FERTILIZER SUBSIDY AND AGRICULTURAL PRODUCTIVITY IN BURKINA FASO Presented by: Doubahan Adeline COULIBALY 2 nd International Conference on Sustainable Development in Africa Dakar, Senégal, November

INTRODUCTION OBJECTIVE THEORETICAL FRAMEWORK EMPIRICAL FRAMEWORK RESULTS AND IMPLICATIONS CONCLUSION AND RECOMMENDATION 2

 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 3

 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. 4

 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. 5

 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) 6

 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 7

8

 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 9

10

11

12

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 13

 Beneficiaries versus producers who didn’t use fertilizer Table 1 : probit Estimation for selection to the subsidy program VariablesCoefficientsRobust Std. Err. AGE-0,015 *** 0,004 ACRED0,475 ** 0,238 TSEM1,019 *** 0,183 SEXE-0,469 * 0,253 CES-0,1080,159 constant-0,2180,337 Observations Log pseudolikelihood ,57 14

Variables Model aModel b Coef sdt Error ANIT 0,3471,0530,3271,05 FUM -7,04e -08 2,13e ,95e -08 2,13e -06 MOF 9,249 *** 3,5739,307* ** 3,56 SEXE 132,448101,261347,80 ** 142,02 AGE -2,719 * 1,4784,8613,808 TSEM 19,10692, ,582* * 231,83 SUBV 500,424 *** 68,485487,65 *** 68,63 Invmills ,35 *** 260,91 Cons 820,203 *** 126, ,049 *** 260,45 Table 2 : Estimation of program impact on productivity. Shively and al. (2012) 15

VariablesCoef sdt Error Stochastic frontier model lUREE0,0400,028 lNPK-0,0160,027 lFUM0,031 * 0,018 lANIT0,0170,033 lHERB0,053 ** 0,023 lSUP1,080 *** 0,025 lMOF-0,1080,0401 Cons6,881 *** 0,289 Model of ineffiency AGE0,013 ** 0,006 SUBV0,1250,182 MLAB-0,404 *** 0,191 NINS0,539 *** 0,165 ACRED-0,1590,229 TSEM-0,1730,201 Cons tant-1,445 ** 0,385 Table3: Estimation of Cobb-Douglas stochastic production fonction 16

n.treat.n.contrATTStd.Err.t.statistique ,0270,015-1,779 Table 4: estimation of the fertilizer subsidy program impact Ricker-Gilbert and al. (2009) 17

 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 18

THANK YOU! 19

FERTILIZER SUBSIDY AND AGRICULTURAL PRODUCTIVITY IN BURKINA FASO Presented by: Doubahan Adeline COULIBALY 2 nd International Conference on Sustainable Development in Africa Dakar, Senégal, November

 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. 21

 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. 22

 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. 23