Market participation and profitability of cotton production in Malawi
Cotton is traditionally a cash crop for smallholder farmers in Malawi, supporting more than 100,000 families. According to the government of Malawi, the cotton sector is a key element in poverty reduction and growth strategy. In the market liberalized economy, the functioning of the market plays a major role in the allocation of resources for increased productivity. This paper investigates the impacts of cotton subsidy and marketing reforms on farm productivity, a key element for poverty alleviation, in rural Malawi. The main objective of this study is to explore whether changes in market participation coupled with government policies have had significant impacts on cotton yields and profitability at the farm level. It will be useful for our empirical approach to briefly discuss some of the main determinants of farm yields in relation to rural households’ behavior, their decisions and economic outcomes. We evaluate the contribution of the cotton subsidy through Cotton up -scaling program to yields and profit using gross margin analysis. We also evaluate whether household market participation influences participation in the program. The study uses panel data collected in 2010 and 2011 from 215 households in 8 Districts of Malawi which are Neno, Karonga, Chikwawa, Nsanje, Balaka, Mangochi, Salima and Nkhotakot.
Ricker-Gilbert, Purdue University.
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