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Do crop purchase programs improve smallholder welfare? The case of Zambia's Food Reserve Agency
Author(s) -
Fung Winnie,
LiverpoolTasie Lenis Saweda O.,
Mason Nicole M.,
Oyelere Ruth Uwaifo
Publication year - 2020
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/agec.12569
Subject(s) - welfare , agency (philosophy) , popularity , economic surplus , agricultural economics , economics , business , government (linguistics) , production (economics) , survey data collection , food security , agriculture , geography , market economy , microeconomics , psychology , social psychology , philosophy , linguistics , statistics , mathematics , archaeology , epistemology
Government and parastatal crop purchase programs have regained popularity in sub‐Saharan Africa, with many citing improving smallholder farmers’ welfare as a key goal. Yet there is limited empirical evidence on the topic. This paper analyzes the effects of the Zambian Food Reserve Agency's (FRA's) maize purchase activities on smallholder welfare. The FRA buys maize at a pan‐territorial price that often exceeds market prices in surplus production areas. Using two household panel survey datasets spanning 15 years and exploiting variation in the scale of FRA activities over time, we employ fixed effects and control function approaches to estimate the effects of a smallholder household's maize sales to the FRA on its welfare, as well as the effects of more intense FRA maize purchase activity in a given district on the welfare of smallholder households in the district. Results suggest positive direct welfare effects on the minority of smallholders that sell to the FRA. We also find that, in the early years of the program, more intense FRA maize purchase activity in a district was associated with reductions in smallholder welfare, particularly among maize autarkic and net buying households. In later years, we find no evidence of such negative effects and some evidence of positive district‐level effects on maize net buyers.