Trends and Patterns in Fertilizer Use by Smallholder Farmers in Kenya, 1997-2007 Joshua Ariga, T.S. Jayne, Betty Kibaara, and J.K. Nyoro Paper presented.

Trends and Patterns in Fertilizer Use by Smallholder Farmers in Kenya,

1997-2007

Joshua Ariga, T.S. Jayne, Betty Kibaara, and J.K. Nyoro

Paper presented at the Egerton University Tegemeo Institute Agricultural Policy Conference,

17 September 2008, Nairobi, Kenya

2

Kenya (42.8, +40%) between 2007 and 1997

Swaziland (30.5, -40%) Malawi (30.8, +9%) Zimbabwe (48.3, +9%)

> 25 kg/ha

Uganda (0.6, +237%) Rwanda (1.8, +89%) Mozambique (3.2, +142%) Ghana (3.6, +68%) Chad (4.3, +93%) Cameroon (5.9, +77%) Togo (7.0, +30%) Cote d’Ivoire (11.8, +53%) Botswana (11.8, +294%) Senegal (13.2, +67%) Ethiopia (14.4, +71%) Benin (17.6, +76%) Lesotho (23.2, +35%)

DRC (0.5, -47%) Angola (0.7, -69%) Niger (0.9, +5%) Guinea (2.0, -4%) Burundi (2.3, -6%) Madagascar (2.9, -8%) Mauritania (4.0, -64%) Tanzania (4.8, -47%) Gambia (5.2, +15%) Nigeria (5.6, -73%) Burkina Faso (5.9, -28%) Zambia (8.4, -34%) Mali (9.0, +7%)

< 25 kg/ha

> +30%< +30%

% growth in fertilizer use intensity (kg/ha cultivated)(mean 1996-2002 / mean 1990-95)

Intensity of fertilizer

use(1996-2002)

3

Kenya fertilizer use, 1990-2008

0

100000

200000

300000

400000

500000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

donor imports

commercial imports

fertilizer consumption

projectedfor 2008

met

ic t

onne

s

4

Objectives:

1. Trends in fertilizer use on maize

2. Factors driving the increase in fertilizer use, 1997-2007

3. Household characteristics associated with fertilizer use

4. Impact on maize yields

5. Policy implications in light of higher food and fertilizer prices

5

Trends in Fertilizer Use on Maize

Objective 1

6

% of Small-scale Farmers Using Fertilizer on Maize

Agro-regional zone 1996 1997 2000 2004 2007

% of households using fertilizer on maize

Coastal Lowlands 0 0 3 4 14

Eastern Lowlands 21 27 25 47 43

Western Lowlands 2 1 5 5 13

Western Transitional 39 41 70 71 81

High-Pot. Maize Zone 85 84 90 87 91

Western Highlands 81 75 91 91 95

Central Highlands 88 90 90 91 93

Marginal Rain Shadow 6 6 12 11 16

Total Sample 56 58 64 66 70

7

Fertilizer Dose Rate (kgs/acre) on maize

Agro-regional zone 1997 2000 2004 2007

Dose rate (kgs/acre) on fertilized maize fields

Coastal Lowlands 11 5 3 7

Eastern Lowlands 10 18 15 16

Western Lowlands 24 14 10 12

Western Transitional 54 48 62 71

High-Pot. Maize Zone 65 67 74 75

Western Highlands 31 36 46 47

Central Highlands 68 64 64 58

Marginal Rain Shadow 12 15 43 43

National sample 56 55 60 59

8

Factors driving the increase in

fertilizer use, 1997-2007

Objective 2

9

4 Reasons for the Upsurge in Fertilizer Use in Kenya

1. GoK has maintained a stable fertilizer policy stance since 1990

Eliminated import licensing quotas Eliminated foreign exchange controls Eliminated retail price controls From 1990 to 2007, no market uncertainties

introduced by large-scale subsidy programs

10

Farmer fertilizer purchases, Malawi

Purchases

0

50

100

150

200

250

300

350

1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/6 2006/7

'000

tonn

es

Subsidised* Unsubsidised Total

11


2. In response to stable input policy environment, private sector investment in fertilizer distribution expanded rapidly

10-11 importers 500 wholesalers 8,000 retailers

12


3. In response to expansion of input stockists, small farmers’ are now much closer to fertilizer retailers

1997: 7.4kms 2000: 5.6kms 2004: 3.7kms 2007: 3.2kms

13

Reasons for the Upsurge in Fertilizer Use in Kenya

4. Greater competition among importers and wholesalers has led to declining fertilizer marketing costs

14

Price of DAP (Di-Ammonium Phosphate) in Mombasa and Nakuru (nominal Shillings per 50kg bag)

