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FERTILIZER SUBSIDY AND AGRICULTURAL PRODUCTIVITY IN BURKINA FASO

Presented by: Doubahan Adeline COULIBALY

2nd International Conference on Sustainable Development in Africa Dakar, Senégal, 26-27 November 2015

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• INTRODUCTION

• OBJECTIVE

• THEORETICAL FRAMEWORK

• EMPIRICAL FRAMEWORK

• RESULTS AND IMPLICATIONS

• CONCLUSION AND RECOMMENDATION

PLAN

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Agriculture plays an important role in the development

process in both developed and developing countries

• labor tank for other sectors and a source of raw materials for

industry (Lewis, 1954; Hirschman, 1958)

Agriculture is also a source of growth

• In 2005, year in which growth of Burkina Faso was highest

(7.4%), the agricultural sector contributed about 4 points of

percentage

INTRODUCTION

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in order to contribute in development process and growth,

agriculture must be productive. However, Burkina Faso

agriculture is characterized by low productivity

• According to the World Development Indicator (2013), cereal

yields in 2012 were only 1417kg / ha and 1230kg / ha

respectively in Sub-Saharan Africa and Burkina against

5922kg / ha, 5837kg / ha and 7524kg / ha respectively in the

United States, China and France.

INTRODUCTION

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On cause of low productivity

• Lack of soil fertility management (average fertilizer application

between 2008 and 2010 was 9,42kg / ha (WDI 2013))

Given the importance of agriculture for Burkina Faso

economy and 2008 food crisis , the government of Burkina

Faso has set up fertilizer subsidy policy.

INTRODUCTION

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Literature is divided about the impact of fertilizer subsidy on productivity

• According to price effect and income effect of the subsidy,

some studies show that fertilizer subsidy has a positive impact

on productivity (Carter et al., 2013 ; Chibwana et al. 2010)

• According to theory of decision under uncertainty and issues of

institution, other authors show that fertilizer subsidy has a

negative impact on productivity (Ricker-Gilbert et al., 2013 ;

Seck 2013)

INTRODUCTION

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Observation: Debate is not determine

• It is then important to know: what is the impact of fertilizer

subsidy on agricultural productivity in Burkina Faso?

Objective: Evaluate the impact of Burkina Faso fertilizer

subsidy program on agricultural productivity

Hypothesis: fertilizer subsidy improves agricultural productivity

OBJECTIVE AND HYPOTHESIS

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Method: Impact evaluation on

• simple production function

• Or stochastic

Objective of Impact evaluation :

• Determine the causal effect of treatment:

THEORETICAL FRAMEWORK

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Fundamental problem of Impact evaluation :

• To determine the counterfactual,

• counterfactual represents on average that will be the

beneficiaries in the absence of the program

• For this research we use two types of counterfactual :

• First: producers who didn’t use fertilizer

• Second: producers who bought the fertilizer at the market

THEORETICAL FRAMEWORK

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Beneficiaries versus producers who didn’t use fertilizer

• Productivity = yield

• Estimation method: Heckman

• With

EMPIRICAL FRAMEWORK

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EMPIRICAL FRAMEWORK

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Beneficiaries versus producers who bought the fertilizer at the market

• Productivity= Technical Efficiency

• Estimation method: Matching on technical efficiency score

EMPIRICAL FRAMEWORK

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• For this study, we use 2012 Permanent Agricultural

Survey of Burkina Faso Ministry of Agriculture and

Food Security

• The information was collected in the 45 provinces of

Burkina Faso.

• Household sample is randomly selected

• After clearance of data base we have 1233 households

DATA

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Beneficiaries versus producers who didn’t use fertilizer

RESULTATS ET IMPLICATIONS

Table 1 : probit Estimation for selection to the subsidy program

Variables Coefficients Robust Std. Err.

AGE -0,015*** 0,004

ACRED 0,475** 0,238

TSEM 1,019*** 0,183

SEXE -0,469* 0,253

CES -0,108 0,159

constant -0,218 0,337

Observations

Log pseudolikelihood

 1155-143458,57

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RESULTATS ET IMPLICATIONS

VariablesModel a Model b

Coef sdt Error Coef sdt Error

ANIT 0,347 1,053 0,327 1,05

FUM -7,04e-08 2,13e-06 -3,95e-08 2,13e-06

MOF 9,249*** 3,573 9,307*** 3,56

SEXE 132,448 101,261 347,80** 142,02

AGE -2,719* 1,478 4,861 3,808

TSEM 19,106 92,963 -439,582** 231,83

SUBV 500,424*** 68,485 487,65*** 68,63

Invmills - - -563,35*** 260,91

Cons 820,203*** 126,459 1312,049*** 260,45

Table 2 : Estimation of program impact on productivity .Shively and al. (2012)

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Beneficiaries versus producers who bought the fertilizer at the market

Variables Coef sdt ErrorStochastic frontier model

lUREE 0,040 0,028lNPK -0,016 0,027lFUM 0,031* 0,018lANIT 0,017 0,033lHERB 0,053** 0,023lSUP 1,080*** 0,025lMOF -0,108 0,0401Cons 6,881*** 0,289

Model of ineffiencyAGE 0,013** 0,006SUBV 0,125 0,182MLAB -0,404*** 0,191NINS 0,539*** 0,165ACRED -0,159 0,229TSEM -0,173 0,201Cons tant -1,445** 0,385

Table3: Estimation of Cobb-Douglas stochastic production fonction

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RESULTATS ET IMPLICATIONS

n.treat. n.contr ATT Std.Err. t.statistique

166 136 -0,027 0,015 -1,779

Table 4: estimation of the fertilizer subsidy program impact

Ricker-Gilbert and al. (2009)

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The fertilizer subsidy program for maize has a positive impact

for beneficiaries but when we compare beneficiaries with

producers who bought fertilizer at the market, it appears that the

latter are more productive than beneficiaries.

we encourage government to continue fertilizer subsidy

program. But the program mechanism must be improved in

order to improve fertilizer subsidy effectiveness

CONCLUSION AND RECOMMENDATION

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THANK YOU!

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FERTILIZER SUBSIDY AND AGRICULTURAL PRODUCTIVITY IN BURKINA FASO

Presented by: Doubahan Adeline COULIBALY

2nd International Conference on Sustainable Development in Africa Dakar, Senégal, 26-27 November 2015

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The objective of the fertilizer subsidy program is to increase the level of the current use of NPK and urea.

The subsidy rate between 2008 and 2010 for the NPK was 12% and 26% for urea. The rate rose to 50% between 2011 and 2013 as well as for urea and NPK

In order to have access to subsidized fertilizer, farmers fill a form where they identify and provide information on crops and area that will be cultivate.

FERTILIZER SUBSIDY PROGRAM

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Once the need for fertilizer is estimated, the ministry of agriculture imports fertilizer and delivered it directly to regional offices.

In many cases, the needs may be underestimated or overestimated. This leads to a misallocation of subsidized fertilizer and creates a surplus subsidized fertilizer in some provinces, while others are in deficit.

FERTILIZER SUBSIDY PROGRAM

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From the above, it appears that participation to the fertilizer subsidy program suffers problem of self-selection. Farmers must support the transport cost from the regional office of ministry of agriculture to the village. In addition, they must pay cash the fertilizer subsidized. It follows that only households able to support these costs will have access to the subsidy.

FERTILIZER SUBSIDY PROGRAM