The Impact of Smart Subsidies on Agricultural Production: Innovative Evidence from Argentina Using Survey and Remote Sensing Data

Produced by: 
Inter-American Development Bank
Available from: 
July 2022
Paper author(s): 
Maja Schling
Nicolas Pazos
Agricultural - Natural Resource Economics

This  study  assesses  the  impact  of  the  Program  for  Rural  Development  and  Family  Agriculture (PRODAF),  a  smart  subsidies  project  that  benefited  the  family  farming  stratum in northeastern Argentina. The evaluation draws  on  two  complementary  data  sources .  The  first  is  a  survey  of agricultural households with a sample of 898 farmer s (534 treated and 364 control) conducted after the end of the project. The second uses plot georeferencing to measure agricultural yields with  satellite  data  for  a  subsample  of  195  farmer s  over  a  10-year  period. Using  the  inverse probability weighting methodology, we fi nd that PRODAF increased the technology adoption rate by 21 percentage points, and increased access to credit by 47 percentage points . Overcoming these barriers enabled the beneficiary farmer s to increase the value of their sales and net income, although impacts varied among the four prioritized chains . In contrast, the analysis only detected a  significant  impact  on  yields  for the  citrus  chain,  which  may  be  due  to  the  type  of  technology adopted in this chain. Finally, we construct the Normalized Difference Vegetation Index (NDVI) to estimate productivity in the cotton and citrus chains . Applying the event study method, we confi rm that  technology  adoption  is  a  complex  process  whose  full  impact  on  yields  only materializes between the second and third year post -treatment. We additionally confirm that the use of satellite data is an effective tool that accurately estimates yield changes and can be used to monitor and assess this type of intervention in real time and at a low cost. 


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