The impact of farm input subsidies on maize marketing in Malawi
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This paper investigates the effects of subsidized fertilizer on marketing of maize in Malawi. It
uses the nationally representative two-wave Integrated Household Panel Survey (IHPS) data of
2010 and 2013. The correlated random effects method of analyzing linear and non-linear panel
data models is used to estimate the average partial effects. The control function approach of the
instrumental variables methods is employed to control for potential endogeneity of subsidized
fertilizer. The results suggest that subsidized fertilizer increases farmers’ market participation as
sellers, quantity sold and commercialization of maize. However, the magnitudes of the effects are
relatively smaller, which highlight the challenge of improving farm household income from sales
of staple food crops. The results have implication on sustainability of the program, policy
formulation and design of programs for the agricultural sector and small farmers in developing
countries.