SOAS Research Online

Abstract

This paper focuses on the analysis of the impact of the Farm Input Subsidy Programme (FISP) using national level data and household survey data collected prior to FISP in 2004/05 and data collected in March – April 2011. In this data set 463 households were interviewed in both surveys and similar questions on some of the socio-economic indicators were asked during interviews to enable us to test the impact using a difference-in-difference estimator. We find evidence of economy wide and input market effects of the subsidy programme. The economy-wide effects of the subsidy programme are strong particularly due to lower maize prices and increased ganyu wage rates. With respect to input market effects, with 2010/11 conditions and quantities of subsidised fertiliser, a 1 percent increase in subsidized fertilizers reduces commercial demand by 0.15 – 0.21 percent. However, using various welfare indicators, we find mixed results on the direct beneficiary household effects of the subsidy programme from panel data analysis. Overall, there are positive impacts of the subsidy programme although some of the relationships are not statistically significant. The direct beneficiary impacts on food security, food onsumption, self-assessed poverty and overall welfare are weak and mixed while there is some statistically significant evidence of positive impacts on primary school enrolment, under-5 illness and shocks. In addition, there is some evidence of positive trends in impact indicators as the number of times a household received the subsidy in the past 6 season increases. The economy-wide effects of the subsidy which arise from higher ganyu wage rates, reduced time spent on ganyu, availability of maize at local level and lower prices of maize have enabled poor households to access maize when they run out of their own production. Nonetheless, the impact analysis highlights the challenges of targeting and sharing of subsidy among households, which may have implications on the direct beneficiary impacts.