligible returns to landlords in Zambia. The findings in this article highlight the need for researchers and policymakers in sub‐Saharan Africa to stay attuned to how land rental market participation and its impacts evolve in the near future.

A major determinant of input subsidy programs’ effects on the achievement of national policy goals is the extent to which they raise total fertilizer use. This study synthesizes recent literature on how the new generation of targeted input subsidy programs has affected national fertilizer use after accounting for crowding effects, and derives benefit–cost (BC) estimates of the fertilizer subsidy programs for Kenya, Malawi, and Zambia after accounting for crowding out and diversion. We highlight two major findings. First, accounting for the illicit diversion of program fertilizer can profoundly influence estimates of how fertilizer subsidy programs affect total fertilizer use and program impacts. Given recent evidence that 33% or more of total program fertilizer may be diverted before being received by intended beneficiary farmers, the failure to account for program diversion is shown to overestimate the contribution of the subsidy programs to national fertilizer use by 67.3% in the case of Malawi, by 61.6% for Zambia, and by 138.0% for Kenya. The second major finding is that the incremental value of maize output produced from these subsidy programs is considerably less than their costs in most years, except under unusually high maize price assumptions. Conventional BC analyses that do not account for crowding out and diversion may seriously overestimate the benefits of input subsidy programs. Greater attention to program design and implementation details to reduce problems of crowding out and diversion can substantially raise the returns to such programs.

HighlightsThe productivity and welfare effects of an e-voucher subsidy program are evaluated.Instrumental variable regression employed to control for endogeneity.The program is effective in improving productivity and welfare outcomes.No heterogeneity effects based on gender and farm land size.The program has a modest benefit–cost ratio.

The Indaba Agricultural Policy Research Institute is a non-profit company limited by guarantee and collaboratively works with public and private stakeholders. IAPRI exists to carry out agricultural policy research and outreach, serving the agricultural sector in Zambia so as to contribute to sustainable pro-poor agricultural development.

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