DRAFT FOR DISCUSSION
PUBLIC EXPENDITURE REVIEW
NATIONAL AGRICULTURAL INPUT VOUCHER SCHEME (NAIVS)
Tanzania
September 2013
TABLE OF CONTENTS
TABLE OF CONTENTS
list of figures
list of tables
Acronyms
ACKNOWLEDGEMENTS
EXECUTIVE SUMMARY
1.0Introduction
1.1Economic and Policy Context
1.2Trends in Crop Production and Productivity
1.3NAIVS Program Motivation
2.0NAIVS IMPLEMENTATION AND COSTS
2.1 Overview of NAIVS
2.2Implementation Features of NAIVS
2.2.1Annual Implementation Cycle
2.2.2Implementation Procedure
2.3Expenditure on NAIVS
3.0Measuring fINANCIAL AND ECONOMIC RETURNS
3.1Analytical Approach and Study Population
3.1.1Sample Selection
3.1.2Data Collection
3.1.3Data Collection Instruments
3.1.4Household Survey
3.1.5Listing Survey
3.1.6Other Surveys
3.1.7Changes to the Sample
3.2Empirical Model and Results
3.2.1Summary Statistics of Program Participants
3.2.2Impacts of Program on Input Usage and Yields
3.2.3Benefit-Cost Analysis
4.0NAIVS Design and Implementation Issues
4.1Households Targeting and Displacement
4.1.1Households Targeting
4.1.2Displacement
4.2Beneficiaries Graduation and Programme Knowledge
4.3Input Market Access and Public Awareness
4.4Expansion to Lower Rainfall Zones
4.5Sustainability
4.6Evidence of Misuse of Vouchers
4.7 Delayed Delivery of Vouchers and Inputs
4.8 Participation of Trained Agro Dealers in the Program
5.0CONCLUSIONS AND RECOMMEDATIONS
References
Appendices
Appendix 1:Performance Indicators for NAIVS
Appendix 2: Annual activity implementation timeline for the program
Appendix 3:Institutional Arrangement
Appendix 4:Number of vouchers distributed to regions in 2010/11 crop season
Appendix 5:Number of vouchers distributed to regions in 2011/12 crop season
Appendix 6:Number of vouchers distributed to regions in 2012/13 crop season
Appendix 7:Technical Details of the Impact Evaluation
Appendix 8: Consumer and Producer Prices per Kg
Appendix 9:Voucher distribution to the regions: Administrative costs in TZS
Appendix 10:Terms of reference of the district agriculture and livestock development officer (DALDO)
Appendix 11:Terms of reference of the Village Agricultural Extension Officer (VAEO)
list of figures
Figure 1.1:Share of Agriculture in GDP and GDP per capita in Tanzania
Figure 1.2:Agriculture and GDP Growth Rates in Tanzania
Figure 1.3:Percentage of farmers using fertilizer in Tanzania by district
Figure 1.4:Trends in Crop Production
Figure 1.5:Trends in Productivity
Figure 1.6:Paddy Irrigation Schemes in Tanzania
Figure 2.1:Annual Activity Implementation Timeline of the Program
Figure 2.2:Implementation Procedure
Figure 2.3:NAIVS Direct Costs by Planned Budget and Actual Expenditure in USD
list of tables
Table 1.1:Agriculture and Poverty in Tanzania, 2011
Table 2.1:Input packages for maize and rice (for 0.5 ha)
Table 2.2:NAIVS Areas
Table 2.3:Changes made between 2009/10 and 2011/12
Table 2.4:NAIVS Total Planned Budget and Actual Expenditure in USD
Table 2.5:Inputs Market Prices in Rukwa Region 2011/12
Table 2.6:Distribution of Vouchers by Season
Table 2.7:Distribution of Vouchers by Region: 2010/11
Table 3.1:Summary Statistics
Table 3.2:Input Usage and Yields across regions (Only beneficiaries 1-3 years)
Table 3.3:Impact of Voucher Scheme on yields by region (Household-Level Data) using the Listings Survey
Table 3.4:Input Usage and Yields among 4th year participants
Table 3.5:Benefit-cost Analysis (Listings Survey)
Table 4.1:Targeting Results from Listing Survey (2010/11 voucher cycle)
Table 4.2:Beneficiaries used input in years before the start of NAIVS
Table 4.3:Reasons given for not Using Inputs in the past ( % of total respondents)
Table 4.4:Average yield gain of farmers with and without vouchers by higher and lower rainfall district
Table 4.5:Common audit concerns
Table 4.6:Cases of possible misuse of NAIVS vouchers under investigation for 2010/2011
Table 4.7:Number of vouchers received and used by recipient households, 2010/11 season
Table 4.8:Participation of Agro-dealers in NAIVS (2010/11 and 2011/12)
Acronyms
ACT Agricultural Council of Tanzania
AFSP Accelerated Food Security Project
AG Attorney General’s Office
