DETERMINANTS OF FARMERS’ WILLINGNESS TO PAY FOR SUBSIDISED FARM INPUTS IN MALAWI

Abstract

Most recently, citing low price elasticity of demand for inputs in the agro-based Malawian economy, economists and non-economists have advocated for increasing prices for subsidized inputs. However, elasticities alone are not enough to make inferences since knowledge of whether higher prices are indeed affordable by farmers is of special significance. This study uses the standard The results reveal that smallholder farmers are willing to pay for more inputs in the Farm Input Subsidy Programme (FISP) with the mean WTP for each household at MK 1000 being about ten 50kg fertilizer bags and the total WTP at the same price being 46 891 bags per year for 4742 observed households. Using data from the Malawi 2011/12 Farm Input Subsidy Study (FISS4), the model identifies age, sex and education of household head, farm size, food security as well as radio ownership as positive determinants of WTP; with coupon receipt and farm incomes as negative determinants

Keywords

• Malawi, FISP, Willingness to Pay, FISS4, Tobit

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