Subsidised fertiliser: Cheaper alternative or expensive way of rearing crops?

By DANN OKOTH

It is harvest time in Uasin Gishu County, in Kenya’s North Rift breadbasket region, but Eunice Chepchirchir is less impressed with her harvest.

The 42-year-old mother of six had expected at least 60 tonnes of maize from her six-acre plot, but she got a meager 25 tonnes instead.

Chepchirchir is the beneficiary of the government’s fertiliser and seed subsidy programme, which seeks to provide cheap farm inputs to farmers to boost maize production. This is why the poor harvest is particularly disappointing to her.

“I had hoped the subsidised fertiliser which comes at nearly half the cost at retail shops would help boost my harvest,” she says, gazing at the small pile of bags before her.

“But the fertiliser came late, – three weeks into the start of the rains, meaning I planted late and hence the poor harvest.It is particularly disappointing because now I will not recoup my investment, leave alone have enough surplus to feed my family,” she adds, tears welling in her eyes.

The delays were caused by an apparent dispute between the National Cereals and Produce Board (NCPB) and its suppliers.

The cereals commodity management and trading organisation is facing difficulties after some of its assets were frozen. In August, a court order froze NCPB’s bank accounts in an attempt to recover a Sh522 million bill for breach of contract involving a supplier. 

 Bounty harvest

But 200km away from Eldoret in Kakamega County, Western Kenya, the atmosphere is quite the opposite, as an ecstatic Kennedy Wafula goes about harvesting his crop.

With a smile on his face, a sickle in his hand and a possible bounty harvest in the offing, Wafula savours the success of his hard work.

Helped by his wife and two children, he whistles as he gathers sack after sack of healthy looking corn. From a meager 0.5 tonnes previously, Wafula now rakes in an incredible seven tonnes per acre.

Yet a few years back, Wafula was a distraught man, watching his two-acre plot in Kabras East return poor harvest year after year.

“I suspected someone from my clan had cast an evil spell on my farm,” he says, a sheepish smile spread across his face.

“Little did I know that my problems lay elsewhere, until a research project came along and identified soil acidity as the cause of the poor harvests,” he adds.

In Western Kenya, food insecurity and poverty have been identified as major constraints to development. The arable land is just about 0.5 million hectares. Maize and beans yields rarely exceed 0.5 tonnes per acre in smallholder farms.

The poor yields are mainly caused by soil acidity due to high rainfall and overuse of fertiliser, striga-weed invasion and high cost of farm inputs.

Other studies have shown that soils in the area are severely depleted of phosphorus and nitrogen.

Lime project

But a joint project between Kenya Agricultural Research Institute (Kari) Kakamega and Moi University, Eldoret, to address the poor soil quality is transforming lives in the area.

The project seeks to create awareness on the use of agricultural lime, increase its application on acidic soils and make farmers have easy access to it and other fertilisers.

“The project also encourages other agronomic practices like inter-cropping maize with leguminous crops such beans to aid in nitrogen fixation,” says David Mbakaya, a soil scientist at Kari, Kakamega, and lead research at the project.

“Farmers are also trained on improved handling and marketing of the anticipated excess produce and to assess the agronomic and economic benefits of these interventions,” he adds.

Margaret Shiyonga, also from Kabras, says she used to add fertiliser to her farm every year but with the same result – poor harvest.

“I increased the amount of fertiliser each planting season, thinking it would improve the yields. I did not know I was only adding to the problem. The lime project has increased my harvest two-fold and I did not even use fertiliser,” she says.

Economic fortunes

Crop yields in the area jumped from 0.5 tonnes per acre to between 5-7 tonnes in just two years, turning around economic fortunes of many rural households.

It now covers over 30,000 small-holder famers in Kakamega, Busia and Siaya and plans to expand that to 50,000 farmers by 2015.

“The project is a study in how agricultural research and the use of simple tools can contribute to increased food production and alleviate poverty in rural households,” Mbakaya says.

Back in Uasin Gishu, the late arrival of subsidised fertiliser is not the only problem Chepchirchir has to worry about.

Getting the meager harvest to the market is a big headache for her due to poor rural roads.

“Often we are stuck with our produce for months on end after it has rained and transporters cannot reach our far-flung farms,” she says.

The government had set aside Sh3 billion for a fertiliser and seed fund in the last planting season. The  amount will be increased progressively to Sh15 billion in the next five years. This is equivalent to 60 per cent of the agricultural budget which stands at Sh38.7 billion.

But some experts say fertiliser subsidies marginally raise crop production, citing the example of Zambia, where an additional kilogramme of subsidised fertiliser only raises maize output by 1.9kg per acre on average.

According to Dr Milu Muyanga, Assistant Professor International Development at the Department of Agriculture, Food and Resources Economics at Michigan State University, this is a very expensive way of increasing agricultural production.

Politically popular

 “It usually leads to huge fiscal burden that amounts to use of public resources for private goods,” he says.

Formerly at Tegemeo Institute and Egerton University, Dr Muyanga believes fertiliser subsidies are politically popular, helping governments in rewarding their voters and political elites in farming or input distribution.

“Of course it has been shown that input subsidies cannot win new votes. In Zambia, studies show that households in constituencies won by the ruling party get more subsidised fertilisers,” he observes.

“Besides, the input subsidy benefits enjoyed by the farmers are usually not transmitted to the end consumers,” he adds.

Subsidised fertiliser depresses purchase of the commodity from commercial retailers thus crowding out commercially distributed fertiliser, leading to shattered private sector fertiliser distribution system.

It has also been shown in Zambia and Malawi that fertiliser subsidies are subject of elite capture and leakage – the largest proportion of the beneficiaries are the medium and large-scale farmers who can afford unsubsidised fertiliser anyway.

Also poorly designed subsidy programmes encourage fertiliser overuse resulting in low response rates and environmental damage, including soil acidity.

“In all the countries where fertiliser subsidies have been introduced, the programmes lack exit strategies – farm input subsidies are very “addictive” to farmers and once introduced they’ve proven notoriously impossible to discontinue, of course without adverse political consequences,” he observes.

Dr Muyanga, who was one of the three main authors of reviews of input subsidy programmes in their countries, to be appearing in a forthcoming special issue of Agricultural Economics, says his past experience teaches him that subsidy is not the best policy instrument for poor agricultural production.

“It has been shown that investment in roads, education and irrigation provide more return. These investments help lower input costs and improve crop-input response rates,” he says.

   Exit strategies

“There is need to focus on soil health and cultural practices. For a package of fertiliser to be profitable and to achieve fertiliser use efficiency, it requires renewed attention to soil health and fertility, organic matter and related cultural practices,.

If the governments cannot resist the temptation of input subsidies, he says, then they should adopt market-smart programmes and support market development/private sector investment – use approaches that crowd-in private sector like vouchers targeted for the poor.

“The government also needs to promote competition and pay attention to farmer demand. For example some farmers may be in need of lime to lower soil acidity and not fertiliser, some farmers live in areas where fertiliser use is not profitable. Improvement of research and development and extension services is paramount, insist on economic efficiency and farmers must be in the driver’s seat and have clear exit strategy to ensure sustainability,” Dr Muyanga tells Standard On saturday.

“In a nut-shell, there are better and less market-distorting strategies to increase agricultural productivity than use of input subsidies. While input subsidies are politically popular, empirical studies show that they do not win new votes. Input subsidies are as addictive as smoking – once started, extremely difficult to discontinue,” he says.