Taking Stock of Africa’s Second-Generation Agricultural Input Subsidy Programs, 2000–2015

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Date
2017-04
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Abstract
This policy research brief examines the performance and impact of second-generation agricultural input subsidy programs (ISPs) in sub-Saharan Africa (SSA) from 2000 to 2015. ISPs, which provide farmers with subsidized fertilizer and seeds, have been debated due to their potential effects on agricultural productivity, food security, and poverty reduction. This study reviews nearly 70 studies from eight African countries to evaluate the effectiveness of these programs. The findings indicate that ISPs have achieved short-term success in increasing national food production. However, the overall impact on production and welfare has been smaller than anticipated. Several factors contribute to this outcome, including the partial crowding out of commercial fertilizer demand, diversion of subsidized fertilizer for commercial sale, and low crop yield response to fertilizer on smallholder-managed fields. Targeting subsidies to farmers who have previously purchased commercial fertilizer exacerbates these challenges and leads to regressive distribution of benefits. Moreover, the production and income impacts of ISPs tend to be limited in duration, typically lasting only one to three years. Grain prices and wage rates are minimally affected by these programs. Consequently, while second-generation ISPs have shown potential on paper, their implementation often deviates from the intended design due to local contextual factors. The declining political enthusiasm for large-scale ISP programs in some African countries has resulted in cutbacks and reforms. This presents an opportunity to explore cost-effective alternatives or reforms to ISPs that promote sustainable agricultural practices and resilience to climate change. Strategies such as conditional subsidies based on climate-smart farming practices, subsidizing inputs for sustainable intensification, and promoting organic compost production can enhance the effectiveness of ISPs. To improve targeting, it is essential to establish clear program goals and recognize the unavoidable challenges associated with targeting criteria. Decentralized targeting, universal subsidy programs, or geographic targeting can be considered, depending on the specific context. Additionally, non-subsidy alternatives that invest in agricultural research, extension services, and soil testing can improve the efficiency and profitability of fertilizer use. It is crucial to address policy coherence issues that inadvertently hinder fertilizer use, such as police checkpoints, road taxes, and redundant agencies regulating fertilizer imports. By adopting a holistic approach that considers agroecological differences, soil quality, and input transfer costs, ISPs can play a more significant role in achieving sustainable agricultural intensification in Africa.
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Sustainable intensification, Food security, Poverty alleviation, Crop yield
Citation
Jayne, T.S., N.M. Mason, W. Burke, and J. Ariga. 2017. “Taking Stock of Africa’s Second-Generation Agricultural Input Subsidy Programs, 2000–2015,” Feed the Future Innovation Lab for Food Security Policy Research Brief 34, Michigan State University, East Lansing, MI, USA.
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