Factors Affecting Demand for Fertilizer in Sub …

1 Agriculture and rural development Discussion Paper 23 The World BankAgriculture & rural development DepartmentWorld Bank1818 H Street, NWWashington, DC 20433 A. KellyFactors AffectingDemand for Fertilizer inSub-Saharan Africa The World Bank Agriculture and rural development Discussion Paper 23 Factors Affecting Demand for Fertilizer in Sub-Saharan Africa Valerie A. Kelly ii1818 H Street, NW Washington, DC 20433 Telephone 202-473-1000 Internet E-mail All rights reserved. The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent.

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3 The World Bank encourages dissemination of its work and will normally grant permission promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470, other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail About the author Valerie A.

4 Kelly is an Associate Professor, International development in the department of Agricultural Economics, Michigan State University, East Lansing, Michigan. The opinions expressed in this paper are solely those of the author. 200 The International Bank for Reconstruction and development / The World Bank 6 Factors Affecting Demand for Fertilizer in Sub-Saharan Africa iii Contents Preface .. v Acknowledgments ..vii Acronyms and Abbreviations .. ix Executive Summary .. xi Background and Objectives .. xi Determinants of Fertilizer Demand .

5 Xi How Good Are Fertilizer Incentives in SSA? ..xii Improving Incentives ..xii Improving Capacity to Purchase Improving Capacity to Use Fertilizer ..xiv Clarifying the Role of Fertilizer in the Overall development xv 1. 1 Why a Paper on Fertilizer Demand in Sub-Saharan Africa? .. 1 Looking at Demand Through an Economist s Eyes .. 3 2. Fertilizer Consumption Trends in Africa .. 5 Quantities of Fertilizer 5 Intensity of Fertilizer Use .. 6 Fertilizer Use by 7 3.

6 Farm-level Fertilizer Demand as a Function of Incentives and Capacity .. 10 Incentives to Purchase Fertilizer .. 10 Capacity to Acquire and Use Fertilizer .. 11 4. Incentives Shaping Fertilizer Demand .. 123 Analytical Methods Used to Evaluate Fertilizer Incentives .. 13 How Good Are Fertilizer Incentives in SSA? .. 15 Improving Fertilizer Incentives .. 18 Risk and Uncertainty .. 19 Agronomic 19 29 5. Capacity to Acquire and Use Fertilizers.

7 38 Human Resources .. 38 Financial Resources .. 40 Credit through Building Farmer Associations .. 41 Interlinked Markets in 42 Agriculture and rural development iv Government Credit .. 43 Insurance .. 44 6. Conclusions .. 45 Appendix 1. Sources of Soil Fertility Problems in 48 Appendix 2. A Comparison of the VCR and MRR Approaches to Measuring Incentives .. 49 Appendix 3. Crop Level Synthesis of Fertilizer Incentives Drawn From Yanggen et al.

8 1998 51 References .. 55 Endnotes .. 71 List of Tables Table Fertilizer Use by Crop in Late 1990s .. 8 Table Fertilizer Incentives: Summary of Key Indicators by Crop and Region .. 16 Table Comparison of Different Indicators of Incentives to Use .. 49 List of Figures Figure Demand for Inputs to the Production Process .. 4 Figure Total NPK Fertilizer Use in Sub-Saharan Africa, 1961 2002 .. 5 Figure Distribution of SSA Fertilizer Consumption Trends by Region .. 6 Figure SSA Intensity of Fertilizer Use: 1970 2002.

9 7 Figure Conceptualizing Fertilizer Demand : A Function of Financial Incentives and Farmers Capacity to Use and Acquire the Input .. 12 List of Boxes Box Ranking Methods Used to Refine the Selection of Best Bet 26 Factors Affecting Demand for Fertilizer in Sub-Saharan Africa v Preface Concerned by the low use of Fertilizer in Sub-Saharan Africa compared to other developing regions, in 2004 the World Bank and the UK department for International development (DFID) jointly undertook an Africa Fertilizer Strategy Assessment, the objectives of which included.

10 Identifying Factors that have undermined Demand for Fertilizer in Sub-Saharan Africa; Identifying Factors that have restricted the supply of Fertilizer in Sub-Saharan Africa; Assessing lessons learned from past attempts to promote increased use of Fertilizer in Sub-Saharan Africa; and Identifying entry points for supporting successful uptake of Fertilizer by African farmers, particularly smallholders. The Assessment generated a number of outputs. In addition to the Africa Fertilizer Policy Toolkit, a CD-based resource designed for use by policy makers and development agency staff, these included four ARD Discussion Papers three that address specific Fertilizer -related themes and one that summarizes the contributions made by participants in an e-forum about increasing Fertilizer use in Africa that was conducted as part of the Assessment.