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Promoting development of agricultural input markets in Mozambique
Policy Brief
September 2007
Emílio Tostão


Background

Portuguese version:
Promovendo o Desenvolvimento dos Mercados de Insumos Agrícolas em Moçambique
Poverty and food insecurity continue in Mozambique despite market reforms liberalizing agricultural markets. Investment in marketed inputs such as high yield commercial seed is critical to achieving higher agricultural yields and incomes. Investment in seeds is very important because seeds determine the maximum yield that can be produced. But Mozambique has under-invested in its national seed system. Recently, vouchers and fairs have been used with the twin objectives of providing seed to producers hit by natural disasters, and stimulating seed market development. However, even with seed vouchers, producers’ effective demand for commercial seed remains low in Mozambique. Producers’ low demand for seed makes investment in the seed sector unprofitable.

Research Findings

This study uses secondary data from a representative agricultural survey to determine smallholder’s probability of buying maize seed in markets with both emergency and commercial seed. Results summarized in Table 1 show that smallholder’s probability of purchasing maize seed remains very low, especially in north (0.12- 0.22) and central Mozambique (0.19-0.38). Producers who receive emergency seed are relatively less likely to buy seed. These results are consistent with the view that continued distribution of emergency seed may prevent development of seed markets in emerging economies.

There is a growing international and regional literature analyzing experiences with agricultural input vouchers or coupons. Such vouchers have several advantages. First, they make it possible to target poor smallholders and increase their capacity to purchase inputs necessary for increasing production.

Second, because the coupons are redeemed through private agro-dealers, they contribute to strengthening the commercial agricultural input markets in rural areas. Mozambique has limited but mostly positive experience with vouchers redeemed at seed fairs. Some countries such as Malawi have gone further and use coupons as the main mechanism to target fertilizer and seed subsidies.

Table 1. Producer’s probability of buying maize seed and the marginal effect emergency seed on producers’ probabilities of buying maize seed by province

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