• TABLE OF CONTENTS
HIDE
 Title Page
 Mission
 Objective
 Abstract
 Introduction
 Will China eat Africa's lunch?
 Policy solutions
 Treating Africa's soil fertility...
 Is cost-sharing just another word...
 Notes
 Reference






Group Title: International working paper series - International Agricultural Trade and Development Center, University of Florida - IW97-15
Title: Are there public benefits to private use of fertilizer in Africa
CITATION THUMBNAILS PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00053918/00001
 Material Information
Title: Are there public benefits to private use of fertilizer in Africa
Series Title: International working paper series
Physical Description: 29 p., <10> p. of plates : ill., map ; 28cm.
Language: English
Creator: Gladwin, Christina H
Publisher: University of Florida, Institute of Food and Agricultural Sciences, Food and Resource Economics Dept.
Place of Publication: Gainesville FL
Publication Date: <1997>
 Subjects
Subject: Fertilizers -- Economic aspects -- Africa, Sub-Saharan   ( lcsh )
Sustainable agriculture -- Africa, Sub-Saharan   ( lcsh )
Agriculture and state -- Africa, Sub-Saharan   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Includes bibliographical references (p. 28-29).
Statement of Responsibility: by Christina H. Gladwin ... <et al.>.
General Note: "October 1997."
Funding: Electronic resources created as part of a prototype UF Institutional Repository and Faculty Papers project by the University of Florida.
 Record Information
Bibliographic ID: UF00053918
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: aleph - 002306289
oclc - 38305317
notis - ALQ9607

Table of Contents
    Title Page
        Title Page
    Mission
        (MULTIPLE)
    Objective
        (MULTIPLE)
    Abstract
        Abstract
    Introduction
        Page 1
    Will China eat Africa's lunch?
        Page 1
        Page 1a
        Page 1b
        Page 2
        Page 2a
        Page 3
        Page 3a
        Page 3b
        Page 3c
        Page 3d
        Page 3e
        Page 4
    Policy solutions
        Page 5
        Page 6
    Treating Africa's soil fertility as a public good
        Page 7
        Page 8
        Page 8a
        Page 8b
    Is cost-sharing just another word for subsidizing?
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
    Notes
        Page 27
    Reference
        Page 28
        Page 29
Full Text


IW97-15



INTERNATIONAL AGRICULTURAL TRADE
AND DEVELOPMENT CENTER


ARE THERE PUBLIC BENEFITS TO PRIVATE
USE OF FERTILIZER IN AFRICA?

By
Christina H. Gladwin, Abraham Goldman, Alan Randall
Andrew Schmitz and G. Edward Schuh


IW97-15 October 1997


INTERNATIONAL WORKING PAPER SERIES


UNIVERSITY OF
FLORIDA
Institute of Food and Agricultural Sciences
Food and Resource Economics Department
Gainesville, FL 32611







MISSION AND OBJECTIVE
OF THE
INTERNATIONAL AGRICULTURAL TRADE
AND DEVELOPMENT CENTER


MISSION:

To enhance understanding of the vital role that international agricultural trade plays
in the economic development of Florida, and to provide an institutional base for
interaction on agricultural trade issues and problems.

OBJECTIVE:

The Center's objective is to initiate and enhance teaching, research, and extension
programs focused on international agricultural trade and development issues. It does
so by:

1. Serving as a focal point and resource base for research on international
agricultural trade, related development, and policy issues.

2. Coordinating and facilitating formal and informal educational opportunities
for students, faculty, and Floridians in general, on agricultural trade issues
and their implications.

3. Facilitating the dissemination of agricultural trade-related research results and
publications.

4. Encouraging interaction between the University community and business and
industry groups, state and federal agencies and policy makers, and other trade
centers in the examination and discussion of agricultural trade policy
questions.







MISSION AND OBJECTIVE
OF THE
INTERNATIONAL AGRICULTURAL TRADE
AND DEVELOPMENT CENTER


MISSION:

To enhance understanding of the vital role that international agricultural trade plays
in the economic development of Florida, and to provide an institutional base for
interaction on agricultural trade issues and problems.

OBJECTIVE:

The Center's objective is to initiate and enhance teaching, research, and extension
programs focused on international agricultural trade and development issues. It does
so by:

1. Serving as a focal point and resource base for research on international
agricultural trade, related development, and policy issues.