0

1000

2000

3000

4000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

nom

inal

Ksh

per

50k

g ba

g

Nakuru, wholesale

Mombasa, cif

15

Price of DAP (Di-Ammonium Phosphate) in Mombasa and Nakuru (constant 2007 Shillings per 50kg bag)

0

1000

2000

3000

4000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

nom

inal

Ksh

per

50k

g ba

g

Nakuru, wholesale

Mombasa, cif

800

1200

1600

2000

2400

2800

3200

3600

4000

4400

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

cons

tand

200

7 K

sh p

er 5

0kg

bag

Nakuru, wholesale

Mombasa, cif

16

Why have real fertilizer marketing margins declined in Kenya?

1. Greater competition has led to lower margins2. Emergence of brokerage services for exploiting

opportunities for cheaper backhaul transport, e.g., linking upcountry fertilizer supply with trucks transporting cargo from Rwanda and Congo to the port of Mombasa;

3. private importers are increasingly using international partners to source credit at lower interest and financing costs than are available in the domestic economy

4. mergers between local and international firms in which knowledge and economies of scope are being passed onto local firms to achieve cost savings in local distribution (e.g., Mea partnering with CONAGRA)

17

Objective 3

Household characteristics associated with fertilizer use

18

02

04

06

08

01

00

0 10 20 30 40Total acres

Scatter lowess

Table 1a: Zone 1 Fertilizer rate vs. Household Acres

05

01

00

15

02

00


Scatter lowess


05

01

00

15

02

00

Fe

rtili

zer

rate

pe

r a

cre


Scatter lowess


01

00

20

03

00

Fe

rtili

zer

rate

pe

r a

cre


Scatter lowess


Relationship between fertilizer use per acre and wealth

19

Relationship between household wealth and fertilizer use

Household Wealth Quartiles

1 (poorest)

2 3 4 (Highest)

Assets (Kenya Shillings) 2,982 12,106 25,633 166,919

Dose Rate (kgs/acre) users only

59 60 66 68

20

% of Small-scale Farmers Using Fertilizer on Maize

Agro-regional zone 1996 1997 2000 2004 2007

% of households using fertilizer on maize

Coastal Lowlands 0 0 3 4 14

Eastern Lowlands 21 27 25 47 43

Western Lowlands 2 1 5 5 13

Western Transitional 39 41 70 71 81

High-Pot. Maize Zone 85 84 90 87 91

Western Highlands 81 75 91 91 95

Central Highlands 88 90 90 91 93

Marginal Rain Shadow 6 6 12 11 16

Total Sample 56 58 64 66 70

21

Objective 4

Impact on maize yields

22

2.9

5.0 5.0

6.3 6.0

8.4 8.0

9.0

6.1

14.1

10.511.4

9.4

14.213.4

14.0

81

31

7.5

Ma

ize

yie

ld: 9

0-kg

bag

s/a

cre

Neither Trad. & fert Hybrid & no Fert combo

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Key for Bars: 1=1997 2=2000 3=2004 and 4=2007 Season

Maize Yields by Seed-Fertilizer Combination Group 1997-2007

Not counting other crops grown on intercropped maize fields

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4.6

8.2

7.18.0

8.6

14.9

10.6

12.3

7.4

16.4

13.1 13.1

11.6

17.6

15.9 16.28

13

17.5

Ma

ize

yie

ld: 9

0-k

g b

ag

s/a

cre

Neither Trad. & fert Hybrid & no Fert combo

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Key for Bars: 1=1997 2=2000 3=2004 and 4=2007 Season

Maize Yields by Seed-Fertilizer Combination Group 1997-2007

Yield includes quantity of other crops produced on intercropped fields converted to maize equivalents by price ratios

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Objective 5

Implications for policy under current world price conditions

.1

.2

.3

.4

.5

.6

.7

.8

1994 1996 1998 2000 2002 2004 2006 2008tonn

e m

aize

/ t

onne

DA

P f

ertil

izer

pri

ce r

atio

25

Profitability of using fertilizer:

Farm-gate Maize Price Δkg maize

---------------------------------- * ------------

Farm-gate Fertilizer Price Δkg fert

26

1. Reduce costs of supplying fertilizer to farm gate

• Port costs at Mombasa• Improve rail / road infrastructure

2. Promote viable farm extension / service provision to raise efficiency of fertilizer use

What about input subsidies?

