Agricultural input subsidies for improving productivity, farm income, consumer welfare and wider growth in low- and lower-middle-income countries
This systematic review (PDF) by Campbell Collaboration evaluates the impact of input subsidies on agricultural productivity, beneficiary incomes and welfare, consumer welfare and wider economic growth, in low- or lower-middle-income countries. Overall, the evidence base is limited with a disproportionate focus on subsidy programmes in sub-Saharan Africa and on fertilizers and seeds. Results show that subsidized fertilizers and seeds are associated with increased use of these inputs, higher agricultural yields and increased income, but evidence of effect on poverty is limited. There is no association between subsidy size and agricultural outcomes. Subsidy vouchers do not always reach farmers, and when they do reach they are not always used. There is much evidence that subsidy schemes are prone to inefficiency, bias ad corruption. Introducing or increasing subsidies generally results in positive effects for consumes and wider economic growth. However, the way subsidies are funded, world input prices and beneficiary targeting, all have important influences in determining the effectiveness of input subsidies. Since the evidence base is relatively small, more research is needed. This research is especially needed on a wider number of countries and on a wider set of contexts where subsidies are used. Impact evaluations can explore different levels of subsidies for different beneficiaries. Simulation models studies should make more use of rigorous evidence in determining coefficients used for household behaviour and micro-economic effects of subsidies. Furthermore, including multiple simulations may be of more use to policy maker than simple comparisons. Researchers should more clearly report methodological approaches, statistical information and type and size of input subsidy implemented or modelled.