Fertilizer subsidy

Spreading fertilizer

Did you know that half of the world’s grain production is supported by fertilizers? This translates to about 162 million tons of fertilizers used by farmers annually to boost the cereal crop yield!

If you are wondering why this, almost ridiculous, amount of fertilizer is put into grain production every year, then I should probably point out that grains/cereals are the most heavily consumed food amongst the general global population. Simply put, the measure of global food security can be determined by the level of grains in circulation. This is especially true for sub-Saharan Africa where the growing demand for cereals has in recent years, greatly surpassed its overall supply. Kenya alone faces a 300,000 MT maize deficit.

Evidently, the world needs a crop yield boosting intervention, now, more than ever. And what better way of meeting this need than through the application of scientifically proven technologies like chemical fertilizers?

The place of fertilizers as the main fuel for high-yield maize production in Kenya can, therefore, not be overstated.

However, our over-reliance on fertilizer input has brought about a new threat; the basic fundamental economic principle that when demand exceeds supply, prices tend to rise. This outcome, coupled with the pandemic and the Ukrainian war, among other factors, has made it almost impossible for most Kenyan smallholder farmers, who greatly contribute to our food system and economy, to access the critical farm input. Which explains the current policy intervention and the subject of this article’s discussion – fertilizer subsidy.

Fertilizer Subsidy: How It Works

The fertilizer subsidy scheme has been in operation in most developing nations since the 1960s. The rationale for this program is that agricultural production can be improved if farming is made efficient for marginalized and smallholder farmers. This policy was proposed years back when it was discovered that high-value agricultural inputs like improved seeds and fertilizers were unaffordable and hence inaccessible to most farmers in developing nations. The creators of this policy intervention perceive subsidies as a means through which the barrier between farm inputs and low-income farmers will be utterly eliminated.

President William Ruto appears to be a big proponent of the application of input subsidies to vitalize Kenya’s food security. In fact, he recently rolled out a new fertilizer subsidy program which allows for subsidized fertilizers to go for Ksh.3,500 per 50kg bag of fertilizer against the Ksh.6,500 market price. This means that as a farmer, you get to share costs with the government; having them pay the remaining Ksh.3,000 for the 50kg bag of fertilizers. With this subsidy, it is envisioned that smallholder farmers will easily access fertilizers in time for the planting season ahead of the coming short rain.

Yet, a growing volume of notable research studies and public debates seem to differ!

Opposing Arguments

The system of agricultural input subsidies is arguably the most contended topic in Agricultural economics. There exists a considerable amount of debate on whether the program is as effective and efficient as it purports to be.

In a recent research study that sought to assess the efficacy of this farming incentive through a systemic approach, it was concluded that while the fertilizer subsidy seeks to solve the problem of access to the farm input, there is no telling whether this objective is met given the lack of clear and sound implementation plans.

This seemingly brilliant move by the Kenyan administration may, in fact, be an epic fail because apparently, there is no mention of a comprehensive plan for its implementation. The information we have is that fertilizer has been subsidized and that the National Cereals and Produce Board (NCPB) is the sole distributor of the subsidized agricultural input.

Now, NCPB has about 118 distribution points spread out across the counties, some counties significantly bigger than others. How then, will low-income farmers who cannot afford the market price of most farm inputs, much less, transport costs, access the subsidized fertilizer? Isn’t the program ingeniously setting up the rich farmers, who can easily cover all transport costs, for looming business success?

And if this were to occur, are there measures in place to prevent a possible market distortion that could occur from having both subsidized and non-subsidized fertilizer in the markets? Remember this was witnessed in the past fertilizer subsidy programs. And right now, there is no telling which farmer intends to buy the 100 units limit at the subsidized price only to resell it at the market price for profit.

These and many more concerns including corruption and mismanagement are linked to this fertilizer subsidy policy. Perhaps it’s time to rethink the approach and go about it extensively for more sustainable solutions.

Fertilizer subsidy

Manufacturing Plant

The Bigger Picture

Firstly, the current food security issue caused by maize shortage is not solely caused by the absence of fertilizer. Another leading factor with a proven threat to our already dwindling food system is climate change. Kenya is currently experiencing a serious drought. The fertilizer subsidy wouldn’t solve the food production situation unless this issue is dealt with first. Land fragmentation, post-harvest losses and poor value chain logistics are among other factors that cause food security issues and should not be ignored.

Secondly, rain-fed agriculture is obsolete. It will be more sustainable to have excellent water policies designed and implemented before skipping to the production process. It is crucial that all the value chain aspects right from input to consumption are considered. Otherwise, we risk running a futile subsidy program.

Thirdly, Kenya has the capacity for domestic production of fertilizer. A recent broadcast by Farmers Review Africa revealed KenGen’s plans to explore fertilizer production in their Olkaria fields in Naivasha. Our very own Kenyan brand blended fertilizer, Baraka Fertilizer, has been in the markets since 2017! If these are not valid pointers to where more funding should be directed in order to create a food-secure future for the nation, then I don’t know what is.

If we play our cards right, we may not need to import any fertilizers in the near future. And naturally, we would not need any subsidy program because our locally available fertilizers would be cheap and easily accessible.

Overall,

This article may seem to be biasedly inclined to the unsuccessful nature of fertilizer subsidy as a form of agricultural reform, but that is far from the case. The point here really is that the overwhelming evidence illustrating the program’s recurrent failures and inefficiencies should not be ignored. Instead, we need to go about our food security issue objectively by looking into other viable and sustainable options. That way, all the critical factors relating to food production will be fully considered, and the fertilizer subsidy, will, indeed, raise the access and utilization of the said fertilizer, improve yield, and ultimately increase farmer income as originally intended.

 

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Related: How the Ruto Government Will Transform the Kenyan Agriculture Sector

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