Abstract:
This study evaluated the effect of the national fertiliser subsidy on farmer participation in commercial fertiliser markets in the North Rift region of Kenya. The study used primary data collected from 710 households. A double-hurdle model and descriptive statistics were used to analyse the data. The results show that the national fertiliser subsidy reduces farmers’ probability of participating in commercial fertiliser markets by 30%. On average, an additional kilogram of subsidised fertiliser displaces 0.2 kg of commercial fertiliser from the market. This implies that the national fertiliser subsidy has a displacement effect on commercial sales. The government therefore should consider changes in programme design and implementation by distributing subsidised fertiliser to areas with weak commercial fertiliser distribution networks. In addition, proper targeting of resource-poor households is recommended if the programme objectives are to be achieved. Key words: fertiliser subsidy; market participation; Kenya; double-hurdle model; displacement effect
