The impact of farm input subsidies on improving fertilizer use and enhancing maize productivity in Malawi

Governments in developing countries are increasingly using farm-input support programs to improve crop productivity and, in turn, reduce poverty among farming households. However, the intended policy outcomes of enhancing productivity and poverty reduction would not be fully optimized if smallholder farmers are technically inefficient. Using nationally representative panel data from Malawi’s Living Standards and Measurement Survey (LSMS), we apply a stochastic production frontier translog model to examine the effects of hybrid seed and fertilizer adoption on the technical efficiency of smallholder maize-based cropping systems. The results show a higher adoption rate for fertilizer application (80%) than the use of hybrid seeds which is estimated at 57% of the sampled maize producers in 2016 and 2019. The mean technical efficiency for the sample is 56% suggesting that an average farmer can improve their productive performance by 44%. Results from treatment effects, propensity score matching and stochastic dominance analysis show that hybrid seeds and inorganic fertilizer adoption increase farmers’ technical efficiency by 10 and 15%, respectively. The study highlights the need for policy strategies to incentivize affordability of farm inputs and upscale accessibility to increase the use of hybrid seeds and fertilizers among smallholder farmers. Facilitating remunerative commodity price offers (high value-cost ratio) and innovative payment schemes like payment by instalments and improved access to financial services could be some of the ways through which smallholder farmers can increase the purchase and use of hybrid seeds and fertilizer.