survey

Experts query wisdom in fertiliser subsidy

By Mark Kapchanga and Daniel Psirmoi | Published Tue, March 18th 2014 at 00:00, Updated March 17th 2014 at 19:34 GMT +3

Experts query wisdom in fertiliser subsidy

By Mark Kapchanga and Daniel Psirmoi

Kenya: The recent release of subsidised fertilisers may have little impact on the country’s weakening food position, experts have warned.

According to them, there is still a lot more that needs to be done to restore the country’s once enviable food production capacity.

In particular, the inefficiencies in the distribution of the subsidised commodity have been brought to the fore, with Tegemeo Institute of Agricultural Policy and Development, a food research think-tank, saying the National Cereals and Produce Board-distributed fertilisers rarely reach farmers on time.

Elgon Kenya Managing Director Bimal Kantaria said to remedy this, the State would need to work with the private sector.

“The Government liberalising the market and creating incentives — such as tax waivers and the removal of non-tariff barriers — would allow more private players to join the distribution network while remaining profitable in business,” he said.

Early this year, the Government said more than 143,000 tonnes of fertiliser worth Sh7.2 billion had been purchased for distribution to farmers at reduced prices.

A 50-kilo bag of Diammonium Phosphate (DAP), used for planting, would cost Sh2,000 instead of Sh2,448, while the top-dressing fertiliser, Calcium Ammonium Nitrate (CAN), would be sold at Sh1,500 instead of Sh1,600.

Farmers are expected to buy a 50-kilo bag of Urea at Sh1,500, down from Sh1,800.

But for farmers to access these fertilisers, they will have to be registered and vetted by provincial administrators.

In addition, they will have to declare the crop they expect to cultivate and their land sizes.

Conduit for corruption

Further, according to the ministry of Agriculture, farmers will only be allowed to buy a maximum of 40 bags of fertiliser from NCPB.

“Access to fertiliser is now at the whim of local chiefs. This will be a conduit for corruption,” said Mr Wycliffe Kimtai, a maize farmer in Uasin Gishu.

He also claimed that there is the danger of fertiliser being repackaged and sold to farmers at higher prices.

Tegemeo Institute Senior Maize Researcher Francis Karin said the usefulness of subsidised fertiliser has been minimal as the amounts imported  for both planting and top dressing have not meet the huge demand from farmers.

Since 2008, the Government has been importing fertiliser and selling it at subsidised prices through NCPB. The plan was informed by the need to boost domestic food production by increasing fertiliser use.

However, the initiative has had its issues.

“There have been cases where DAP is delayed for between one to four weeks while top-dressing fertilisers is supplied late or not at all. This has impacted negatively on food production,” said Mr Karin.

Critics add that the subsidy should only be a short-term solution to the country’s dwindling production since the better portion of subsidised fertiliser finds its way to the elite, rather than the intended farmers.

They add that subsidies in developing economies like Kenya’s promote price control and rationing, which encourages rent seeking and unfair competition between State-run and private sector enterprises.

“This may retard development of commercial input delivery systems as witnessed in Nigeria, Zambia and Zimbabwe in the 1990s,” said Nairobi-based agribusiness analyst Michael Bosire.

In the long run, Dr Bosire said the State should consider alternatives to subsidies, such as the promotion of policies and institutions that contribute to efficient markets.

This would include reducing the costs of transportation and taxation on agriculture, and increasing investment in agricultural research and extension.

Statistics show that fertiliser use in Kenya is at about nine kilos per hectare.

This is a lower rate than that in countries in other regions such as Latin America, where it is at 86kg per hectare; South Asia, at 104kg per hectare; and South East Asia at 142 kg per hectare.

Increase in maize prices

And with food production remaining persistently low and millions facing starvation, the Government has opened the importation window to bolster reserves of maize, the country’s most widely consumed food. 

“Between March and June, maize prices are expected to increase gradually. Households may face increasing difficulty accessing food as prices rise and stocks of legumes and other non-maize crops from the short rains dwindle,” the US Agency for International Development’s Famine Early Warning Systems Network said in a report.

However, available national maize stocks are likely to be sufficient through June or later, depending on the total size of the short-rains harvest.

The report adds that households are expected to afford minimal food requirements, but not essential non-food items like medication, fuel, transport and clothing.

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