Can fertiliser subsidies help farmers out of poverty?

For farmers in sub-Saharan Africa to produce similar crop yields to other countries, they will need to use more fertilisers and improved seeds. Many development scientists and policymakers are demanding subsidies to increase fertiliser use.

About 83 percent of the land suitable for agriculture in Africa has low soil fertility or other limitations, such as no irrigation and variations in growing conditions. Yet, in the 2002/03 season, average fertiliser use intensity in sub-Saharan Africa was only 9 kilos per hectare (kg/ha) of harvested land, compared to 100 kg/ha for South Asia, 135 kg/ha for East and Southeast Asia and 73 kg/ha for Latin America. Policies need to encourage farmers to use more fertilisers in sub-Saharan Africa.

However, farm-level fertiliser prices in sub-Saharan Africa are among the highest in the world, due to high transport costs and limited market development. Between 1991 and 1992, fertiliser prices in sub-Saharan Africa were US$232 to $487 per tonne for urea and phosphates; prices in Asia were between US$68 to $201 over the same period. The use of fertilisers in sub-Saharan Africa is thus low, resulting in the world's lowest crop yields.

Lower cost fertilisers

One option for increasing fertiliser use in sub-Saharan Africa is subsidising the price to farmers. There are several good reasons for doing this:

• Using fertiliser is risky in sub-Saharan Africa's rain-fed agricultural systems. Unreliable weather can make crop response to fertiliser highly variable. Reducing costs increases the chances of farmers taking that risk.
• Many farmers have difficult raising enough cash to buy inputs. A subsidy may make purchasing inputs more attractive.
• Subsidies offset high fertiliser prices, reducing input: output price ratios. They also protect poor farmers from volatile world market prices for fertilisers.
• Higher soil fertility is essential for increasing crop yields. Improved yields can break the vicious cycle of poverty and food insecurity and enable farmers to experiment with new seeds and invest in their land. This can increase agricultural productivity in the medium or long-term.

Who will pay for fertiliser subsidies?

Subsidies are an expensive policy option - but sub-Saharan Africa desperately needs long-term, stable interventions. Every year, rich countries respond to emergencies with financial and food aid but average living standards in sub-Saharan Africa have declined in the last 20 years. If more aid was invested into subsidising inputs, these emergencies would be reduced. It is more important to help smallholder farmers permanently escape the poverty trap than just respond to crises.

Many researchers criticise subsidies as ineffective and poorly managed. Policymakers must ensure fertiliser subsidies really benefit farmers who need them by:

• Investing in transport, power and communications infrastructure: smallholder farmers need all-weather roads to get fertiliser into villages and crops out to markets.
• Using vouchers, 'fertiliser for work' and other pro-poor mechanisms to ensure that subsidised fertilisers do not go to commercial farmers or into wealthier countries.
• Creating reliable delivery systems, such as improved rural markets. Supporting both large- and small-scale private traders will ensure the availability of fertilisers to farmers when they are needed.

Paul Thangata
PT-Associates International, 3 Drake Close, Hethersett, Norwich NR9 3JS, UK
T +44 (0)7884 405838
pthangata@pt-associates.org
www.pt-associates.org

See also

'Africa can escape poverty', Developments (28), UK Department for International Development: London, 2004
www.developments.org.uk/data/issue28/escape-poverty.htm

Alternative Approaches for Promoting Fertilizer Use in Africa, with Particular Reference to the Role of Fertilizer Subsidies, Department of Agricultural Economics: Michigan State University, by Eric W. Crawford, T. S. Jayne, and Valerie A. Kelly, 2005

Factors Driving the Growth in Fertilizer Consumption in Kenya: The Potential for Broader Replicability in Sub-Saharan Africa, PASS Project WB0287 by Joshua Ariga, T.S. Jayne, and J. Nyoro, 2005
Link (PDF)

Fertilizer development in support of the Comprehensive Africa Agriculture Development Programme (CAADP), Regional conference, Johannesburg, South Africa, 1-5 March 2004
www.fao.org/docrep/meeting/008/J1662e.htm

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