Exploring the incentive effects of food aid on crop production in Zambia

Abstract

Understanding the effects food aid on crop production is very valuable especially in Zambia where food aid distribution to rural households has become a common phenomenon in recent years. In many respects, food aid can be considered as an important enabler to food production while at the same time it can potentially act as an impediment to sustainable agricultural growth. Integrating the effects of food aid on small holder productivity in designing agricultural programs can be very helpful and could provide decision makers with the right choices for sustaining agricultural growth in Zambia. This study analyzed the effects of food aid on the average quantities of maize produced by farmers in a community using two complimentary estimation procedures: OLS and quantile regressions. The OLS results show that there is a mean effect of food aid on average household maize production which is negative and significant (holding other observable factors constant). However, the results of the quantile regression show that food aid has distinct impacts at different points of the conditional maize production distribution. This shows for example that communities producing small quantities of maize are affected by food aid differently relative to communities that produce large quantities of maize. The quantile regression results actually show that communities at the lower end of the maize production conditional distribution (and in the region of the mean) tend to have stronger negative effects of food aid. The effect however reduces in magnitude in the extreme upper end of the distribution (at the 90th quantile) even though this effect is not statistically significant. Both the OLS and quantile regression results provide evidence that food aid distributed to communities does reduces household maize production significantly (at least at many points of the maize production distribution in the case of quantile regression results). These results suggest that it would be appropriate to carefully evaluate continuation of food aid programs in agricultural development as this approach results in an estimated average reduction in maize production of 2,000 Kgs for every 1,000 Kgs of food aid received by a community in the last season. While the results suggest a negative effect of food aid at the community level, it should be recognized that the available data did not support panel estimation, which would have allowed us to correct for fixed or random productivity effects. We compensated for this data limitation by including province level dummy variables and a lagged dependent variable. However, panel estimation would still be preferred. Future work could strengthen the implications of the results by using panel data at the household level.