27

Summary of research evidence about fertilizer subsidies in Africa:

can help to raise production, but little sustained benefit after subsidies are withdrawn

(e.g., Zambia, Malawi) Benefits tend to be disproportionately

captured by better-off farmers, unless near universal coverage

Costly – foregone payoffs from alternative public investments

28

ZambiaTotal

IncomeAssets Landholding

size

Fertilizer source:

‘000 kwacha per capita

ha per capita

Households not acquiring fertilizer:

266 173 .15

Source: Govereh et al, 2006

29

ZambiaTotal


size

Fertilizer source:


ha per capita


266 173 .15

Cash purchases from private retailers:

774 342 .20


30

ZambiaTotal


size

Fertilizer source:


ha per capita


266 173 .15

Cash purchases from private retailers:

774 342 .20

Government Fertilizer Support Program (50% subsidy)

804 425 .23


31

Budget allocation to Agricultural Sector in Zambia: ZMK465 million in 2005

Personnel Emoluments20%

Operational funds11%

Irrigation Development3%

Infrastructure2%

Food Security Pack & EDRP12%

Food Reserve Agency Maize Marketing

15%

Fertilizer Support Program37%

32

IFPRI review of rate of return studies:

Returns

Subsidies Negative – 12%

Investments

- research & extension 35% to 70%

- roads 20% to 30%

- education 15% to 25%

- communications 10% to 15%

- irrigation 10% to 15%

If we believe these findings, they have major implications

33

If the decision has already been made to provide input subsidies:

Four insights (from experience in Malawi and Zambia):

34

Insight #1:

1. Targeted input voucher program less likely to undercut commercial input distribution system

35

Insight #2:

Ensure that input subsidies are pro-poor by targeting the poorest farmers:– Will generate greatest food security and

poverty reduction impact– No evidence that fertilizer use is more

efficient on large farms than small farms– Achieves more maize output per unit of

subsidized fertilizer distributed (evidence from Malawi and Zambia)

36

Insight #3:

If subsidy programs are to be implemented, design them in ways that involve the full range of private importers, wholesalers, and retailers.

Providing tenders to only 2-3 firms can: – entrench their position in the market– cause other firms to cease making investments in the

system or drop out altogether– lead to a more concentrated input marketing system

and restricted competition when the input subsidy program ends

37

Insight #4:

Recommend reduced rates of fertilizer application – 100kg per acre is certainly not optimal in most parts of Kenya.

38

Summary of Main Findings1. nationwide, the % of farmers using fertilizer on maize

has increased from 56% in 1996 to 70% in 20072. Fertilizer dose rates on maize (maize fields receiving

fertilizer) have increased only slightly, from 56kg/acre in 1997 to 59kg/acre in 2007

3. Fertilizer use has increased especially rapidly on the intercropped fields, and less so on monocropped fields

4. The dominant factor influencing smallholder households’ decisions to use fertilizer on maize is location:

• Over 90% of smallholders use fertilizer on maize in three of the zones surveyed: the High Potential Maize Zone; Western Highlands, and Central Highlands.

• Less than 30% use fertilizer on maize in Coastal Lowlands, Marginal Rain Shadow.

39

Summary of Main Findings

5. Total area under maize has remained largely constant over the decade

6. maize yields increased by 20% between 1997-2007 period, which is correlated with the rise in fertilizer use.

7. Paying attention to the different types of maize production technologies and maize cultivation techniques is important to carefully control for confounding factors when examining trends in maize yields in Kenya

Thank you

http://www.aec.msu.edu/fs2/

http://www.aec.msu.edu/fs2/

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Table 1: Sampled districts in agro-ecological zones

Agro-ecological zone Districts No. of households

Coastal Lowlands Kilifi, Kwale 75

Eastern Lowlands Machakos, Mwingi, Makueni, Kitui, Taita-Taveta 145

Western Lowlands Kisumu, Siaya 153

Western TransitionalBungoma (lower elevation), Kakamega (lower elevation)

148

Western Highlands Vihiga, Kisii 331

Central Highlands Nyeri, Muranga, Meru 129

High-Potential Maize Zone

Kakamega (upper elevation), Bungoma (upper elevation) Trans Nzoia, Uasin Gishu, Bomet, Nakuru, Narok

242

Marginal Rain Shadow Laikipia 37

Overall sample 1260

Trends and Patterns in Fertilizer Use by Smallholder Farmers in Kenya, 1997-2007 Joshua Ariga, T.S. Jayne, Betty Kibaara, and J.K. Nyoro Paper presented.

Documents

kenya fertilizer use

intensity of fertilizer

fertilizer retailers

fertilizer prices

fertilizer distribution

kenya slide

fertilizer use intensity

kms slide