Differential Impact of In-Kind Agricultural Assistance and Per Capita Net Crop Income in Subsistence Economy: the Malawi Case

Abstract

The overall objective of this research was to investigate whether in-kind government agricultural assistance improves the production of maize (staple), increase input use especially fertilizer and thereby identify the main determinant of per capita net crop income among the small holder farmers in Malawi. The research was conducted in the five district of Malawi. The stratification was done purposely along the districts of Dedza, Dowa, Nkotakota, Rumphi and Mangochi because of the concentration of agricultural lending institutions, whereby most of cash loans for agricultural activities take place in these areas. The study addresses the differential impact of agricultural productivity due to in-kind and cash loans for agricultural activities through the provision of input packages to the small holders and examined the share of land allocation for the production of the staple food. The results on income and expenditure showed that in-kind packages had raised production and mean gross margins were found to be higher for in-kind inputs than the cash loan inputs. Households with strictly with in-kind input assistance realized higher per capital net crop income than households in cash loan assistance. On the other hand, farmers with the usage of cash loans for agricultural activities incurred heavy expenditure on inputs or non-farm activities and thereby reducing their gross margins. It was also found that the in-kind assistance raised the net per capita income by K380 as opposed to K116 increment obtained from cash loan farm activities. On production of maize, land holding size, extension, level of education and age of the household were found to have a greater effect while dependency burden had negatively affected the per capita net crop income. The study has also shown a significant effect of land holding size, household size and the share of maize grown on the uptake of fertilizers. Apart from the share of land allocation for maize production, the results confirmed the hypothesis that the in-kind packages has increased net crop per capita income. However, the possibility of cash loan deviation to other activities and the delays in loan processing negatively affected the crop income and hence less increment of per capital net crop income.

UNISWA Research Journal of Agriculture, Science and Technology Vol. 4 (2) 2000: pp 163-170