2. Coordinating and facilitating formal and informal educational opportunities
for students, faculty, and Floridians in general, on agricultural trade issues
and their implications.

3. Facilitating the dissemination of agricultural trade-related research results and
publications.

4. Encouraging interaction between the University community and business and
industry groups, state and federal agencies and policy makers, and other trade
centers in the examination and discussion of agricultural trade policy
questions.








Are There Public Benefits to Private Use of Fertilizer in Africa?
by

Christina H. Gladwin, Abraham Goldman, Alan Randall,
Andrew Schmitz, and G. Edward Schuh*


Key words: African development, fertilizer, public good, soil fertility.


Abstract
The consensus of opinion about the development prospects of sub-Saharan Africa is that
it is the only region in the world where poverty and political violence are likely to increase in
the opening years of the next century. The "doom and gloom" scenarios are in part based on
concerns about Africa's ability to feed itself, because per capital food production growth rates
have steadily decreased at 2 percent per year since 1960. Africa needs to intensify land use and
to do so, sustained fertilizer use is essential. But fertilizer consumption in Africa is the lowest
in the world at 13 kg/ha, and it is decreasing due to current adverse price ratios of fertilizer to
food crops. Pedro Sanchez and colleagues at the International Center for Research on
Agroforestry (ICRAF) claim that the nutrient capital of African countries is being mined, just like
mineral deposits of metals or fossil fuels; and soil fertility depletion on smallholder farms is the
fundamental biophysical root cause of declining per-capita food production in Africa. To
replenish Africa's soils, global and national institutions as well as local farmers must invest in
soil fertility as a form of natural capital, because there are public benefits to private use of
fertilizer in Africa. To discuss the unique idea of fertilizer as a public good, three fellows of the
American Association of Agricultural Economists (AAEA) were asked for their reactions at the
1997 AAEA meetings in Toronto, Canada. Their reactions are presented here.








Are There Public Benefits to Private Use of Fertilizer in Africa?
by

Christina H. Gladwin, Abraham Goldman, Alan Randall,
Andrew Schmitz, and G. Edward Schuh*


Introduction
Christina H. Gladwin and Abraham Goldman,
University of Florida

The consensus of opinion about the development prospects of sub-Saharan Africa is that

it "is the only region in the world where poverty and political violence are likely to increase in

the opening years of the next century" (Chege 1997: 552). Immersed in what Chege calls "the

paradigm of doom," Africa is presently inundated by gloomy reports about its civil wars, famines,

high HIV infection rates, geographical isolation, chronic mismanagement, and negative or

minimal growth rates (Kennedy 1983, Leonard 1991, Goldberg 1997, Sachs 1997). These "doom

and gloom" scenarios are in part based on concerns about Africa's ability to feed itself.

Will China Eat Africa's Lunch?

Africa's per capital food production growth rates have steadily decreased at 2 percent per

year since 1960. In contrast, food production growth rates in China have recently soared, in spite

of--and perhaps due to--famines endured there in the late 1950s. As a result, most reports

detailing the difference between China's and Africa's food production end up focusing on African

failures. Aggregate data for the early 1990s for all developing regions show that China leads the

developing world in per capital food production indices; while sub-Saharan Africa trails all

developing regions (figure 1). Cereal yields follow the same trend: China's 1992-94 averages

at 4482 kg/ha are the highest of the developing world; Africa's are the lowest (1023 kg/ha)

(figure 2). In contrast, sub-Saharan Africa's population growth rates 1990-1995 are the highest

1








Are There Public Benefits to Private Use of Fertilizer in Africa?
by

Christina H. Gladwin, Abraham Goldman, Alan Randall,
Andrew Schmitz, and G. Edward Schuh*


Introduction
Christina H. Gladwin and Abraham Goldman,
University of Florida

The consensus of opinion about the development prospects of sub-Saharan Africa is that

it "is the only region in the world where poverty and political violence are likely to increase in

the opening years of the next century" (Chege 1997: 552). Immersed in what Chege calls "the

paradigm of doom," Africa is presently inundated by gloomy reports about its civil wars, famines,

high HIV infection rates, geographical isolation, chronic mismanagement, and negative or

minimal growth rates (Kennedy 1983, Leonard 1991, Goldberg 1997, Sachs 1997). These "doom

and gloom" scenarios are in part based on concerns about Africa's ability to feed itself.