AGRA Alliance for a Green Revolution in Africa
AIS Agricultural Input Section
ASDP Agricultural Sector Development Program
BOT Bank of Tanzania
CNFA Citizens Network for Foreign Affairs
CAG Controller and Auditor General
CBO Community-Based Organization
CSOs Civil Society Organizations
DALDO District Agriculture and Livestock Officer
DAP Diammonium Phosphate
DVC District Voucher Committee
ESRF Economic and Social Research Foundation
GDP Gross Domestic Product
HAIS Head of Agricultural Input Section
LGA Local Government Authority
MAFC Ministry of Agriculture, Food Security and Cooperatives
MKUKUTA National Strategy for Growth and Reduction of Poverty
MoFEA Ministry of Finance and Economic Affairs
MRP Mmussoorie Rock Phosphate
NAIVS National Agricultural Input Voucher Scheme
NMB National Microfinance Bank
NVSC National Voucher Steering Committee
OPV Open Pollinated Variety
PADEP Participatory Agricultural Development and Empowerment Project
PCCB Prevention and Combating of Corruption Bureau
PIM Programme Implementation Manual
PMO-RALG Prime Minister Office-Regional Administrative and Local Government
RC Regional Commissioner
RVC Regional Voucher Committee
TAFSIP Tanzania Agriculture and Food Security Investment Plan
TASAF Tanzania Social Action Fund
URT United Republic of Tanzania
USAID United States Agency for International Development
VA Village Assembly
VEO Village Executive Officer
VG Village Government
VVC Village Voucher Committee
WDI World Development Indicator
WVC Ward Voucher Committee
1
DRAFT FOR DISCUSSION
ACKNOWLEDGEMENTS
The study team consists of staff members from the Tanzanian Ministry of Agriculture, Food and Cooperatives (MAFC), University of Dar-es-Salaam, Tanzanian research institution (REPOA), and the World Bank. In particular, the report was prepared jointly by David Biswalo, Xavier Gine, Aparajita Goyal, Oswald Mashindano, Donald Mmari, David Rohrbach, under the overall guidance of Stephen Mink; and has been possible, thanks especially, to the continuous support provided by the Ministry of Agriculture, Food and Cooperatives, Government of Tanzania.
Additional comments and suggestions were received from Sergiy Zorya, Madhur Gautam, Jacques Morisset, Emmanuel Mungunasi, Isis Gaddis, Victoria Cunningham, and Michael Morris. Faith Lucy Motambo and Volana Farantsa Andriamasinoro provided excellent assistance in various aspects of administration of the project.
Financial support from Bill and Melinda Gates Foundation for the overall project on Strengthening National Comprehensive Agricultural Public Expenditure in Sub-Saharan Africa, 3ie International Initiative for Impact Evaluation, and the World Bank Accelerated Food Security Project is gratefully acknowledged.
EXECUTIVE SUMMARY
The National Agricultural Input Voucher Scheme (NAIVS) is a market smart input subsidy program aiming to increase the adoption of improved seed and fertilizer in smallholder maize and rice systems in order to raise productivity and improve food security. Since 2008/09, approximately TZS 480 billion has been invested in helping 2.5 million farmers (roughly 45 percent of all smallholders in the country) by distributing vouchers that subsidize half of the price of a package of improved seed and fertilizer that farmers obtain with the vouchers from private dealers at market prices.Each farm household is expected to receive three consecutive years of assistance that would allow farmers to estimate the returns to investing in improved seed and fertilizer under variable rainfall conditions, and build a stock of capital for continuing purchases of these inputs once the subsidy is withdrawn. The three year coverage also provides time for input retailers to strengthen their supply chains and understanding of the rural market conditions. Hence, the immediate gain of the program is expected to be the additional grain obtained through the productivity gains derived from using improved inputs, while the medium term gain is expected to be the level of sustained productivity gain derived from continuing adoption of improved seed and fertilizer after the subsidy ends.
