Fertilizer subsidies and social cash transfers

Fertiliser subsidies have received a lot of attention, and praise for success in combating food insecurity and poverty. This article reviews the debates on fertilizer subsidies, mostly in Sub-Saharan Africa. While they have been successful in boosting production overall, they have number of limits: they can take a heavy toll on national budget, poorer farmers cannot afford the subsidised price. Nevertheless fertilizer subsidies can be part of a broad portfolio of social transfers' instruments.

The author, Franck Ellis, starts with the background of this tool and gives a comparison with social cash transfers. Then Malawi case is studied. This country has had a famous fertilizer subsidy policy for the past four years, but its cost has doubled between 2008 and 2009 for many reasons. The author explores alternatives for the government to implement other social transfers. Finally, Malawi experience is compared to Zambia, neighbouring country that has implemented a fertilizer subsidy policy.

 RHVP - October 2009