Up in Smoke?: Agricultural Commercialization, Rising Food Prices and Stunting in Malawi

Diversification into high-value cash crops among smallholders has been propagated as a strategy to improve welfare in rural areas. However, the extent to which cash crop production spurs projected gains remains an under-researched question, especially in the context of market imperfections leading to non-separable production and consumption decisions, and price shocks to staple crops that might be displaced on the farm by cash crops. Our study is a recent contribution to the long-standing debate on the links between commercialization and nutrition. We use nationally-representative household survey data from Malawi, and estimate the effect of household export crop, namely tobacco, adoption on child height-for-age z scores. Given the endogenous nature of household tobacco adoption, we rely on instrumental variable regressions, and isolate the causal effect by comparing impact estimates informed by two unique samples of children that differ in terms of exposure to an exogenous domestic staple food price shock during the early child development window (from conception through two years of age). We find that household tobacco production in the year of or the year after child birth, combined with exposure to an exogenous domestic staple food price shock, lowers child height-for-age z-score by 1.27, implying a 70 percent drop in z-score. The negative effect is, however, not statistically significant among children that were not exposed to the same shock. Our results put emphasis on the food insecurity and malnutrition risks materializing at times of high food prices, which might have disproportionately adverse effects on uninsured cash crop producers.