DFID Policy Brief on 2016/17 Farm Input Subsidy Program

Photo credit: M.Mitchell/IFPRI, Malawi field visit 2016

Up until last year, the decade-long Farm Input Subsidy Programme (FISP) - a national programme designed to improve resource poor smallholder farmers’ access to improved agricultural inputs- had remained largely unchanged despite some criticisms about areas for improvement. A set of reforms finally came in 2016/17. A new policy brief published by the UK Aid Department for International Development (DFID) shows that these reforms have contributed to improved program effectiveness and efficiency, although additional changes are still needed.

This policy brief draws results from two independent evaluation studies of the 2016/17 FISP implementation, one by the Center for Development Management (CDM) and the other by the Farmers Union of Malawi (FUM). In particular, the studies examined the effects of the following reforms:

  1. Centrally-managed, random targeting of program beneficiaries, including a sharp decline in the total number of beneficiaries
  2. Greater private sector participation in fertilizer distribution and retailing
  3. Increased farmer contributions towards the total cost of fertilizer
  4. A pilot program to target “productive poor farmers” in Dowa and Rumphi districts

The evaluations revealed that new targeting criteria reduced operational costs and blame on field staff for inclusion and exclusion errors. Greater private sector involvement decreased travel distance and wait times for many farmers accessing fertilizer, although many areas still were not served by either the public or private sector. Increasing farmer contributions towards the cost of subsidized fertilizer was appreciated by the private sector, and farmers still paid less than what they would pay at a commercial market. However, the private sector over-priced inputs to hedge against delayed government payments, which ultimately caused the unit cost of subsidized fertilizer to be higher than fertilizer purchased commercially without vouchers. Finally, the "productive poor" pilot showed promise of providing higher crop productivity gains and maize yields.

While the evaluations cite some improvements as a result of the 2016/17 FISP reforms, they also suggest program areas where additional modifications and action from the government are needed, such as:

  • Reviewing FISP objectives to determine whether "productive poor" farmers should be more heavily targeted, while considering other social support programs for less productive farmers
  • Simplifying the process of private sector involvement in fertilizer markets
  • Increasing extension service provision for all farmers, particularly FISP recipients, and discouraging fertilizer sharing to improve yields
  • Ensuring transparency, in particular through public validation of targeting exercises and displaying beneficiary lists in convenient, public locations

Authors: Centre for Development Management (CDM) and Farmers Union of Malawi (FUM)

Download and read the full policy brief here. (PDF 683 KB)