The Political Economy Factors Behind Fertilizer Subsidy Reforms
If you’ve ever wondered why it is so difficult to change government programs that seem expensive or inefficient, you aren't alone. In agriculture, fertilizer subsidies are a classic example, often standing as a major hurdle to the global agenda of repurposing agricultural support toward more sustainable and nutritious outcomes. While economists frequently point out the fiscal and environmental flaws of these programs, they remain a mainstay of policy in many countries. A recent IFPRI Discussion Paper looks into the reasons behind this. The authors move beyond simple budget talk to examine the real drivers: politics, institutional structures, and the power of public expectations.
Methodology
To build a solid foundation, the researchers conducted a systematic review of 38 fertilizer subsidy cases across 15 countries from 2000 to 2025. They used the Semantic Scholar academic search engine and AI tools to screen over 3,000 papers, applying a reference snowballing technique to identify additional pertinent literature from bibliographies. Ultimately, 32 peer-reviewed political economy studies and 43 supplemental policy sources were selected. A case was only included if it involved a major policy shift, such as the total introduction or removal of a subsidy. Finally, all data was manually coded using NVivo software to categorize the political and institutional factors driving each reform.
Political economy factors influencing policy adoption
The study identifies four distinct pillars that drive the decision to adopt a fertilizer subsidy reform. First, ideational factors are central to successful introduction; these include deeply held beliefs about national self-sufficiency and the social contract where the state provides inputs in exchange for rural stability. Second, electoral factors play a role in almost half of the cases, as politicians use subsidies as highly visible tools to secure votes or fulfill campaign promises. Third, institutional factors, specifically how centralized or decentralized a government is, determine how quickly a policy can be pushed through the legislative process. Finally, while economic factors like donor funding were less frequent than political ones, they still provided the necessary financial runway for these programs to take flight during times of crisis.
Political economy barriers in failed cases
The study highlights that even when a program is clearly struggling, three specific dynamics often prevent its reform.
- Vested Interests: Elites often block changes to protect their own interests. In Indonesia, a state-owned company dominates nearly the entire urea market; any reform to increase competition would threaten its position. In Zambia, early attempts to move to electronic vouchers were stalled by major fertilizer importers protecting their favored status.
- Budget Cycles: High-stakes political moments can become roadblocks. In India, attempts to raise fertilizer prices were rolled back because opponents framed the move as "anti-farmer" during sensitive budget debates.
- The Evidence Gap: Facts alone are rarely enough. In nearly all failed cases, there was robust evidence of inefficiency or corruption, yet it was ignored. In Malawi, technical advice to increase farmer contributions was sidelined because politicians felt the electoral benefits of low prices outweighed the fiscal costs.
What matters most
The study serves as a theory-testing effort to determine which factors matter most in the policy process, revealing that some variables originally assumed to be important were actually overshadowed by others. For instance, farmer protests and narratives rarely acted as a primary motivator or barrier to reform, and technological innovations like e-vouchers were less prominent in precipitating change than shocks, electoral cycles, and policy windows of opportunity. The influence of these factors varies significantly according to the reform trajectory; while the introduction of a subsidy is driven mostly by ideational and institutional factors, the phasing out stage relies heavily on institutional factors and the influence of multilateral and regional organizations. In contrast, technocratic and technical factors finally come to the fore during the redesign phase, while electoral incentives remain key at both the introduction and redesign stages but matter less during phasing out because removing benefits is politically unpopular.
The analysis concludes that, ultimately, research and evidence are frequently vetoed by strong political actors who fear political or personal losses. For researchers to have an impact, they must do more than highlight program weaknesses; they must align their recommendations with the priorities of policymakers and show how those leaders might actually benefit from repurposing subsidies, as success requires a holistic understanding of the right entry point by combining political feasibility with research-informed pathways.
Rajalakshmi Nirmal is the Global Communications Lead of CGIAR Science Program on Policy Innovations and works at the International Food Policy Research Institute