by by Amit Roy Amit Roy IFDC IFDC www.ifdc.org Managing Access to farm Inputs Managing Access to farm Inputs Presented at the World Bank Symposium Cultivating Innovation: A Response to the Food Price Crisis Washington, D.C. September 26, 2008
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byby
Amit RoyAmit Roy IFDCIFDC
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Managing Access to farm InputsManaging Access to farm Inputs
Presented at the World Bank Symposium
Cultivating Innovation: A Response to the Food Price Crisis
Washington, D.C.
September 26, 2008
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Fundamentals of Fertilizer Fundamentals of Fertilizer ProductionProduction
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Air(80% Nitrogen)
Ammonia
Energy & Feedstock (Natural Gas)
NitrogenNitrogen
Urea
Energy (Natural Gas)
Total Energy and Feedstock: Equivalent to 4 Barrels of Oil
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Phosphate Rock
PhosphoricAcid
DiammoniumPhosphates (DAP)
AmmoniaSulfur(Sulfuric
Acid)
PhosphatesPhosphates
1 Ton Sulfur Produces ~ 2 ton of DAP
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Sylvaniteor Carnallite
Potassium Chloride (Potash)
Beneficiation
PotashPotash
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Fertilizer Prices (FOB, bulk)Fertilizer Prices (FOB, bulk) Monthly AveragesMonthly Averages
January 2000 January 2000 –– July 2008July 2008
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What Can Be Done What Can Be Done in the Short Term?in the Short Term?
1.1. Transfer proven efficient nutrient Transfer proven efficient nutrient management technologies to farmersmanagement technologies to farmers
2.2. Make fertilizers available to farmers Make fertilizers available to farmers thru purchasing power supportthru purchasing power support—— e,g.,targetede,g.,targeted vouchers vouchers
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Urea Deep PlacementUrea Deep Placement BangladeshBangladesh
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2 Out of 3 Bags of Urea Lost for Split Application in Wetland Rice
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Conversion Conversion of Prilled Urea of Prilled Urea to USG Using to USG Using a Briquettera Briquetter
Prilled Urea
Briquette Machinefor USG
USG
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2 Out of 3 Bags of Urea Lost for Split Application
1 Out of 3 Bags of Urea Lost for USG
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Average Impact on Paddy YieldAverage Impact on Paddy Yield BangladeshBangladesh
6,432
7,676
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Broadcast Deep Placement
(kg/
ha)
Paddy Yield(Kg/ha)
125 kg N/ha
77 kg N/ha
6,432
7,676
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Broadcast Deep Placement
(kg/
ha)
Paddy Yield(Kg/ha)
125 kg N/ha
77 kg N/ha
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Impact of Urea Deep Placement Impact of Urea Deep Placement Technology on FarmersTechnology on Farmers’’ RevenuesRevenues
BangladeshBangladesh
324
19
342
0
50
100
150
200
250
300
350
400
RevenueIncrease
Fertilizer CostSavings
Total AddedRevenue
Benefits to Farmer($/ ha)
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Fertilizer Program RwandaFertilizer Program Rwanda Auction/VoucherAuction/Voucher
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MINAGRI
• Buyer Qualification Requirements• Bid Documents• Bid Evaluation• Award• Delivery Authorization
Dealer/Cooperative
•Confirm Qualifications•Sealed Bid/Bid Bond•Complete Procurement
• Approve Finance
• Application for Finance• Make Down Payment @ 30%• Complete Payment After Award
CommercialBank
Confirmation of Payment
List of Approved Buyers
Fertilizer Auction—Flow of Documentation
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Rwanda Agricultural Intensification Program – 2008/09 SeasonSubsidy Through Voucher Program – Flow Diagram
Bank (s)Dealer/Retailer
Co-opsNetwork
RegionalNGOs
Farmer
World BankMinistry of Agriculture
(MINAGRI) IFDCAdvisory Services
Special CellProgram
Management
Fertilizer Auctions
Financial Assistance Technical Assistance
Subsidy Vouchers
Voucher Distribution
Voucher
+
Cash
Fertilizer
+
Seed
Voucher Redemption
Used
Vouchers
Subsidy Funds
Commodity, Subsidy
ProgramPromotion
ProgramExtension
ProgramMonitoring &Evaluation
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Africa Specific InterventionsAfrica Specific Interventions
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Cereal Production, 1961Cereal Production, 1961––20012001 (% change)(% change)
Yield
Are
a
South Asia Sub-Saharan Africa
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Fertilizer Price Formation: Fertilizer Price Formation: Thailand vs. SubThailand vs. Sub--Saharan Africa (2006)Saharan Africa (2006)
X
X + 49%
X + 80%
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Actions on the Fertilizer SectorActions on the Fertilizer Sector
Eliminate taxes and tariffsEliminate taxes and tariffsAssess economic viability of fertilizer production Assess economic viability of fertilizer production and blendingand blendingEvaluate regional procurement optionEvaluate regional procurement optionPromote intraPromote intra--regional traderegional tradeDevelop capacity for quality controlDevelop capacity for quality controlDevelop and scale up networks of input dealersDevelop and scale up networks of input dealersFacilitate financial arrangements for importers and Facilitate financial arrangements for importers and dealersdealersTargeted support to the smallholder farmers to Targeted support to the smallholder farmers to access fertilizer and other inputsaccess fertilizer and other inputs
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Longer Term InterventionsLonger Term Interventions
Conduct research to improve nutrient Conduct research to improve nutrient management efficiencymanagement efficiency•• New productsNew products
•• Better water and soil management Better water and soil management
•• Better fertilizer recommendationsBetter fertilizer recommendations
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ConclusionsConclusions
Global fertilizer supply/demand will Global fertilizer supply/demand will remain tight for next 2remain tight for next 2--3 years3 yearsNew investments will increase global New investments will increase global supply but may not reduce prices to the supply but may not reduce prices to the 20052005--2006 levels2006 levels
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ConclusionsConclusions
ShortShort-- term interventions should term interventions should •• Provide purchasing power support to Provide purchasing power support to
farmersfarmers•• Promote productivity enhancing Promote productivity enhancing
technologiestechnologies•• Remove taxes and tariffs on inputsRemove taxes and tariffs on inputs•• Accelerate dealer developmentAccelerate dealer development
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Conclusions (contConclusions (cont’’d)d)
Simultaneous interventionsSimultaneous interventions•• Promote public private partnershipPromote public private partnership•• Increase private sector participationIncrease private sector participation•• Evaluate regional procurement optionsEvaluate regional procurement options•• Assess economic viability for fertilizer Assess economic viability for fertilizer
productionproduction•• Improve access to finance for private Improve access to finance for private
sectorsector•• Market support servicesMarket support services
MISMISQuality control Quality control
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