Why Subsidize Fertilizer if Subsidizing Water is More Effective?

Wouter Zant

No 2015/09, Working Papers from Maastricht School of Management

Abstract: We use both a panel of district data for a nearly 20 year period (1991-2008) and a panel of household survey data (2010 and 2013) of Malawi to investigate the contribution of water to productivity in rain-fed agriculture. Production function estimations suggest a larger contribution to production from rainfall than from chemical fertilizer. We supply evidence that (uncertainty of) supply of water is a key determinant of the crop choice of farmers, and more specifically, the choice between, on the one hand, low input staple foods / subsistence crops, and, on the other hand, high input and high value cash crops. We plan to claim additionally that chemical fertilizer use depends critically on crop choice, notably the choice for high value cash crops, and thereby on the availability of water. Finally, we provide evidence at household level that further supports these claims. Our work gives an alternative explanation of observed low uptake of chemical fertilizer by farmers and of the mechanism that drives fertilizer use in rain-fed SSA agriculture.

Keywords: subsistence agriculture; input subsidies; productivity; growth; Malawi; Africa (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015-09
New Economics Papers: this item is included in nep-agr and nep-eff
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