Land rights and the impact of farm input subsidies on poverty convergence

Mwale, Martin Limbikani and Kamninga, Tony Mwenda (2022): Land rights and the impact of farm input subsidies on poverty convergence.

Abstract

Notwithstanding the global significant progress in reducing poverty over the last two decades, still many people live in poverty. Consequently, social protection remains key to welfare sustainability. In this paper, we used longitudinal data from Malawi to examine the impacts of farm input subsidies on poverty convergence. Convergence is coined here as the reduction in persistence of poverty over time. We specifically estimated the response of poverty convergence in a current period, to farm input subsidies that were provided in a prior period, to understand if the programs build sustainable welfare resilience among poor households. We analyse the convergence in two opposing land rights regimes: matrilocal settlements where only women hold rights to land, and patrilocal settlements where only men hold rights to land. Matrilocal and patrilocal settlements offer varying incentives to household heads, who are often men, of investing in familial land. We find that farm input subsidies lead to poverty convergence, only in settlements where men hold rights to land and receive the subsidies on behalf of their households. Poverty convergence is non-responsive to the subsidies in settlements where men receive the subsidies on behalf of their households, while women together with their extended families, hold rights to the land. We further find that the impact of farm input subsidies on poverty convergence is significant in a year when Malawi faced drought, suggesting that the subsidies built sustainable resilience, against an unanticipated climatic shock, in poor households. The paper calls for anti-poverty policies to target poor people while paying attention to their landholding traditions shared prosperity, is to be achieved.

• Item Type: MPRA Paper
• Language: English
• Keywords: Poverty Convergence; Subsidies; Land rights; Resilience; Shared Prosperity; Malawi
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics; D - Microeconomics > D6 - Welfare Economics; H - Public Economics > H2 - Taxation, Subsidies, and Revenue; H - Public Economics > H5 - National Government Expenditures and Related Policies; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture

References

Ajefu, J. B. and Abiona, O. (2020). The mitigating impact of land tenure security on drought-induced food insecurity: Evidence from rural malawi. The Journal of Development Studies, 56(12):2169–2193.

Arndt, C., Pauw, K., and Thurlow, J. (2016). The economy-wide impacts and risks of Malawi’s farm input subsidy program. American Journal of Agricultural Economics, 98(3):962–980.

Asfaw, S. and Maggio, G. (2018). Gender, weather shocks and welfare: Evidence from malawi. The Journal of Development Studies, 54(2):271–291.

Asfaw, S., McCarthy, N., Lipper, L., Arslan, A., and Cattaneo, A. (2016). What determines farmers’ adaptive capacity? empirical evidence from malawi. Food security, 8(3):643–664.

Balla, S., Goli, S., Vedantam, S., and Rammohan, A. (2021). Progress in child stunting across the world from 1990 to 2015: testing the global convergence hypothesis. Public Health Nutrition, page 1–10.

Bargain, O. and Aminjonov, U. (2021). Poverty and covid-19 in africa and latin america. World Development, 142:105422.

Basurto, M. P., Dupas, P., and Robinson, J. (2020). Decentralization and efficiency of subsidy targeting: Evidence from chiefs in rural malawi. Journal of Public Economics, 185:104047.

Benjamin, E. O. (2020). Smallholder agricultural investment and productivity under contract farming and customary tenure system: A malawian perspective. Land, 9(8).

Berge, E., Kambewa, D., Munthali, A., and Wiig, H. (2014). Lineage and land reforms in Malawi: Do matrilineal and patrilineal landholding systems represent a problem for land reforms in Malawi? Land Use Policy, 41:61–69.

Brugh, K., Angeles, G., Mvula, P., Tsoka, M., and Handa, S. (2018). Impacts of the malawi social cash transfer program on household food and nutrition security. Food Policy,76:19–32.

Chibwana, C., Fisher, M., and Shively, G. (2012). Cropland Allocation Effects of Agricultural Input Subsidies in Malawi. World Development, 40(1):124–133.

Chibwana, C., Shively, G., Fisher, M., Jumbe, C., and Masters, W. A. (2014). Measuring the impacts of Malawi’s farm input subsidy programme.

Chikapa, T. M. (2021). Gender culture and Malawian women’s reconciliation of work and family responsibilities. Gender in management, 36(4):449–463.

Chirwa, E. and Dorward, A. (2013). Agricultural Input Subsidies: The Recent Malawi Experience. Oxford University Press.

Deininger, K., Xia, F., and Holden, S. (2019). Gendered incidence and impacts of tenure insecurity on agricultural performance in malawi’s customary tenure system. The Journal of Development Studies, 55(4):597–619.

Diop, S. and Asongu, S. A. (2021). The covid-19 pandemic and the new poor in africa: The straw that broke the camel’s back. Forum for Social Economics, 0(0):1–13.

