Department of Agricultural, Food, and Resource Economics Feed the Future Innovation Lab for Food Security Policy

Melinda Smale, Amidou Assima, Véronique Thériault, Yénizié Kone, 2020. Effects of the Fertilizer Subsidy Program on Fertilizer Use, Farm Productivity and Crop Sales in Mali, FSP Research Paper 172.

Abstract

Mali’s most recent phase of fertilizer subsidies began during the global food crisis of 2008/09, but
there is little evidence-based information concerning its effects. To generate information of
potential use to policymakers in Mali, we implemented a survey to a random sample of 2400
extended farm family households in two major agroecological zones of Mali—the Delta du Niger
and the Plateau de Koutiala.

In this paper, we test the effects of the fertilizer subsidy on total fertilizer applied, yield, target cropincome and quantity of all crops sold. We find that subsidized fertilizer accounts for most of thetotal fertilizer applied by farmers, suggesting that in some instances it is displacing demand forcommercial fertilizer. Average fertilizer use rates in kgs appear to be below the recommended quantities for all target crops, despite subsidy receipts. In future research, we intend to verify these findings converting units to nitrogen nutrient kgs, which standardizes across fertilizer types and permits a more exact comparison.

We compare regression results across several econometric approaches to improve their reliability.
Each econometric approach provides evidence that considering all crops combined, the fertilizer
subsidy has a positive effect on total fertilizer applied per ha, yields, and crop revenues of target
crop, as well as on quantities of all crops sold. However, important differences are observable
among crops. On average, subsidy effects on millet and sorghum outcome variable were weak or
not statistically significant. Average subsidy effects on all outcome variables were strong for rice.
Average subsidy effects were strong on maize yields, but not revenues or sales of other crops.
For cotton, the subsidy only allowed an increase in the mean quantities of fertilizers used without
improving productivity or other outcomes.

The dose-response estimation suggests efficiency intervals in which the fertilizer subsidy has a
positive marginal effect on fertilizer use, productivity and crop sales. These also vary from one
crop to another, but are estimated only for rice, maize and cotton given that mean effects are not
significant for sorghum and millet. We find no positive marginal effect of subsidized fertilizer on
yields below 65 kg/ha for rice and 87 kg/ha for maize. The graphs also show peaks at high levels
of subsidized fertilizer for both crops, with declining marginal returns after that point. For rice,
marginal effects on rice revenues have a similar shape to that of the yield effect, and effects on
quantities of all crops sold are strong through much of the range of subsidized fertilizer applied in
the data. This last result is observable also for maize at higher levels of the subsidy, suggesting
some spillovers from rice and maize to non-target crops. No positive effect on cotton yields,
cotton revenues or quantities of all crops sold is discernible regardless of the level of subsidization.

The fertilizer subsidy in Mali is currently designed to target particular crops and enhance their
productivity. We conclude that the design could be made more efficient by either reconsidering
target crops or targeting the subsidy according to different criteria. We consider that applying the
subsidy to cotton represents a deadweight loss—that is, a public expenditure that leads to no
discernible supply shift. This last finding could be season-dependent, or result from factors we
could not measure in this analysis—such as cotton seed quality.