Subsidy pushes up Yields by 3%—study
Households that had access to Farm Input Subsidy Programme (Fisp), the predecessor of Affordable Inputs Programme (AIP), had their maize yields rise by a paltry 2.9 percent, a recent study has shown.
The study produced by the University of Malawi’s Department of Economics titled the Interactive Effects of Farm Input Subsidy Programme and Agricultural Extension Services on Smallholder Maize Production and Technical Efficiency in Malawi established that having access to extension services for a household that already had access to Fisp increased the magnitude of the impact of the subsidy on maize yield further by about 3.7 percent.
The study, authored by Lucius Cassim and Laeticia Amiss Pemba, used data from the fourth Integrated Household Survey (IHS4)by the National Statistical Office (NSO) collected from April 2016 to April 2017, with a sample of 12 480 households or 53 885 individuals from 768 communities across the country.
Reads the study in part: “To shed more light on this interpretation, let us assume an average smallholder farmer produces 10 50 kilogramme [kg] bags of maize, but has no access to extension services nor Fisp.
“If this farmer is to be a beneficiary of Fisp in a certain cropping season, then they will realise an increase of about three bags, producing about 13 50 kg bags of maize.”
It says if this farm household is to receive extension services over and above the Fisp, they can on average realise an increase of about four bags, producing about 14 50 kg bags of maize.
In an interview on Tuesday, Cassim said providing inputs to the farmers without necessarily providing extension services reduces gains from the input subsidies.
“In fact, we are finding that Malawi can improve maize yield by 53 percent by simply improving technical efficiency [best farming practices that could mostly come from extension services] without necessarily increasing input usage,” he said.
Fisp was introduced in 2006 to help poor families who cannot afford farm inputs get fertiliser and hybrid seeds at subsidised prices.
International Food Policy Research Institute recently found that overall, poor households that received subsidised inputs under Fisp were better off than those who did not access the inputs.
Fisp also increased fertiliser use, enhanced maize yields and expanded maize production at the expense of other crops.
Fisp targeted an average one million beneficiaries at a cost of about K35 billion per year.
Due to financial challenges and rise in the cost of farm inputs, Ministry of Agriculture has revealed plans to scale down on AIP, with the number of beneficiaries reduced from 3.7 million to 2.7 million in the 2021/22 farming season.
In its 12th edition of its biannual publication on Malawi, the Malawi Economic Monitor, the World Bank faulted the AIP, saying huge monetary costs “make it impossible” for government to sustain the scheme amid limited resources.
