STEG Project Policy Brief Research Theme 3: Agricultural Productivity and Sectoral Gaps, Research Theme 4: Trade and Spatial Frictions

Nutrition Demand, Subsistence Farming, and Agricultural Productivity

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In many of the poorest countries, agriculture is unproductive and subsistence farming is widespread. I propose nutrition demand as a mechanism that can explain what subsistence farmers in low-income countries choose to consume and grow on their land, and that ultimately contributes to keeping the productivity of the whole agricultural sector low. I use Malawian household-level data to document that the smallest farmers focus their consumption and subsistence production on obtaining calories, medium farmers diversify both their diet and their subsistence production, and the largest farmers commercialize their farms. Next, I build a quantitative model where farmers face explicit caloric needs. The model reproduces the new facts and suggests that allowing farmers to even partly leave subsistence and commercialize would raise the productivity of Malawi’s agricultural sector by over 40%.

STEG Working Paper Series

Misallocation and Product Choice

Stepan Gordeev, Sudhir Singh • Research Theme 3: Agricultural Productivity and Sectoral Gaps

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