The Effect of the National Input Voucher Scheme on the Technical Efficiency of Rural Farmers in Tanzania

The National Agricultural Input Voucher Scheme (NAIVS) was an agricultural input subsidy in the Republic of Tanzania that was first fully implemented in the 2008/09 planting season. Through NAIVS, certain households were given the opportunity to purchase a voucher that gave 50% subsidy on a bundle of improved seeds and inorganic fertilizer. These household were selected due in part to their limited past experience with the inputs. It was theorized that these subsidized experiences with improved inputs may increase a farmer’s ability with them. This study estimates the effect of receiving vouchers in three separate years on a farmer’s technical efficiency using stochastic production frontiers. Results indicate that receiving a voucher further in the past is associated with larger increase in technical efficiency. This effect holds when controlling for potential selection bias of voucher recipients.