Djurfeldt, A. A., Hillbom, E., Mulwafu, W. O., Mvula, P., and Djurfeldt, G. (2018). “the family farms together, the decisions, however are made by the man”—matrilineal land tenure systems, welfare and decision making in rural Malawi. Land Use Policy, 70:601–610.

Engblom, A. and Isacsson, A. (2019). Poverty reduction through land titling : A study about the economic effects of the malawi national land policy.

Funsani, W., Rickaille, M., Zhu, J., Tian, X., Chibomba, V., Avea, A. D., and Balezentis, T. (2016). Farmer input support program and household income: Lessons from zambia’s southern province. Transformations in Business and Economics, 15(3C):396–412.

Gatzoflias, S., Kurlansky, P., and George, I. (2021). Rationale for inverse probability treatment weight variables in left-sided infective endocarditis patients treated with primary surgical or medical therapy. The Annals of thoracic surgery, 112(3):1035–1036.

GoM (2020). Provisional budget statement 2020-21 financial year.

Government of Malawi (2012). Malawi growth and development strategy ii 2011-2016. Technical report, Ministry of Economic Planning and Development, Zomba.

Government of Malawi (2017). Malawi growth and development strategy iii (2017-2022): Building a productive, competetive and resilient nation. Technical report, Ministry of Economic Planning and Development, Lilongwe.

Government of Malawi and National Statistical Office (2014). Malawi millennium development goals endline report.

Hall, R. and Kepe, T. (2017). Elite capture and state neglect: new evidence on south africa’s land reform. Review of African Political Economy, 44(151):122–130.

Harou, A. P. (2018). Unraveling the effect of targeted input subsidies on dietary diversity in household consumption and child nutrition: The case of malawi. World Development, 106:124–135.

Hirano, K. and Imbens, G. W. (2001). Estimation of causal effects using propensity score weighting: An application to data on right heart catheterization. Health Services and Outcomes Research Methodology, 2(3-4):259–278.

Holden, S. T. and Fisher, M. (2015). Subsidies promote use of drought tolerant maize varieties despite variable yield performance under smallholder environments in malawi. Food security, 7(6):1225–1238.

IMF (2017). Malawi economic development document. Imf country report no. 17/184, International Monetary Fund.

Johnson, C. A. and Krishnamurthy, K. (2010). Dealing with displacement: Can “social protection” facilitate long-term adaptation to climate change? Global Environmental Change, 20(4):648–655. 20th Anniversary Special Issue.

Johnson, J. (2018). Feminine futures: female initiation and aspiration in matrilineal Malawi. Journal of the Royal Anthropological Institute, 24(4):786–803.

Karamba, R. W. and Winters, P. C. (2015). Gender and agricultural productivity: Implications of the Farm Input Subsidy Program in Malawi. Agricultural Economics (United Kingdom), 46(3):357–374.

Katengeza, S. P. and Holden, S. T. (2021). Productivity impact of drought tolerant maize varieties under rainfall stress in malawi: A continuous treatment approach. Agricultural Economics, 52(1):157–171.

King, A. and Ramlogan-Dobson, C. (2015). Is africa actually developing? World Development, 66:598–613.

Kishindo, P. (2001). The Malawi Social Action Fund and community development. Community Development Journal, 36(4):303–311.

Kishindo, P. (2011). The Marital Immigrant. Land, and Agricultue: A Malawian Case Study. African Sociological Review / Revue Africaine de Sociologie, 14(2):89–97.

Lewbel, A. (2012). Using heteroscedasticity to identify and estimate mismeasured and endogenous regressor models.Journal of Business and Economic Statistics, 30(1):67–80.

Lewbel, A. (2018). Identification and estimation using heteroscedasticity without instruments: The binary endogenous regressor case. Economics Letters, 165:10–12.

Lichtenberg, F. R. (1994). Testing the convergence hypothesis. The review of economics and statistics, 76(3):576–579.

Lovo, S. (2016). Tenure Insecurity and Investment in Soil Conservation. Evidence from Malawi. World Development, 78:219–229.

Lowes, S. (2020). Kinship structure women: Evidence from economics. Daedalus, 149(1):119–133.

Lunduka, R., Ricker-Gilbert, J., and Fisher, M. (2013). What are the farm-level impacts of Malawi’s farm input subsidy program? A critical review. Agricultural Economics (United Kingdom), 44(6):563–579.

Lyncker, K. v. and Thoennessen, R. (2017). Regional club convergence in the eu: Evidence from a panel data analysis. Empirical economics, 52(2):525–553.

Malawi Anti-Corruption Bureau (2021). Report on the monitoring of the 2020/21 affordable inputs programme. Technical report.

Mason, N. M. and Jayne, T. S. (2013). Fertiliser subsidies and smallholder commercial fertiliser purchases: Crowding out, leakage and policy implications for zambia. Journal of Agricultural Economics, 64(3):558–582.

