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1 Why is the Development of Agricultural Input Markets Sluggish in Mozambique? Input Voucher Regional Workshop Lusaka - Zambia Emílio Tostão.

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Presentation on theme: "1 Why is the Development of Agricultural Input Markets Sluggish in Mozambique? Input Voucher Regional Workshop Lusaka - Zambia Emílio Tostão."— Presentation transcript:

1 1 Why is the Development of Agricultural Input Markets Sluggish in Mozambique? Input Voucher Regional Workshop Lusaka - Zambia Emílio Tostão

2 2 The Problem  Over 40% of children are malnourished  Over two thirds of Mozambicans live below the poverty line  Most of the poor live in rural areas rely on agriculture for work and income Ag. sector employs 80% of active population Contributes to 30% of the GDP

3 3 The Problem Cont...  Sustained agricultural growth is needed for reducing poverty and food insecurity  farmer’s access to and use of improved seeds needs to improve. Why?  Seeds are very important: they determine the biological yield frontier and the productivity of land, labor, and capital

4 4  drought and disease-resistant seeds can still help raise agricultural yields  But Mozambique has under-invested in its national seed system lose about $77 million annually (Rusike et al. 1997)  Lack of improved seeds means low yields, hunger and poverty across generations. The Problem Cont...

5 5 Context & Objectives  MDGs,  Maputo Declaration of 2003  Abuja Declaration on Fertilizer of 2006  Mozambique domestic PRS (PARPA’s I and II)  suggest a twin commitment to poverty alleviation and input market development.

6 6 Context & Objectives  The question is how to achieve the dual objective  Input vouchers have been used to market agricultural inputs in Mozambique  In the last six years, over 100,000 producers got seed worth about US950,000 via seed vouchers.  Previous work suggest that vouchers have offered little incentive to the formal seed sector

7 7 Context & Objectives  Several possible theoretical explanations for sluggish development of the formal seed sector  Empirical evidence using actual data on seed and sound statistical analytical methods is lacking.  The objective of this study is to estimate smallholders’ probability of purchasing maize seed where there are both emergency and commercial seed.

8 8 Data & Procedures  Used 2003 HH-level data from national agricultural survey (TIA)  Desk literature review  Used a binary logit model to model smallholders’s decision of whether or not to buy seed  Probability of buying see and marginal effects in each of 10 provinces of Mozambique

9 9 Results Province Probabilty of buying seed Marginal effect of emergency seed Niassa Cabo delgado Nampula Zambezia Tete Manica Sofala Inhambane Gaza Maputo

10 Probability of buying seed Marginal effect of emergency seed

11 11 Key Conclusions  Producer probability of buying maize seed is small  Relatively bigger in south Mozambique. Space matters: size and sign of coeficients vary  Smallholders who receive emergency seed are less likely to buy marketed seed.  Emergency seed programs might be preventing development of commercial seed markets.

12 12 Policy Options  A clear definition of “emergency,” the objective of emergency intervention, and a clear definition of the target population.  production of maize surplus and subsequent participation in maize output markets do not seem related to the use of commercial seed. Lack of enforcement lead to disappointment: when the promised quality is not attained, then demand for commercial seed is likely to remain low.

13 13 Policy Options  Successful strategies must target younger producers, and create incentives for private investment in market development.  Long run: need to investment on roads, simplify regulation, and enforce quality standards  short run: consider incentives such as income tax breaks and/or gasoline allowances for business in rural areas where transportation costs are high.

14 14 Policy Options  short run: consider incentives such as income tax breaks and/or gasoline allowances for agricultural companies, small business in rural areas where transportation costs are high.  Space matters: carefully consider constraints that define regions’ absolute advantages. The usual “one size fits all” policy approach might not work in Mozambique

15 THANK YOU


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