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Input Subsidy Programs in Sub-Saharan Africa by Thom Jayne

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IFPRI Policy Seminar "Input Subsidy Programs in Developing Countries …

IFPRI Policy Seminar "Input Subsidy Programs in Developing Countries
What Works, What Doesn’t, and Why?" presentation by Professor Thomas Jayne, Michigan State University on 18 April 2013.

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  • -transition to textbox is another rational for targeting larger farmers is to raise national maize production and put downward pressure on retail maize prices but …
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    • 1. Input Subsidy Programs in Sub-Saharan Africa T.S. Jayne, Michigan State University Policy Seminar IFPRI, Washington DC 1 April 18, 2013
    • 2. Context for this seminar• 10 years ago, input subsidy programs (ISPs) were out of favor – very few in Sub-Saharan Africa• ISP expenditures is SSA now account for over US$2.0 billion per year• How did we get to where we are now in 2013? 2
    • 3. How did ISPs go from “bust” in early2000s to “boom” in 2013? 1. HIPC 2. Shift from conditionality to budget support 3. Malawi miracle -- “…simply by ignoring the experts” 4. Rise in global food prices since 2007 5. Shift in WB position – support for “smart” subsidy programs• WB and other basket donors now financing most of 3 the 7 countries with the biggest ISPs in SSA
    • 4. 4 questions1. There is a role for ISPs in most SSA countries: true or false2. Do you feel that ISPs in most SSA countries need: A: no changes to design B: small tweaks C: major reforms/improvements D: should be discontinued 4
    • 5. 4 questions1. There is a role for ISPs in most SSA countries: true: 69%2. Do you feel that ISPs in most SSA countries need: A: no changes to design B: small tweaks C: major reforms/improvements D: should be discontinued 5
    • 6. 4 questions1. There is a role for ISPs in most SSA countries: true: 69%2. Do you feel that ISPs in most SSA countries need: A: no changes to design: 0% B: small tweaks: 4% C: major reforms/improvements: 81% D: should be discontinued: 15% 6
    • 7. 4 questions3. What should be the primary rationale for input subsidy programs: A: Increasing food supplies / food self-sufficiency B: Poverty reduction C: Dynamic economic growth D: Others 7
    • 8. 4 questions3. What should be the primary rationale for input subsidy programs: A: Increasing food supplies / self-sufficiency: 27% B: Poverty reduction: 12% C: Dynamic economic growth: 38% D: Other: 23% 8
    • 9. 4 questions4. Do you feel that ISPs in SSA should be: A: Scaled up? B: Are at about the right level of expenditure C: Should be downsized 9
    • 10. 4 questions4. Do you feel that ISPs in SSA should be: A: Scaled up? 8% B: Are at about the right level of expenditure: 0% C: Should be downsized: 92% 10
    • 11. Emerging consensus of workshop participants1. Spending a large share of the ag budget on ISPs may not be the most effective way to promote the welfare of it citizens, but it is a highly demonstrable way to do so.
    • 12. Emerging consensus of workshop participants2. ISPs are a powerful tool to quickly raise food production….3. But if they account for too large a share of agricultural spending, they can crowd out other public investments required for sustainable development
    • 13. Emerging consensus of workshop participants4. Focus on making inputs profitable / sustainable use:Profitable use = major drivers: crop response rates output price input prices
    • 14. Variation in farmers’ efficiency of fertilizer use on maize, Agroecological Zone IIa, Zambia 5 4 Percent of farms 3 2 1 0 0 5 10 15 20 25 30 35 Marginal product (kgs / kg nitrogen)Note: Zone IIa is a relatively high-potential zone suitable for intensive maize production
    • 15. Emerging consensus of workshop participants4. Focus on making inputs profitable / sustainable use:Profitable use = major drivers: crop response rates output price input prices…..Underlying investments in R&D,extension programs, infrastructure, etc.
    • 16. Public spending on agriculture, 201016 Other 9% FISP 30% FRA 61% Source: Min. Finance Yellow book Indaba Agricultural Policy Research Institute
    • 17. Public spending on agriculture, 201017 Other 9% FISP Input subsidy 30% FRA program 61% Source: Min. Finance Yellow book Indaba Agricultural Policy Research Institute
    • 18. Public spending on agriculture, 201018 Other 9% FISP maize Input subsidy 30% marketing FRA board and program 61% price supports Source: Min. Finance Yellow book Indaba Agricultural Policy Research Institute