Will China Eat Africa's Lunch?

Africa's per capital food production growth rates have steadily decreased at 2 percent per

year since 1960. In contrast, food production growth rates in China have recently soared, in spite

of--and perhaps due to--famines endured there in the late 1950s. As a result, most reports

detailing the difference between China's and Africa's food production end up focusing on African

failures. Aggregate data for the early 1990s for all developing regions show that China leads the

developing world in per capital food production indices; while sub-Saharan Africa trails all

developing regions (figure 1). Cereal yields follow the same trend: China's 1992-94 averages

at 4482 kg/ha are the highest of the developing world; Africa's are the lowest (1023 kg/ha)

(figure 2). In contrast, sub-Saharan Africa's population growth rates 1990-1995 are the highest

1











Per Capita Food Production Index
(1992-94)


China



S Asia



SE Asia



Trop Latin Amer



Sub-Sahara Afr


0 100


Index (1979-81 = 100)


SOURCE: Data from World Resources, '96-'97


200















Cereal Yields

(1992-94 Avg)


China




S Asia




SE Asia




Trop Latin Amer




Sub-Sahara Afr


1000


*qi. ***, L-i~
~ ~h,-G 4482
- i I .:;*
''! : : ; .


'"-
* i '


...
I- 2;.-.L- 2346'~ 2 4


1023


2000
2000


3000


4000
4000


5000


Yield (kg/ha)


SOURCE: Data from FAO & World Resources, 1996-97








2

in the world at 3 percent per annum, while China's are now a low 1.4 percent per annum (figure

3). (ABE: exact references?)

These indicators show that Africa's per capital food production cannot keep up with its

population growth rates. It is a continent of farmers which enigmatically imports one-third of

its food grains; nine of its ten largest countries are net importers of food. Yet most African

economies are agriculturally-based, with 75 to 80 percent of the labor force still employed in

agriculture and most of the GDP still generated by the agricultural sector (Tomich et al. 1995).

What are some of the causes of its low agricultural productivity? Among the factors

mentioned besides high population growth rates are 25 years of mostly poor weather; too few

roads, vehicles, and telephones; predatory governments and officials; public policies which lurch

among the extemes; and devastating regional and ethnic conflicts (ABE: REFS?).

In addition, there is a factor some of us call the invisible factor. Women are the food

producers in sub-Saharan Africa, in contrast to smallholders in Latin America and Asia; and the

constraints facing women farmers are proving to be greater stumbling blocks to agricultural

development than those faced by male smallholders during the 1960s and 1970s when Latin

America and Asia had their "Green Revolutions." These include women's lack of access to: land

(women beg for land rather than own it), capital or credit or cash (women don't usually raise

cash crops which are in the male domain), fertilizer or manure, technological training and

extension services, the political arena, and the nonfarm labor markets (women lack education)

(Gladwin 1996, 1997).

This is called "the invisible factor" because the gender-related constraints that lower

women's productivity are almost never mentioned as explanations of Africa's food security











Population Growth Rates
(1990-95)

World 1.7


Europe 0.3


South Amer 1.7


China 1.4


India 1.9


Sub Sahar Afr 3


Annual Growth Rate (%)








3

problems (Eicher 1982, 1995; Smale 1995). They are mentioned in the women in development

(WID) literature, but delinked from the food security literature.

Most agricultural experts conclude that Africa needs to intensify land use or increase

yield/land area; and for intensification, sustained fertilizer use is essential. But fertilizer

consumption in Africa is the lowest in the world at 13 kg/ha, again compared to China (figure

4). Per capital fertilizer use is also the lowest; and more distressing, a comparison of 1995 to

1985 data shows it decreased in Africa but increased in China and Latin America during the same

time period (figure 5). Moreover, this decrease can be seen in most African countries, although

some (e.g., Nigeria) use more fertilizer than others (figure 6).

Why the Decrease in Fertilizer Use?

Due to structural adjustment programs, fertilizer prices increased slowly in the late 1980s

and then more rapidly in the 1990s. Bumb et al. (1996) of the International Fertilizer

Development Center (IFDC) claim that in Ghana, this is due more to recurrent devaluations of

the Cedi in the 1990s than to the lagged effect of Ghana's fertilizer subsidy removal in 1990

(figure 7). In Malawi, the same process -- the final removal of all fertilizer subsidies in 1995/96

coupled with a 100% devaluation of the kwacha in 1994 -- resulted in 200% to 300% increases

in the price of fertilizer without corresponding increases in maize prices in 1995/96 and 1996/97

(figure 8).

