Going the Extra Mile: Farm Subsidies and Spatial Convergence in Agricultural Input Adoption

We evaluate a unique policy experiment in which the Government of Malawi randomized beneficiary selection for its Farm Input Subsidy Program. These subsidies can only be redeemed at local retailers, making travel cost-adjusted prices higher for remote farmers. Despite these costs, redemption is only marginally lower in remote areas. The subsidy eliminates the substantial remoteness-input quantity gradient that would exist in its absence. The equalizing effect on village-level input usage is modest because remote farmers are less likely to share subsidized inputs with non-beneficiaries. Our results demonstrate that subsidy programs may narrow spatial inequities in developing countries.