Effect of fertilizer subsidies on farm financial profitability in Burkina Faso

Using data from a permanent agricultural survey (2020), this study analyses the effect of fertilizer subsidies on Several indicators of financial profitability of farm households in Burkina Faso. To resolve the problems of bias and endogeneity, score matching was combined with Heckman’s two-stage model and simultaneous equation models. The results showed that the subsidy did not have a significant effect on the profitability indicators because of the low rate. However, factors such as the age of the head of household, agricultural equipment, agricultural extension and fixed costs have a positive influence on profitability indicators, whereas access to agricultural credit, household size and variable costs have significant and negative effects on these indicators. In light of these results, the subsidy program can be continued by increasing the subsidy rate to reduce the variable costs of farms.