What does Malawi's Fertiliser Programme do to Private Sector Fertiliser Sales? A Quasi‐Experimental Field Study

Malawi implemented reforms to its Farm Input Subsidy Program (FISP) during the 2015/16 agricultural season that allowed certain large‐scale, private sector fertiliser dealers to sell subsidised fertiliser at their network of retail stores in select districts on a pilot basis. At the same time, small‐scale independent fertiliser dealers were excluded from participating in the pilot. We use a unique panel dataset of large‐scale corporate fertiliser dealers and small‐scale independent fertiliser dealers collected before and after the policy change to estimate the impacts of the FISP on those who participated in the pilot and those who did not, using a difference‐in‐differences estimator. Results indicate that large‐scale dealers who sold the FISP fertiliser under the pilot programme in 2015/16 did not have their commercial sales either crowded‐in or crowded‐out by the FISP pilot. Instead, the average volume of fertiliser sold at each of their retail stores increased by 59% due to an increase in subsidised fertiliser sales. Conversely, small‐scale independent fertiliser dealers who were not allowed participate in the pilot had their commercial sales crowded‐out by the programme. They experienced a 60% decline in the volume of commercial fertiliser sales on average at each store. This implies that the FISP reforms have mainly benefited large‐scale fertiliser dealers who sell 90% of the fertiliser in Malawi, but caused some harm to the many small‐scale independent fertiliser dealers who sell about 10% of the private sector's fertiliser in Malawi, but often operate their businesses in more remote areas.     

How do informal farmland rental markets affect smallholders’ well‐being? Evidence from a matched tenant–landlord survey in Malawi

We estimate the efficiency and equity returns to farmland rental markets in Malawi using a matched tenant–landlord survey of smallholder farm households in four districts. Our sample allows us to more fully observe the landlord side of the rental market, which is almost always missing in previous studies. Our results suggest that land rental markets promote efficiency by facilitating a net transfer of land to more productive farmers. We also find that land rental markets promote equity as conventionally defined in the land markets literature, that is, by transferring land from land‐rich households to land‐poor households, and from labor‐poor to labor‐rich households. However, our study identifies some important challenges for land rental markets in this context. First, we find that tenants in our sample are wealthier than their landlord counterpart on average in all dimensions other than landholding. In addition, most landlords report the motive for renting out their land as either the need for immediate cash, or the lack of labor and/or capital to cultivate the plot that was rented out. These findings align with concerns about potential “stress renting” by poor landlords and suggest the value of defining equity along a broader set of dimensions other than simply equalizing the distribution of farmland and labor.