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Going the Extra Mile: Farm Subsidies and Spatial Convergence in Agricultural Input Adoption

Kumar, Naresh / Kapoor, Rolly / Aggarwal, Shilpa / Jeong, Dahyeon / Park, David Sungho / Robinson, Jonathan / Spearot, Alan

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Abstract

Many countries subsidize agricultural inputs but require farmers to travel to retailers to access inputs, just as for normal purchases. What effect do travel costs have on subsidy take-up and input usage, particularly for remote farmers? We analyze Malawi’s Farm Input Subsidy Program (FISP), and show that travel-cost-adjusted prices are substantially higher in remote areas. However, subsidy redemption is nearly universal. We make use of a policy change in 2017-19 which took centralized control of beneficiary selection and find that FISP eliminates the sizeable remoteness gradient that exists for non-beneficiaries. Our results demonstrate that subsidy programs may narrow spatial inequities.

Issue Date
2023-12
Publisher
KDI School of Public Policy and Management
Keywords
Input Subsidies; Technology Adoption; Transport Costs; FISP
Pages
34
Series Title
KDIS Working Paper 23-13
URI
https://archives.kdischool.ac.kr/handle/11125/53476
URL
https://ssrn.com/abstract=4703382
DOI
10.2139/ssrn.4703382
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