To what extent do fertiliser subsidies improve household income and reduce poverty? The case of Malawi
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In a number of sub-Saharan African countries, farm input subsidies are currently implemented in
order to stimulate farm-level fertiliser application, enhance food security, improve household
income and alleviate poverty. In this paper, a computable general equilibrium (CGE) model and the
Foster, Greer and Thorbecke (FGT) method are employed to explore the extent to which fertiliser
subsidies improve household income and reduce poverty in Malawi. Modelling results suggest that
fertiliser subsidies lead to small increases in income distribution of all agricultural households.
Rural non-agricultural households experience reductions in their incomes, while there are no
income changes for metro households. The results of the FGT decomposition of poverty suggest that
the subsidies help to reduce income poverty for rural and urban agricultural households, as well as
for urban non-agricultural households. However, the poverty situation of rural non-agricultural
households worsens, while no poverty changes occur in the case of metro households.