Farming households that cultivate no more than 1 hectare (approximately 2.4 acres) of maize or paddy and could afford the top-up payment for the input package are selected into the NAIVS subsidy program.Priority is given to female-headed households and to householdsthat have not used any fertilizer and improved seeds for targeted crops over the last five years. More broadly, NAIVS expected to introduce improved maize and rice seed varieties to farmers who would not otherwise have applied these inputs, and introduced the use of chemical fertilizer to households who would not otherwise have tried this input.
The aim of the NAIVS is to intensify food production in areas with high agro-ecological potential for producing the twostaple foods. These areas are concentrated in the Southern Highlands, Northern Highlands, and Western regions with agro-ecological zones suitable for the targeted crops, accounting for at least 70 percent of total maize production and 50 percent of total paddy production in Tanzania.These three regions accounted for 82 percent of the total number of household beneficiaries and 82.3 percent of the total value of voucher in 2010/11. Moreover, Tanzania’s grain belt known as the “big six” regions covers the Southern Highlands (Ruvuma, Iringa, Rukwa, Mbeya) as well as some of the Western (Kigoma) and Central zones (Morogoro). In 2010/11 season, the “big six” regions had received 62.1 percent of total printed vouchers.When the program was designed, it was targeted to cover 65 districts in Tanzania’s higher potential zones for maize and rice. However, there appears to have been a political imperative to cover all regions and all farming districts in the country. By 2011/12, the project provided support to farmers in over 130 of the country’s 152 districts. The additional districts encompassed many relatively drier and more drought prone areas of the country.
The average annual expenditure on NAIVS between 2009/10 and 2011/12 is USD 71 million that includes three types of costs:direct costs, indirect costs and complementary investments, with direct subsidy costs taking the largest share of the total annual expenditures on NAIVS (96.5 percent on average annually). Indirect costs mainly consistof resources spent to improve farmers’ awareness and project management costs, while complementary investments include the costs of strengthening agro-dealers’ network, strengthening the national seed system, and the project monitoring and evaluation; that together make up the remaining share of the total expenditure on NAIVS. NAIVS started with 740,000 household beneficiaries in 2008/09 and then expanded to 1,511,900 households in 2009/10 and 2,011,000 household receiving a total of six million vouchers in 2010/11. The number of beneficiaries in 2011/12 season decreased a bitbecause the first-round (2008/09) beneficiaries of NAIVS had graduated from the program.On average, the amount of NAIVS expenditure on each household beneficiary was USD 51 in 2009/10, USD 33 in 2010/11 and USD 41 in 2011/12.
To evaluate the impacts of NAVIS, two rounds of household surveys were conducted between December 2010 and December 2012 focusing specifically on eight regions that comprised of the “big six” as mentioned before (Iringa, Mbeya, Ruvuma, Rukwa, Morogoro, Kigoma) and two additional regions in the North(Arusha and Kilimanjaro). Among these eight regions, Morogoro, Arusha, and Kilimanjaro are distinct because they experience bi-modal rainfall patterns, which result in a later start date for the main planting season as compared to southern areas with uni-modal rainfall. The sample was also expanded in the 2012 follow up survey to include regions that experience lower rainfall (Tabora and Dodoma) to estimate spatial heterogeneity in effects and implications of expanding the program to drier regions of the country.
A total of 2,000 households comprising of both beneficiaries and non-beneficiaries were interviewed in both baseline and follow-up surveysover time. The empirical analysis exploits the roll-out plan of the program to generate comparable treatment and counterfactual groups for estimating the program impacts.The treatment group is comprised of farming households that receive the subsidy for the first time in the 2009/11 planting season and the comparison group consists of eligible farming households in the same village that did not receive the subsidy. By comparing eligible beneficiary and eligible non-beneficiary households within the same village, we find that for 2010/11 season the usage of improved inputs significantly increased average maize yields.In contrast, the impacts for paddy are smaller and much less significant.This may partly reflect the fact that the rice farmers being targeted were all expected to be on irrigation schemes. Therefore they had higher yields to begin with. Some rice farmers perhaps also have had access to improved rice seed and fertilizer through alternative development programs. The analysis also suggests that the average yield gains achieved in these drier regions were lower than the gains achieved in areas of more reliable rainfall.
