Economic Efficiency and Subsidized Farm Inputs: Evidence from Malawi Maize Farmers

Although agriculture is widely regarded as a major channel through which poverty and food insecurity in Africa can be curtailed, the continent’s agricultural productivity has been abysmal. Farm input subsidy is becoming a popular policy tool that African governments are using to improve agricultural productivity. Because agricultural productivity is closely linked with efficiency in the use of existing farm inputs, this study uses stochastic frontier analysis to investigate efficiency among farmers and how it is affected by farm input subsidy programs using Malawi maize farmers as a case study. The study finds that farm input subsidy improves efficiency among farmers but even with subsidy, farmers are only 47% efficient in production. Input subsidy alone is therefore not enough to promote agricultural productivity via improvements in farmers’ efficiency. Other programs such as irrigation should be promoted along with subsidies.