Agricultural Input Subsidies for Improving Productivity, Farm Income
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David J Hemming Ephraim W Chirwa Agricultural input subsidies for improving Holly J Ruffhead productivity, farm income, consumer Rachel Hill Janice Osborn welfare and wider growth in low- and Laurenz Langer middle-income countries Luke Harman Chris Coffey A systematic review Andrew Dorward Daniel Phillips June 2018 Systematic Agriculture Review 41 About 3ie The International Initiative for Impact Evaluation (3ie) promotes evidence-informed equitable, inclusive and sustainable development. We support the generation and effective use of high- quality evidence to inform decision-making and improve the lives of people living in poverty in low- and middle-income countries. We provide guidance and support to produce, synthesise and quality assure evidence of what works, for whom, how, why and at what cost. 3ie systematic reviews 3ie systematic reviews appraise and synthesise the available high-quality evidence on the effectiveness of social and economic development interventions in low- and middle-income countries. These reviews follow scientifically recognised review methods, and are peer- reviewed and quality assured according to internationally accepted standards. 3ie is providing leadership in demonstrating rigorous and innovative review methodologies, such as using theory-based approaches suited to inform policy and programming in the dynamic contexts and challenges of low- and middle-income countries. About this review Agricultural input subsidies for improving productivity, farm income, consumer welfare and wider growth in low- and middle-income countries: a systematic review, was submitted in partial fulfilment of the requirements of grant SR5.1062 awarded under Systematic Review Window 5. This review is available on the 3ie website. 3ie is publishing this technical report as received from the authors; it has been formatted to 3ie style, however the tables and figures have not been reformatted. 3ie will also publish a summary report of this review, designed for use by decision makers, which is forthcoming. This review has also been published in the Campbell Collaboration Library and is available here. All content is the sole responsibility of the authors and does not represent the opinions of 3ie, its donors or its board of commissioners. Any errors are also the sole responsibility of the authors. Comments or queries should be directed to the corresponding author, David J Hemming, [email protected] Funding for this systematic review was provided by 3ie’s donors, which include UK aid, the Bill & Melinda Gates Foundation, Hewlett Foundation and 16 other 3ie members that provide institutional support. Suggested citation: Hemming, DJ, Chirwa, EW, Ruffhead, HJ, Hill, R, Osborn, J, Langer, L, Harman, L, Coffey, C, Dorward, A and Phillips, D, 2018. Agricultural input subsidies for improving productivity, farm income, consumer welfare and wider growth in low- and middle- income countries: a systematic review. 3ie Systematic Review 41. London: International Initiative for Impact Evaluation (3ie). Available at: doi: https://doi.org/10.23846/SR51062 3ie systematic review executive editors: Beryl Leach and Hugh Waddington Production manager: Angel Kharya Assistant production manager: Akarsh Gupta © International Initiative for Impact Evaluation (3ie), 2018 Agricultural input subsidies for improving productivity, farm income, consumer welfare and wider growth in low- and middle- income countries: a systematic review David J Hemming Centre for Agriculture and Bioscience International (CABI) Ephraim W Chirwa University of Malawi Holly J Ruffhead CABI Rachel Hill CABI Janice Osborn CABI Laurenz Langer Independent consultant Luke Harman SOAS University of London Chris Coffey International Initiative for Impact Evaluation Andrew Dorward SOAS Daniel Phillips National Centre for Social Research, UK 3ie Systematic Review 41 June 2018 Acknowledgments We are grateful to 3ie for funding the study, the International Development Coordinating Group (IDCG) for technical support, and to our advisory group: David Rohrback (World bank), Maria Wanzala (NEPAD), Porfirio Fuentes (IFDC) and Valerie Kelly (ASFC). Conflict of interest statement Chirwa and Dorward are engaged in evaluations of the Malawi Farm Input Subsidy Programme and have published on this and more widely on input subsidy impacts. Any work of theirs was independently assessed by other members of the team. There are no other conflicts of interest to declare of which we are aware. i Executive summary Background In recent decades, agricultural productivity in low- and lower-middle-income countries, particularly in Africa, has fallen increasingly behind that of upper middle-income countries. Adequate use of agricultural