Overall, the program appears to be cost effective for maize in most of the surveyed regions at the current level of subsidy but not so for paddy.The survey data also indicates that a significant proportion of the voucher graduates whohad not used improved inputs prior to the programare continuing to purchase improved seed an fertilizers. This suggests that farmers widely valued the improved access to the modern varieties of maize and rice and will continue to grow these varieties into the future, indicating a sustained payoff of the program that would extend well beyond the period of the subsidy program if the behavior persists. This coincides with evidence received from both fertilizer and seed companies that their commercial sales were increasing in the aftermath of the subsidy program. Several of these companies are investing more in developing wholesale to retail marketing chains, and in the provision of private technical advice to encourage smallholders to continue to purchase their products.
It should be noted that the analysis reflects the most immediate returns to the investment, and underestimates the longer term gains derived from training farmers about the value of improved seed and fertilizer, and developing retail input supply chains extending closer to the farmgate. A number of farmers interviewed suggested that they were seeing some improved varieties of maize or paddy for the first time. Insofar as they continue to use improved varieties, the productivity gains will be sustained. The increase in seed and fertilizer adoption rates among subsidy graduates, particularly those who had not previously purchased these inputs, also raises the level of investment gains.
Despite the success of the NAIVS program in terms of increase in adoption rates for improved seed and fertilizer, yield and food security, there are still some concerns that need to be addressed. First, there has been substantial public attention to the misuse of vouchers The impact survey datareveal that many farmers only received 1 or 2 vouchers instead of the mandated three. Data from the National Microfinance Bank, which has been responsible for the payment of all vouchers, suggests that in 2010/11, approximately 92 percentof all vouchers were redeemed and paid out suggesting a need to tighten voucher tracking and security to reduce fraudulent redemption.Perhaps deploying electronic vouchers that are transferred to farmers’ cell phones and then transferred to licensed agro-dealers upon purchase of inputs could be one way to address such distortions.
Second, farmers commonly complained about the late delivery of vouchers, as well as the late delivery of inputs once the vouchers were in hand. The period of delay varied considerably depending on the district and local practice. For example, in 2010/11, the subsidy vouchers were printed late, arrived in early December, but then remained in the port of Dar es Salaam until mid-January because of a tax dispute. Many farmers only received their vouchers in late January and early February – long after the planting season. The yield gains derived from the use of improved seed and chemical fertilizer depend heavily on the timeliness of application of these inputs. In general, the later the crop is planted, relative to the start of the rainy season, the lower the yield. The actual level of loss depends on the choice of seed variety, the consistency or rains and the length of the season. Basal fertilizer should commonly be applied at or just prior to planting.Perhaps, if the voucher and input delivery had been achieved on a timelier basis, these yield gains would likely have been higher.
Third, the failure to withdraw the subsidy from participating farmers after three years led to some households receiving a subsidy for four or even five years. Finally, withdrawal of the services of agro-dealers wouldundermine the levels of continuing commercial purchases of improved inputs. Many of the agro-dealers providing inputs under the program withdrew from village markets when the demand for their inputs was no longer guaranteed by the vouchers. While the agro-dealers were required to set up shops in the villages in order to participate, many of these shops were seasonal and rented on a short term basis. This is sensible because grain seed and chemical fertilizer sales are highly seasonal.If farmers have to travel to a distant town to look for seed or fertilizer with uncertainty about prices and availability, commercial sales will decline. Another factor undermining the continuing purchase of these improved inputs is their high cost. The fact remains that seed and chemical fertilizer remain expensive commodities at the farmgate. Many farmers face difficulty finding the capital to make this investment during the start of the growing season.Thus, whether the adoption of improved seed and fertilizer will be sustained as the subsidy is withdrawn is of greater concern.