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Monday, 5 August 2013

Poverty and agricultural subsidies

Agriculture expert Rhoda Mofya-Mukuka (Research Fellow at IAPRI) recently gave an interview to the Africa Research Institute where she discusses some of the reasons why agricultural subsidies in Zambia have not had the desired impact with regard to poverty reduction, productivity of smallholder farmers and commercialisation of the agricultural sector. Here is the answer to the hotly debated question - "Have the subsidies had the intended impact on poverty in rural areas?" :
We do not have the empirical data to answer this question with certainty. However, our studies at IAPRI have observed that poverty remains persistent in rural areas. About 80% of rural households live in poverty – unchanged since the early 2000s. The maize market is highly concentrated, with about 2-5% of small- to medium-scale farmers accounting for 50% of marketed surplus. Two-thirds of smallholders do not produce a surplus – and many them are net consumers. FISP targets “viable” farmers, leaving out those that cultivate less than one hectare. Therefore, better-off farmers have been the principal beneficiaries of agricultural subsidies. The poorest farmers have been neglected; hence the slight impact on poverty reduction.
You can read the rest of the fascinating interview via Africa Research Institute

ABOUT THE AUTHOR
Chola Mukanga | Economist | Writer
Copyright © Zambian Economist 2013

2 comments:

  1. As you rightfully noted in another post Zambia's subsidy program was poorly targeted so that it is some how subsidizes both consumers and producers (I am not shocked by the spillage of the program to unintended recipients).
    The correct approach would be to re-design the program and re-think the incentives and targeting and most importantly to collect baseline data. The reason there is no data is because there probably was not a baseline study performed at the onset of the program, but I could be wrong.

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  2. In reference to IAPRI's recommendations(see pages 5-6 http://fsg.afre.msu.edu/zambia/ps_51.pdf), I would add, and this is critical in any poverty reduction program for purposes of evaluating the program's efficacy,that what was immediately apparent to me was that there was no mention of poverty reduction indicators apart from increased use of fertilizer. One would expect yields to be an important indicator in an agriculture program since I can't imagine a scenario where the government/consumer purchases low-grade maize. Further, yields would also capture whether or not the fertilizer is being applied correctly.

    The brief also contained no mention of what the program design was (it seems it was initially designed to phase in more beneficiaries but also have those who are phased out?) Needless to say, the issue with FISP is design, monitoring and lack of sufficient indicators and baseline data to warrant an impact evaluation.

    Latly, with any program leakage is likely to occur, the major concern should be whether or not it has a negative or positive effect, this should have been addressed and anticipated in the initial program design.

    -Just my two cents-

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