inputs such as improved seeds and inorganic fertilisers has been identified as one way of enhancing agricultural productivity. However, these inputs can be financially unaffordable or unattractive to many poor farmers in developing countries. Agricultural input subsidies aim to make inputs available to users at below market costs as a way of incentivising adoption, increasing agricultural productivity and profitability, increasing food availability and access and ultimately reducing poverty and stimulating economic growth. They were common in poor rural economies in the 1960s and 70s. Their use declined in the 1980s and 90s, but recent years have witnessed a resurgence of interest and investment, mainly in Africa. There remains considerable debate regarding the effectiveness and efficiency of their use and the conditions under which they may or may not work. Objectives This systematic review explores the effects of agricultural input subsidies on agricultural productivity, farm incomes, consumer welfare and wider growth in low- and lower-middle- income countries. This research question is divided into the following primary and secondary research questions: 1. What are the effects of agricultural input subsidies on agricultural productivity and beneficiary incomes and welfare? 2. What are the effects of agricultural input subsidies on consumer welfare and wider economic growth? Search methods We carried out a systematic search for includable studies in a wide range of sources and using a variety of search methods. We searched academic and online databases, carried out forwards and backwards citation tracking of included studies, and consulted experts. There were no restrictions on publication year, type or language, though searches were undertaken in English. The main searches were completed in November 2013. However, we incorporated additional papers after this date where they became available before our analysis was completed. Selection criteria To be included, studies had to examine the effects of agricultural input subsidies, including products, machinery, seeds or fertilisers, on farmers, farm households, wage labourers or food consumers in low- or lower- middle-income countries. Eligible comparisons included no active agricultural input subsidy intervention, wait-list, alternate input subsidy intervention, or other interventions providing access to inputs. We included experimental or quasi-experimental studies to address our primary research question regarding primary outcomes of adoption, productivity and farm income. We included ii econometric modelling studies to address our secondary research question on consumer welfare and wider economic growth outcomes. Studies were assessed by a single reviewer at both title and abstract level and full-text level. A second reviewer then checked screening decisions taken at full-text level. Data collection and analysis We extracted a range of data including bibliographic details, outcomes, time period covered, study design and outcomes data. For our primary research questions we synthesised evidence from experimental and quasi-experimental studies using meta- analysis, meta-regression analysis and a qualitative synthesis of relevant implementation and contextual factors. For our secondary research questions we synthesised evidence from modelling studies narratively and displayed effects in scatter plots where possible. Main results We identified 15 experimental and quasi-experimental studies that assess the effectiveness of agricultural input subsidies on adoption, yield and farm incomes. We also identified 16 studies that use computable models that simulate the effect of agricultural input subsidies on measures of consumer welfare and wider growth. Overall, the evidence base is limited with a disproportionate focus on subsidy programmes in sub-Saharan Africa and in particular on the case of Malawi. Most studies also have a focus on fertilisers and/or seeds rather than other types of inputs. We undertook meta-analysis of experimental and quasi-experimental studies to examine the effect of agricultural input subsidies on adoption, productivity, household income and poverty. The findings for primary outcomes are as follows: • Adoption: Meta-analysis of seven experimental and quasi-experimental studies indicates an increase in adoption by 0.23 standard deviations (SD) (95% confidence interval (CI) [0.08, 0.38]) for farmers receiving agricultural input subsidies versus those not receiving agricultural input subsidies. • Productivity: Across five studies, which were able to account adequate for confounding, there is an increase in yields of 0.11 SD (95% CI [0.05, 0.18]) for agricultural input subsidy recipients, compared to non-recipients. • Farm income: Recipient farmer income, measured by household expenditure and income and crop