Mason, N. M., Wineman, A., Kirimi, L., and Mather, D.(2017). The Effects of Kenya’s ‘Smarter’ Input Subsidy Programme on Smallholder Behaviour and Incomes: Do Different Quasi-experimental Approaches Lead to the Same Conclusions? Journal of Agricultural Economics, 68(1):45–69.

Mason, N. M., Wineman, A., and Tembo, S. T. (2020). Reducing poverty by ‘ignoring the experts’? evidence on input subsidies in zambia. Food security, 12(5):1157–1172.

Miller, C. M., Tsoka, M., Reichert, K., and Hussaini, A. (2010). Interrupting the intergenerational cycle of poverty with the malawi social cash transfer. Vulnerable Children and Youth Studies, 5(2):108–121.

Mkwara, B. (2013). To what extent do fertiliser subsidies improve household income and reduce poverty? the case of malawi.

Mtika, M. M. (2007). Political economy, labor migration, and the AIDS epidemic in rural Malawi. Social Science & Medicine.

Mwale, M. L., Kamninga, T. M., and Cassim, L. (2021a). The effects of the Malawi Farm Input Subsidy Program on household per-capita consumption convergence. Development in Practice, September(3):1–13.

Mwale, M. L., von Fintel, D., Marchetta, F., Smith, A., and Kamninga, T. M. (2021b). The negative impact of farm input subsidies on women’s agency in malawi’s matrilocal settlements. Working paper, Partnership for Economic Policy (PEP), Nairobi.

NSO (2012). Integrated household survey 2010-2011. Technical report, Ministry of Economic Planning and Development. NSO (2021). Malawi poverty report 2020. Technical report, National Statistics Office, Zomba.

Oh, K.-Y. and Evans, P. (2011). Test of the convergence hypothesis allowing for cross-sectional dependency. Pacific economic review (Oxford, England), 16(3):302–312.

Outes, I. and Porter, C. (2013). Catching up from early nutritional deficits? Evidence from rural Ethiopia. Economics and Human Biology, 11(2):148–163.

Pauw, K., Mussa, R., and Beck, U. (2016). Did rapid smallholder-led agricultural growth fail to reduce rural poverty? making sense of malawi’s poverty puzzle. In Growth and Poverty in Sub-Saharan Africa. Oxford University Press, Oxford.

Pesaran, M. H. (2014). A test of conditional independence assumption in sample selection models. Journal of Applied Econometrics, 21(August 2012):1–21.

Place, F. and Otsuka, K. (2001). Tenure, agricultural investment, and productivity in the customary tenure sector of malawi. Economic development and cultural change, 50(1):77–99.

Rassekh, F. (1998). The convergence hypothesis: History, theory, and evidence. Open economies review, 9(1):85–105.

Ricker-Gilbert, J. and Jayne, T. S. (2017). Estimating the enduring effects of fertiliser subsidies on commercial fertiliser demand and maize production: Panel data evidence from malawi. Journal of Agricultural Economics, 68(1):70–97.

Rivas, M. D. G. and Villarroya, I. S. (2017). Testing the convergence hypothesis for oecd countries: a reappraisal. Economics. The open-access, open-assessment e-journal, 11(1)

Smale, M., Theriault, V., and Assima, A. (2019). Fertilizer subsidy effects on the diet quality of farm women in mali. FSP Research Paper, 121.

Solow, R. M. (1956). A Contribution to the Theory of Economic Growth. The Quarterly Journal of Economics, 70(1):65–94.

Swan, T. W. (1956). Economic growth and capital accumulation. Economic Record, 32(2):334–361.

The Economist (2019). Climate change is making it harder to reduce poverty in malawi; when it rains. The Economist (London).

The World Bank (2016). Malawi Drought Recovery and Resilience Project: The Challenge-Recent Droughts and Recurring Disasters. Technical report.

The World Bank (2018). Breaking the cycle of low growth and slow poverty reduction. Report no. 132785, The World Bank- Malawi Country Team, Lilongwe.

United Nations (2015). Sustainable development goals (sdgs). Technical report, United Nations.

Walther, S. (2017). Moral hazard in marriage: the use of domestic labor as an incentive device. Review of Economics of the Household, 15(2):357–382.

Walther, S. (2018). Noncooperative decision making in the household: Evidence from Malawi. Journal of Development Economics, 134:428–442.

Winsemius, H. C., Jongman, B., Veldkamp, T. I., Hallegatte, S., Bangalore, M., and Ward, P. J. (2018). Disaster risk, climate change, and poverty: assessing the global exposure of poor people to floods and droughts. Environment and Development Economics, 23(3):328–348.

Wossen, T., Abdoulaye, T., Alene, A., Feleke, S., Ricker-Gilbert, J., Manyong, V., and Awotide, B. A. (2017).Productivity and welfare effects of nigeria’s e-voucher-based input subsidy program. World Development, 97:251–265.