Is Chemical Fertilizer Profitable Now in Africa?

The current adverse price ratio of fertilizer to food crops raises the inevitable "bottom-

line" question posed above, and the answer is too often no in sub-Saharan Africa, although it

depends on the country and crop. In Western Kenya, for example, ICRAF scientists say











Fertilizer Use Intensity
per cultivated hectare, 1995


China 308.1


S Asia 83.8


SE Asia 82.2


Trop Latin Amer 77.2


Sub-Sahara Afr 12.8


100 200 300 400
Total Fertilizer Nutrients (kg/ha)
SOURCE: Data from FAO & World Resources, 1996-97











Per Capita Fertilizer Use

1986 & 1995


China


S Asia



SE Asia



Trop Latin Amer



Sub-Sahara Afr


I1


24.2


10.8


E 1986
* 1995


19.9
20.1


0 10 20 30
Fertilizer nutrients (kg)
SOURCE: World Bank & FAO data











Fertilizer


Use Trends


Select African Countries


Ethiopia


Year


600


500


400


300


200


100


Ot-
1984
1984


1986 1988 1990 1992 1994 1996








Figure 2- Ghana: Fertilizer Price and Fertilizer Use, 1980-95


16000.0 30000

1 14000.0
< 25000 m
m r 12000.0
20000 N
. 10000.0 CD
0 C
8000.0 15000 ic
CD
a) 6000.0
o 10000 0
4000.0 -
L, ,.5000
.N 2000.0

0.0 *.. s 0
o N c' cD co = N I'
0O CO) 0 OD o CY ) C) 0)
a0) 0) 03) 0 0m m 0

Years













Figure :. Nitrogen : maize price-ratio -- nitrogen as urea, ADMARC producer maize price; 1987 -1997.


16 -
[ I-- nitrogen (MK/kg) [
14 -------- --------------------
S--- maize (MK/kg)
12 N : maize price ratio ---------------------------

10 --------------------------------------- -/--

8 --------------------------------------- ------

6 -- ---- ----------------- ------ --------




0 t --------------- -

87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97

Source: MoALD Inputs Section.








4

fertilizers, organic and inorganic, are not now profitable on maize, but are on tomatoes (Jama,

personal communication 1997). In Ghana, Bumb et al. (1996) claim fertilizer on maize not

profitable. In Mali, however, Sanders (1997) shows fertilizer was profitable on maize in 1996,

after maize prices relative to fertilizer increased over 70% after a 100% devaluation in the CFA

countries in 1994.

In Malawi, data analyzed from nitrogen (N) fertilizer response functions estimated

nationally by Benson (1996) with data from 1600 on-farm trials on hybrid maize show the answer

partly depends on whether one assumes farmers are perfect profit maximizers or merely

satisficers. Perfect profit-maximizers who exactly equate the value of the marginal product

(VMP) to marginal cost (MC) find some fertilizer use profitable; satisficers who use the rule of

2 (i.e., VMP has to be at least twice the MC) either don't find fertilizer profitable at all or only

in very small amounts. The answer also depends on whether one uses consumer or producer

prices in the calculation, as consumer prices are often 1 1/2 times that of producer prices.

Benson in Malawi thus finds 69 kg N profitable for hybrid maize consumed at home, but only

35 kg N is profitable for hybrid maize produced for sale.'

What's the problem? Gender-division-of-labor rules in Malawi dictate that women usually

grow the maize for home consumption, and their lack of cash and credit block their use of

fertilizer so they end up planting unfertilized local maize while men with greater access to cash

and credit plant hybrid maize as a cash crop (Gladwin 1992). As a result, with the recent

increases in fertilizer prices, men decreased the area planted to hybrid maize (a cash crop for

them) from 24% of the total maize area in 1992 to 7% in 1996, same as that of 15 years ago

(Carr 1997). This was contrary to Smale's (1995) optimistic prediction that it would increase to








5
40% of the total maize area with "Malawi's delayed Green Revolution." Carr (1997) claims, "the

outcome has not been a Green Revolution but the collapse of the government strategy of

intensification of maize production."

