In the 2015/16 agricultural season, the Farm Input Subsidy Programme (FISP) was in its 11th year of implementation providing subsidised fertilisers and seeds to smallholder farmers in Malawi. The 2015/16 subsidy programme included 150,000 MT of fertilisers (NPK and urea), 7,135 MT of maize seeds (of which 87% were hybrid maize seeds), 0.16 MT of pigeon peas, 0.03 MT of cow peas, 1.3 MT of beans, 0.53 MT of soya bean seed and 0.75 MT of groundnut seed. Several reforms were introduced in the 2015/16 programme including fixed prices for delivery of subsidised fertilizers, increase in redemption prices (farmer contribution) for both fertilizers and improved seeds, introduction of random targeting of beneficiaries and inclusion of the private sector in retailing of subsidised fertilisers in selected districts. The following are the key messages from the evaluation of the 2015/16 subsidy programme: The inclusion of the private sector in the retailing of subsidised fertilizer has substantially reduced the cost of the programme as well as improving efficiency in delivery of input in districts served by the private sector. Overall, due to inefficiency of the public sector, the delivery record for fertilizers in 2015/16 was the worst in the 11 years of implementation of the programme. Since 2010/11, there is deteriorating trend of delivery of inputs to smallholder farmers and the Government has also been inefficient in paying suppliers of inputs. Improving efficiency in programme implementation, for example by increased involvement of the private sector, is likely to maximise the use of inputs by farmers. Targeting of beneficiaries in FISP remain a major issue. The random targeting system adopted in 2015/16 season is hardly consistent with objectives of the programme. The random targeting system did not lead to any changes in targeting outcomes. The study shows that coupons were distributed fairly across the income distribution, implying that the very poor were as likely as better off households to receive coupons. Furthermore, the proportion of repeat beneficiaries was high with 40% getting coupons since 2005/06 season. There is need for better means testing targeting that excludes the non-poor from receiving subsidised inputs. The increase in the farmer contribution towards subsidised inputs did not lead to reduction in input use. There is also higher willingness from smallholder farmers to contribute more towards purchase of inputs. There is scope for further adjustments in farmers’ contribution and consideration should be made to increases in farmer contributions annually. There has been a reduction in the displacement effects of the fertiliser subsidy implying that the subsidy is also playing a role in stimulating commercial demand. The subsidy programme provides value for money and the cost reduction measures that were implemented in 2015/16 season and the high maize price has resulted in positive and higher benefit cost ratios. The major sources of cost reductions are participation of private sector in retailing, fixing the supply price of contracted fertilisers in local currency, and increasing the farmer contribution in the redemption of fertiliser coupons.