A recent study in north-eastern Zimbabwe has found that farming subsidies help spread crop risk but have a limited impact on household income. The research, conducted in Mashonaland East province, looked at 408 households, half of which were beneficiaries of Zimbabwe's Pfumvudza input subsidy programme. The programme provides farmers with free maize seed, fertiliser, and lime to establish climate-smart conservation plots. The study aimed to understand whether input subsidies were helping rural households build better lives or simply cope with challenges.
The study found that receiving subsidised inputs encouraged households to diversify their livelihoods, with beneficiaries having more varied livelihood portfolios than non-beneficiaries. However, the research also revealed that extra diversification did not translate into higher incomes. In fact, subsidy beneficiaries were worse off than households that had not received subsidies. The study suggests that this is due to an inverted U-shaped relationship between diversification and household income, where income rises as households add income-earning activities, but only up to a point.
Beyond a certain threshold, adding more activities was associated with lower rather than higher income. The study found that most households in the sample were operating beyond this optimum, with over half classified as "medium" diversifiers and a further 14.5% as "highly" diversified. Only about 27% were "low" diversifiers, and 2% specialised in a single activity. The activities that households were adding were mostly low-return ones, such as petty trading, casual farm labour, and small informal businesses.
The research also found that subsidy beneficiaries were less likely than non-beneficiaries to grow cash crops such as tobacco or cotton. These crops demand a great deal of labour, and the Pfumvudza programme is itself labour-intensive. The programme may be crowding out the cash crops that offer the clearest route to higher returns. The study suggests that the crucial factor is not the number of activities, but the assets behind them.
The research identified a specific set of assets that predicted higher incomes, including tertiary education, livestock ownership, access to irrigation, formal credit, contract farming, and regular contact with agricultural extension services. Households with these assets tend to diversify into high-value activities such as tobacco, horticulture, and stable non-farm enterprises. However, these assets were concentrated among households that were already better off.
The study's findings point to several priorities, including expanding irrigation infrastructure, which is the single most consistent enabler of high-return diversification. The research suggests that rehabilitating existing schemes through public-private partnerships, with training in water management, could help improve household incomes. The study also highlights the need for policymakers to support and enable households to diversify up to the point where it pays off.
The researchers conclude that input subsidies function as a coping mechanism rather than a pathway out of poverty. The study's findings have implications for policymakers seeking to support rural households in Zimbabwe and other parts of sub-Saharan Africa. By understanding the impact of input subsidies on household livelihoods, policymakers can develop more effective strategies to reduce poverty and improve rural incomes.
Key points
- Input subsidies encourage diversification but do not necessarily raise household incomes.
