The long-standing policy debate on whether to raise public expenditures on agriculture presumes the question is binary—should we spend more or not? Using a panel of 87 low- and middle-income countries (1990–2020) and a novel fiscal allocation–impact frontier model, we show that the salient issue is not the level of spending but its composition, timing, and accountability mechanisms.

Key findings:

A 1% rise in “effective” agricultural expenditure—defined as disbursements that reach frontline agencies within the same fiscal year and are subjected to third-party audits—yields a 2.3% increase in total factor productivity (TFP) growth and lifts 0.8% of the rural population above the poverty line. Conversely, identical nominal increases in “ineffective” spending (characterised by delayed transfers, weak procurement, and low transparency) generate no measurable gains.

Simulations:

Simulations indicate that reallocating just 15% of current ineffective outlays to effective categories can achieve the same TFP and poverty impacts as doubling total agricultural budgets under the status quo mix.

Reframing the policy question:

The paper therefore reframes the policy question from “how much” to “what for and how.”

Practical contribution:

We provide a parsimonious diagnostic scorecard that ministries of finance and agriculture can use to shift resources toward expenditure categories with the highest marginal social returns, offering a politically viable path to agricultural transformation without necessarily increasing the fiscal envelope.