IFDC FOCUS ON FERTILIZERS AND FOOD SECURITY

“These African farmers who are just scratching in the dirt, with no fertilizer, with no seeds to plant, are in a chronic state while European farmers, who of course, have solidarity with African farmers, know that there’s surplus there for them when the bottom falls out of the European market,” Bono, U2 frontman and outspoken advocate of aid to Africa, said at a news conference.

U2 singer Bono supports a proposal to divert $1.5 billion in farm subsidies
for European farmers to subsidize fertilizer and improved seeds for African farmers.

The funds, which were originally earmarked for European Union’s agricultural subsidies, aren’t being used because of the soaring commodity prices, Barroso explained.

Fertilizer Subsidies in Asia, Africa

Elsewhere, countries are increasingly seeking to ease the crisis of soaring fertilizer prices by providing “smart subsidies” or purchasing power support—often through vouchers—to targeted farmers to buy fertilizers and other agricultural inputs at reduced prices. IFDC has used vouchers in technology transfer programs in Malawi, Afghanistan, and Nigeria. IFDC is currently helping governments implement voucher programs in Rwanda, Mozambique, and Nigeria.

Focus has gathered news items on current subsidy or voucher programs across Asia and Africa. China and India, the world’s top two fertilizer users, keep fertilizer prices low for farmers by subsidizing the domestic manufacturers.

China

China is the world’s largest user of fertilizer. The Chinese Government subsidizes domestic fertilizer manufacturers for the feedstock, electricity, and transport of fertilizers, the U.S. Delta Farm Press reported on Sept. 24. China used 53 million tons of nitrogen, phosphorus, and potassium in 2007, the report said. Farmers also receive direct subsidies for cereal crops. The government is expanding a rural lending program to support the purchase of fertilizers and other inputs. China has also imposed strict export tariffs to prevent fertilizers from moving out of the country.

India

India is the world’s second-largest fertilizer user. The Indian Government fixes the retail price that farmers pay for fertilizers and compensates the domestic fertilizer producers for the difference in the fixed price and the cost of production plus a profit margin. This was reported by Delta Farm Press, which added that the subsidies to domestic manufacturers reduced the price of urea to Indian farmers by 57% and phosphate by 41%.

“We are happy and thankful to the government, but this is a temporary step,” said Satish Chandler, Director-General of the Fertilizer Association of India, Livemint reported on Aug. 12.

Philippines

The Philippines has initiated a subsidy program as a key component of its national program to become at least 90% self-sufficient in rice by 2010, the Visayan Daily Star reported on Sept. 15. The Department of Agriculture has distributed 2.66 million fertilizer discount coupons to farmers tilling 1.33 million hectares, GMANews TV reported on Sept. 10.

Sri Lanka

The Sri Lankan Government will continue to sell subsidized urea for LKR (Sri Lankan rupees) 350 ($3.30) per 50-kilo bag, although the full cost is LKR 5,400 ($50.20) per bag, the Colombo Page reported on Sept. 1.

Indonesia

Agriculture Minister Anton Apriyantono has asked farmers to shift to organic fertilizers as world fertilizer prices increase. Apriyantono also announced a large government subsidy “to help farmers buy equipment to produce their own fertilizer,” according to TempoInteractive on Aug. 25.

Ghana

The number of farmers in Ghana’s Northern Region who use fertilizers has increased from fewer than 20,000 to 75,680 this past season, according to Sylvester Adongo, Regional Director of Food and Agriculture, reported in The Ghanian Times on Sept. 24. Adongo attributed the increase to $11 million of government subsidies for fertilizer.

Nigeria

The National Program for Food Security (NPFS) and IFDC implemented a successful pilot voucher program in Nigeria in 2004 and initiated a follow-up program in 2008.  About 33,000 bags of fertilizer have been distributed to about 3,000 Nigerian farmers, Vanguard reported on Aug. 12.

A voucher scheme was used to assure that fertilizer reached genuine farmers, said Alhaji Aliyu Gital, Program Manager of the Bauchi State Agricultural Development Program. Farmer associations and agro-dealers were involved in the distribution to prevent diversion of fertilizer products.

“Farmers were allocated fertilizers based on the size of their farms and their fertilizer needs,” Gital said.

Malawi

In 2003, IFDC provided vouchers to 100,000 subsistence farmers in Malawi in exchange for 1 month of labor each on village feeder roads, says Ian Gregory, IFDC Agribusiness Specialist. Roads were improved, giving better access to markets. Plus,  the time when families must rely on food aid was reduced from 4 months to 1 month a year for participating households.

Analysis and Solutions

Many national governments are allocating significant funding to help farmers buy affordable fertilizer and other inputs. Some are subsidizing fertilizer manufacturers; others are supporting farmers themselves, often through vouchers.

Dr. Balu Bumb, Leader of the IFDC Policy, Trade, and Markets Program says, “Smallholder farmers clearly need support during this period of soaring fertilizer prices, and often, scarce supply. Empowering farmers to participate in the marketplace through vouchers will kill two birds with one stone: poverty alleviation and market development.”

“Support for fertilizer use should not distort markets and should enhance the purchasing power of smallholder farmers,” Bumb says.

“Support the people, not the product.”

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