In order to analyze the effects of policy reforms, output supply and factor demand responses to input and output prices are estimated in this paper for Malawian agriculture in a multiple-output, multiple-input framework. The implications of various structural adjustment policies implemented in Malawi are analyzed using the model results for their impact on smallholder agricultural sector. The results of the analysis indicate that removal of fertilizer subsidy - a major component of market reform policies - does not substantially reduce the production of maize - the major staple food. However, when implemented in appropriate sequence along with other output market liberalization policies and increased investment in infrastructure, such a policy is likely to increase the productivity of smallholder agriculture.
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