The impact of farm input subsidies on household welfare in Malawi

This paper analyzes the impact of a fertilizer subsidy program in Malawi on household food security and the total annual per capita consumption expenditure. The study uses the nationally representative two-wave Integrated Household Panel Survey (IHPS) data of 2010 and 2013. Fixed effect and correlated random effect quantile regression models are employed to estimate the conditional mean and heterogeneous effects of subsidized fertilizer. The study finds a positive effect of subsidized fertilizer on the availability of kilocalories per capita per day, the number of months of household food security, and the probability of a household being food secure over the whole year. The study also finds heterogeneous effects of the program with relatively higher impact on food secure households. However, the study finds no evidence of effects on annual per capita consumption expenditure. These results suggests that farm input subsidy programs could be beneficial for the improvement of food security, particularly of larger food crop producers, but such programs are less useful when the main policy objective is to decrease poverty