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Citation Information

Type Working Paper
Title A Review of Zambia’s Agricultural Input Subsidy Programs: Targeting, Impacts, and the Way Forward
Publication (Day/Month/Year) 2013
URL http://pdf.usaid.gov/pdf_docs/PA00JMQ8.pdf
In the last decade, the Government of Republic of Zambia (GRZ) has devoted a considerable share of its agricultural budget to input subsidies. Between 2004 and 2011, spending on the Farmer Input Support Programme (FISP) accounted for an average of 30% of total GRZ agricultural sector spending, and 47% of GRZ agricultural sector Poverty Reduction Programme spending. Through FISP, GRZ provides beneficiary farmers with subsidized fertilizer and hybrid maize seed. This paper reviews the design and implementation of FISP and GRZ’s other input subsidy programs since structural adjustment, synthesizes the empirical evidence to date on the targeting and effects of the programs, and presents new empirical evidence on heretofore unexplored dimensions of the programs. The empirical evidence presented in the paper is drawn mainly from analyses of two nationally representative surveys of smallholder farm households in Zambia. The first is the Supplemental Survey (SS), a three-wave panel covering the 1999/2000, 2002/03, and 2006/07 agricultural years. The second is the 2012 Rural Agricultural Livelihoods Survey (RALS), which covers the 2010/11 agricultural year. On targeting, the study finds significant political economy dimensions to FISP fertilizer targeting. Regarding the impacts of the subsidy programs, results suggest that the FISP program exhibits a significant degree of crowding out of commercial purchases of hybrid maize seed and fertilizer. These and other results highlighted in the paper point to a number of changes that could be made to FISP to improve its poverty reduction impacts and to better achieve its other objectives, including raising agricultural productivity and increasing private sector participation in input markets.

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