Can Crop Purchase Programs Reduce Poverty and Improve Welfare in Rural Communities? Evidence from the Food Reserve Agency in Zambia

57 Pages Posted: 12 Oct 2015

See all articles by Winnie Fung

Winnie Fung

Wheaton College

Lenis Saweda O. Liverpool-Tasie

Michigan State University - Department of Agricultural, Food and Resource Economics

Nicole Mason

Michigan State University - Department of Agricultural, Food and Resource Economics

Ruth Uwaifo Oyelere

Morehouse College; IZA Institute of Labor Economics

Abstract

The last decade has seen a resurgence of parastatal crop marketing institutions in sub-Saharan Africa, many of which cite improving food security and incomes as key goals. However, there is limited empirical evidence on the welfare effects of these programs. This article considers one such program, the Zambian Food Reserve Agency (FRA), which purchases maize from smallholder farmers at a pan-territorial price that typically exceeds maize market prices in surplus production areas. Using both fixed effects and an instrumental variables approach combined with correlated random effects, we estimate the effects of the FRA's maize marketing activities on smallholder farm household welfare. Results suggest that FRA activities have positive direct welfare effects on the small minority of smallholder households that are able to sell to it. However, the results also suggest negative indirect FRA effects, as higher levels of FRA activity in a district are associated with higher levels of poverty.

Keywords: crop marketing boards, strategic grain reserves, maize, smallholder farmers, income, poverty, Zambia, sub-Saharan Africa

JEL Classification: Q12, Q13, Q18, I38, D31, O13

Suggested Citation

Fung, Winnie and Liverpool-Tasie, Lenis and Mason, Nicole and Uwaifo Oyelere, Ruth, Can Crop Purchase Programs Reduce Poverty and Improve Welfare in Rural Communities? Evidence from the Food Reserve Agency in Zambia. IZA Discussion Paper No. 9361, Available at SSRN: https://ssrn.com/abstract=2672147 or http://dx.doi.org/10.2139/ssrn.2672147

Winnie Fung (Contact Author)

Wheaton College ( email )

501 College Ave
Wheaton, IL 60187
United States

Lenis Liverpool-Tasie

Michigan State University - Department of Agricultural, Food and Resource Economics ( email )

MI
United States

Nicole Mason

Michigan State University - Department of Agricultural, Food and Resource Economics ( email )

MI
United States

Ruth Uwaifo Oyelere

Morehouse College ( email )

Department of Economics
Atlanta, GA 30332
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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