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What are the effects of input subsidy programs on equilibrium maize prices? Evidence from Malawi and Zambia

Jacob E. Ricker-Gilbert, Nicole Mason, Thomas Jayne (), Francis Addeah Darko and Solomon Tembo

No 149259, 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. from Agricultural and Applied Economics Association

Abstract: An important hypothesized benefit of large-scale input subsidy programs in Africa is that by raising maize production, the subsidies should put downward pressure on retail maize prices to the benefit of urban consumers and the rural poor who tend to be net food buyers. To inform debates related to this rationale for input subsidies, this study estimates the effects of fertilizer subsidies on retail maize prices in Malawi and Zambia using market or district-level panel data covering the 2000/01 to 2011/12 maize marketing years. Results indicate that roughly doubling the size of Malawi’s subsidy program (i.e., increasing the amount of subsidized fertilizer distributed to each district by 4,000 metric tons per year) reduces maize prices by 1.2% to 1.6% on average. In Zambia, roughly doubling the scale of the country’s subsidy program (i.e., increasing the amount of subsidized fertilizer distributed to each district by 1,000 metric tons per year) reduces maize prices by 1.8% to 2.4% on average. The results are robust across countries and model specifications, and indicate that the fertilizer subsidy programs in Malawi and Zambia have had a minimal effect on reducing retail maize prices.

Keywords: Demand and Price Analysis; Food Security and Poverty; International Development; Production Economics (search for similar items in EconPapers)
Pages: 47
Date: 2013
New Economics Papers: this item is included in nep-afr and nep-agr
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea13:149259

DOI: 10.22004/ag.econ.149259

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