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

Naresh Kumar, Rolly Kapoor, Shilpa Aggarwal, Dahyeon Jeong, David Sungho Park, Jonathan Robinson and Alan Spearot

No 31704, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: O12 O13 Q12 Q16 (search for similar items in EconPapers)
Date: 2023-09
New Economics Papers: this item is included in nep-agr and nep-ger
Note: DEV
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