    • 19. Public spending on agriculture, 201019 Other 9%• Seed improvement• Farm extension / training programs FISP• Irrigation systems• Responding to 30% FRA climate change• Policy analysis 61%• Rural electrification• Road-rail-port infrastructure• Land grant university system Source: Min. Finance Yellow book Indaba Agricultural Policy Research Institute
    • 20. Question:• Given that ISPs will continue, what concrete guidance can be identified to improve their effectiveness? 20
    • 21. Proposal 1: Raise publicinvestment in agronomic researchand extension programs to enablefarmers to use fertilizer moreefficiently
    • 22. Proposal 2: Reconsidertargeting guidelines to achievemore equitable developmentimpacts
    • 23. 23FISP fertiliser received (2010/11 crop season) and expectedmaize sales, 2011, by farm size categoryTotal area Number of % of farms % of kg of FISP % of Expectedcultivated farms farmers fertilizer farmers maize sales(maize + all receiving received per expecting (kg/farmother crops) FISP farm to sell household) fertilizer household maize (A) (B) (C) (D) (E) (F)0-0.99 ha 616,867 41.9%1-1.99 ha 489,937 33.3%2-4.99 ha 315,459 21.4%5-9.99 ha 42,332 2.9%10-20 ha 6,626 0.5%Total 1,471,221 100%Source: MACO/CSO Crop Forecast Survey, 2010/11
    • 24. 24FISP fertiliser received (2010/11 crop season) and expectedmaize sales, 2011, by farm size categoryTotal area Number of % of farms % of kg of FISP % of Expectedcultivated farms farmers fertilizer farmers maize sales(maize + all receiving received per expecting (kg/farmother crops) FISP farm to sell household) fertilizer household maize (A) (B) (C) (D) (E) (F)0-0.99 ha 616,867 41.9% 14.3%1-1.99 ha 489,937 33.3% 30.6%2-4.99 ha 315,459 21.4% 45.1%5-9.99 ha 42,332 2.9% 58.5%10-20 ha 6,626 0.5% 52.6%Total 1,471,221 100% 28.6%Source: MACO/CSO Crop Forecast Survey, 2010/11
    • 25. 25FISP fertiliser received (2010/11 crop season) and expectedmaize sales, 2011, by farm size categoryTotal area Number of % of farms % of kg of FISP % of Expectedcultivated farms farmers fertilizer farmers maize sales(maize + all receiving received per expecting (kg/farmother crops) FISP farm to sell household) fertilizer household maize (A) (B) (C) (D) (E) (F)0-0.99 ha 616,867 41.9% 14.3% 24.11-1.99 ha 489,937 33.3% 30.6% 69.32-4.99 ha 315,459 21.4% 45.1% 139.75-9.99 ha 42,332 2.9% 58.5% 309.710-20 ha 6,626 0.5% 52.6% 345.6Total 1,471,221 100% 28.6% 77.1Source: MACO/CSO Crop Forecast Survey, 2010/11
    • 26. 26FISP fertiliser received (2010/11 crop season) and expectedmaize sales, 2011, by farm size categoryTotal area Number of % of farms % of kg of FISP % of Expectedcultivated farms farmers fertilizer farmers maize sales(maize + all receiving received per expecting (kg/farmother crops) FISP farm to sell household) fertilizer household maize (A) (B) (C) (D) (E) (F)0-0.99 ha 616,867 41.9% 14.3% 24.1 22.21-1.99 ha 489,937 33.3% 30.6% 69.3 47.72-4.99 ha 315,459 21.4% 45.1% 139.7 64.05-9.99 ha 42,332 2.9% 58.5% 309.7 82.110-20 ha 6,626 0.5% 52.6% 345.6 86.8Total 1,471,221 100% 28.6% 77.1 42.7Source: MACO/CSO Crop Forecast Survey, 2010/11
    • 27. 27FISP fertiliser received (2010/11 crop season) and expectedmaize sales, 2011, by farm size categoryTotal area Number of % of farms % of kg of FISP % of Expectedcultivated farms farmers fertilizer farmers maize sales(maize + all receiving received per expecting (kg/farmother crops) FISP farm to sell household) fertilizer household maize (A) (B) (C) (D) (E) (F)0-0.99 ha 616,867 41.9% 14.3% 24.1 22.2 1351-1.99 ha 489,937 33.3% 30.6% 69.3 47.7 6092-4.99 ha 315,459 21.4% 45.1% 139.7 64.0 1,7295-9.99 ha 42,332 2.9% 58.5% 309.7 82.1 6,61310-20 ha 6,626 0.5% 52.6% 345.6 86.8 15,144Total 1,471,221 100% 28.6% 77.1 42.7 950Source: MACO/CSO Crop Forecast Survey, 2010/11
    • 28. 28 Farm size Kgs maize (ha) per kg fertilizer 0-0.99 3.73 1-1.99 3.48 2-4.99 3.52 5-9.99 3.68 10-20 3.46Sources: Burke et al. (2012a), Ricker-Gilbert et al.
    • 29. Proposal 2: reconsider targetingguidelines and monitoring
    • 30. Conclusions 30
    • 31. Conclusions1. ISPs would be more effective if adequate resources were allocated to complementary public investments2. More balanced public expenditure patterns could more effectively promote national policy objectives3. There are concrete steps for improving ISP effectiveness4. Q for group discussion: how to communicate 31 these messages effectively to governments?
    • 32. Indaba Agricultural Policy Research Institute