The impact of farm input subsidies on maize marketing in Malawi

- Subsidised fertilizer increases farmers' maize market participation as sellers.
- Beneficiaries are more likely to be net sellers and sell more net quantity of maize.
- Subsidy has no effect on net quantity bought and household maize self-sufficiency.
- The challenge remains of improving household income from sales of staple food crops.

This paper investigates the effects of subsidised fertilizer on marketing of maize in Malawi. It uses the nationally representative two-wave Integrated Household Panel Survey (IHPS) data of 2010 and 2013. The results suggest that subsidised fertilizer on average increases farmers' maize market participation as sellers, total quantity of maize sold, and maize commercialisation. In addition, participation in subsidised fertilizer programme is found to increase the probability of farmers to be net sellers and increases net quantity of maize sold. However, the study finds no evidence of effect on net quantity of maize bought and on household maize self-sufficiency. These results suggest that the farm input subsidy programme has contributed toward an increased level of maize market supply engagement for small farmers and in this sense, the policy has the potential to provide the wider external benefits. Furthermore, the results have implication on the sustainability of the subsidy programme, policy formulation and design of programmes for the agricultural sector and small farmers in developing countries.