Reaping Richer Returns: Public Spending Priorities for African Agriculture Productivity Growth

Targeting Inputs: Experimental Evidence from Tanzania

“…Participation in NAIVS among farmers in the lowest landholding quintile was only 5 percent and it increased to 10 percent among farmers in the highest quintile. This finding is consistent with results from Zambia and Malawi (Jayne et al, 2016;Goyal and Nash, 2017). By the year of the intervention, however, the probability of participation was roughly constant at around 15 to 20 percent across landholding quintiles.…”

“…Critics have argued that subsidies are expensive, and they may distort the market and divert resources from other complementary investments, such as R&D, irrigation infrastructure and soil improvements. The recurring instances of food shortages and rising food prices in developing countries, however, have led to a renewed interest in agricultural input subsidies (Duflo, Kremer and Robinson, 2011; Bardhan and Mookherjee, 2011;Jayne and Rashid, 2013;Goyal and Nash, 2017). Subsidy programs are appealing because they encourage changes in farming practices that result in short-term increases in productivity and food security while putting downward pressure on food prices (Carter et al 2014).…”

“…Vouchers were allocated to farmers who already used fertilizers, thus crowding out private investment and reducing the impact on poverty reduction. In contrast, declining soil fertility associated with rising land pressures and continuous cultivation, poor soil management practices, and rainfed farming conditions hold more potential as explanations for the limited ability of Tanzanian farmers to use fertilizer profitably, and public resources should be directed at addressing these complementary investments (Jayne and Rashid, 2013;Goyal and Nash, 2017).…”

On the Structural Transformation of Rural Africa

“…One rule of thumb, derived from this budget allocation rule, is to compare the sector's share of public investment with its share in GDP. For agriculture-related investments (R&D, irrigation, extension, market infrastructure, subsidies) this suggests substantial bias towards nonagricultural sectors-the share of public investment in agriculture being at most a third of agriculture's share to GDP (5.18 percent on average during 2000-2014 compared with 17 percent in 2013 respectively) (Goyal and Nash, 2016). Such comparative analysis is not available for rural investments that support agriculture (rural infrastructure, education and health).…”

Future of Food

“…22 Similarly, more recent analysis in Sub-Saharan Africa indicates that rebalancing the composition of agricultural public spending to higher return public goods could yield significant payoffs. 23 Recent analysis of agricultural support in the European Union (EU) found that farmer support that is decoupled from production of specific commodities, and support for rural development are associated with higher agricultural labor productivity and employment as well as with lower poverty rates than coupled farmer support that has conditions on the production of specific commodities. 24 Shifting away from coupled farmer support in the EU since the mid-2000s also had a positive environmental impact.…”