This book takes forward our understanding of agricultural input subsidies in low income countries.

Many countries subsidize agricultural inputs but require farmers to travel to retailers to access inputs, just as for normal purchases. What effect do travel costs have on subsidy take-up and input usage, particularly for remote farmers? We analyze Malawi's Farm Input Subsidy Program (FISP), and show that travel-cost-adjusted prices are substantially higher in remote areas. However, subsidy redemption is nearly universal. We make use of a policy change in 2017-19 which took centralized control of beneficiary selection and find that FISP eliminates the sizeable remoteness gradient that exists for non-beneficiaries. Our results demonstrate that subsidy programs may narrow spatial inequities.

This volume sets out a strategy for raising rural incomes which emphasises the creation of diversified rural economies with opportunities within and outside agriculture.

Agricultural input subsidies have been adopted on a large scale across different African countries in the last few years. However global experience with input subsidies has been mixed, and there is considerable concern that current input subsidies will turn out to be expensive political programmes with very limited development benefits. There is, however, also considerable enthusiasm for new, "smart" approaches in subsidies' delivery and for their potential to raise the productivity of millions of poor smallholder farmers and lift them out of poverty while promoting wider food security. This book takes forward our understanding of agricultural input subsidies in low income countries. A review and extension of current thinking on the potential roles of such subsidies provides the basis for a broad examination of recent documented experience in different African countries and then for: a detailed examination of Malawi's current agricultural input subsidy programme, the main focus of the book. This large programme has been the subject a very considerable international debate, much of it unfortunately little informed by the substantial amount of information available on the programme. Drawing on their extensive involvement with the programme over many years and on a wide range of information sources, the authors provide a detailed analysis of the historical, political and agro-economic roots and context of the programme, and its implementation and impacts from 2005 to 2011. Of interest in its own right, this also provides critical insights into the potential benefits and risks with such programmes, and on political and technical issues that are critical in success or failure.

The agriculture sector receives substantial fiscal subsidies in various forms, including through programs that are linked to production and others that are decoupled. As the sector has reached the technology frontier in production over the last three decades or so, particularly in high- and middle-income countries, it is intriguing to investigate the impact of subsidies on productivity at aggregate level. This study examines the impact of subsidies on productivity growth in agriculture globally using a long time series on the nominal rate of assistance for 42 countries that covers over 80 percent of agricultural production. The econometric results show heterogenous effects from various subsidy instruments depending on the choice of productivity measure. Regression results suggest a strong positive effect of input subsidies on both output growth and labor productivity. A positive but relatively small impact of output subsidies is found on output growth only. Subsidies that are mostly decoupled reveal no significant impact on any of the productivity measures.

March 1995 Federal transfers to Russia's agro-industrial complex fell from 10 percent of GDP in 1992 to 3 percent of GDP in 1993, and were slated to be only 2 percent of GDP in 1994. But the basic framework for agricultural policy has not changed since the Soviet era and federal transfers have tended to impede rather than enhance market-oriented reform. Galbi analyzes the role of federal agricultural credits and subsidies in Russia since the Gaidar reforms of January 1992. Pressure on the budget has led to a significant reduction in federal transfers to the agro-industrial complex. Transfers fell from 10 percent of gross domestic product (GDP) in 1992 to 3 percent of GDP in 1993, and budget transfers for 1994 are only about 2 percent of GDP. But the nature of federal transfers to the agro-industrial complex has not changed significantly since 1992, and federal transfers have tended to impede market-oriented reform rather than enhance it. So reform in the agriculture sector has been driven largely by a budget squeeze on the implementation of policies that hinder the development of market-oriented agriculture. Galbi provides an overview of federal agro-industrial programs, describing four types of support in detail: * Credits and subsidies to promote private farms. * Credits associated with state procurement of agricultural products. * Subsidies for agricultural inputs. * General subsidies to agricultural producers. He shows the difficulty of using federal transfers to support agriculture when institutions are unstable, the government's administrative and regulatory capabilities are weak, and information needed for effective credit allocation is unavailable. He also shows the extent to which the framework for agricultural policy has not changed since the Soviet era. This paper -- a product of the Office of the Vice President, Development Economics -- is part of an ongoing research on Russian monetary and credit policy.

The good practice guidelines - which form the basis of an interactive policymaker's tool kit included on a CD accompanying the book - relate not only to the more focused problem of encouraging increased fertilizer use by farmers, but also to the broader challenge of creating the type of enabling environment that is needed to support the emergence of efficient, dynamic and commercially viable fertilizer marketing systems."--Jacket.