Abstract:
The Zambian government, through the Ministry of Agriculture and Cooperatives (MACO), provides maize seed and fertilizers to farmers at heavily subsidised prices under the Farmer Input Support Programme (FISP). MACO’s narrow evaluation of FISP, based on estimated production without quantifying the significant changes in production and other critical socioeconomic factors, fails to adequately highlight and service the benefits of subsidies to intended beneficiaries. Furthermore, MACO estimates of the impact of FISP never consider the question of how much beneficiary farmers would have produced in its absence, leading to potentially misleading assessments. The key question addressed in this study is whether using more rigorous econometric methods that account for heterogeneity in socioeconomic factors between participants and non-participants would still confirm the positive impact of FISP on maize productivity and poverty reduction, hence justifying the huge government expense on the programme. The study utilised cross-sectional data obtained from 497 randomly selected households, collected in 2011 from six provinces of Zambia to assess the causal effect of FISP on beneficiary households’ maize yields and asset accumulation. The data was analysed using well-grounded matching techniques that account for differences in observable characteristics between programme participants and non-participants. The study also tested for possible unobserved selection effects using the Rosenbaum bounds. The results indicated that participating in FISP increased maize yields and assets accumulation and hence might directly or indirectly positively affect beneficiary poverty levels. There were also no influences of unobserved characteristics on the estimated maize yield and asset level differences between participants and non-participants. On average, FISP increased maize yields by about 451 kg per hectare, with an improvement of about 0.5 on the wealth index (score used to rank households according to asset levels). The positive impact on maize yields and asset accumulation on the participating farmers therefore justifies government’s continued implementation of FISP.