Policy Solutions

What are some possible solutions to this almost-impossible problem? Policies tried in

Africa's recent past include: free fertilizer grants and subsidies, an increase in food prices,

microcredit, targeting of women farmers, and treating Africa's soil fertility as a public good. A

brief review of arguments pro and con each of these policy solutions is in order, in order to

understand why there might be public benefits to fertilizer, normally considered a private good.

Free Fertilizer Grants and Subsidies

Arguments pro subsidies have been simple: Is the absence of fertilizer subsidies and

grants preferable to the absence of fertilizers in Africa? Eicher (1995), for example, complains

that donors have not presented the case for fertilizer subsidies in a balanced way to African policy

makers. He notes that the Green Revolution in Asia was -- and in some cases still is -- highly

dependent on fertilizer subsidies.2

Arguments con grants and subsidies are often just as simple: free grants of fertilizer in

the 1990s were as unpopular with USAID and other donors as fertilizer subsidies were in the

1980s3. African countries depend on donors for balance of payments support, which can amount

to 40 percent of the government's total budget.

Let Food Prices Increase

Arguments pro increased food prices include the classic arguments against "cheap food,

cheap labor" policies, namely that urban-biased development results because food producers suffer








6

from a lack of production incentives with cheap food policies (deJanvry 1981). Food prices are

one of the important macro prices that an economy needs to "get right" in order for price signals

to guide resource allocation in an undistorted manner (Timmer et al. 1983).

Arguments con increased food prices are that "chronic food insecurity does not often

manifest itself in terms of price rises, because the most common cause is lack of resources

translatable into food purchasing power" (Thomson and Metz 1997). Increases in prices after

liberalization of food commodity markets often end up hurting the people they were intended to

help, namely low-income rural producers. In Malawi, for example, 70 to 80 percent of rural

producers are net purchasers of maize for three to five months of the year (Peters and Herrara

1989).

Microcredit

The "hot" solution in development circles today, the microcredit solution is based on the

experience of the Grameen Bank in Bangladesh which provides loans to the poorest of the poor,

primarily rural women (Khandker, Khalily, and Kahn 1995). Programs such as Grameen Bank

and Ahon Sa Hirap in the Philippines have also inspired respected donors such as the UNDP to

start their own MicroStart Programs and test the feasibility and replicability of microcredit

programs targeted at the poorest of the poor in Africa.

Adams and VonPischke (1995), however, claim that microcredit programs with the aim

of alleviating poverty too often lead to unsustainable financial institutions which soon collapse.

Financial intermediaries and institutions have enough to do to provide a developing country with

efficient capital markets, without also being burdened with the additional responsibility of

alleviating poverty.










Targeting Women Farmers

The argument for targeting African women farmers is straitforward: If government's aim

is to increase food production, then it should target the food producers who in Africa happen to

be women (Gladwin 1996, 1997). This can be done in any number of ways: by policies that

encourage cash cropping by women farmers on a small part of their land normally devoted to the

subsistence crop (e.g., by giving women credit for fertilizer for both cash and food crops which

can be repaid with the harvested cash crop); or by programs that supervise women's use of

fertilizer vouchers on food crops; or by "fertilizer safety nets" or "fertilizer-for-work" programs

that use gender and poverty as self-targeting mechanisms and allow the poorest female headed

households access to fertilizer.

The problems with directly targeting women are both political and economic. Men object

to programs directly targeting women, claim the donors (Katrine Saito, WID office of the World

Bank, personal communication). Food insecurity is primarily income insecurity, claim the

economists (Thomson and Metz 1997); and the food security analyst's aim should be to alleviate

the poverty of the food insecure in the long run and provide safety nets in the meantime. In this

case, considerations of class may be as important as gender (Peters, personal communication),

although there is much confounding of gender and poverty in rural Africa.4

Treating Africa's Soil Fertility as a Public Good

In this paper, we explore the last policy option in depth because traditionally, fertilizer

has been treated by economists as a private, not public, good. The genesis of this new way of

looking at fertilizer and soil fertility in Africa did not come from economists, however, but from

soil scientist Pedro Sanchez and researchers associated with the International Center for Research








8

on Agroforestry (ICRAF) who claim that ICRAF's agroforestry innovations should be adopted

by African farmers as an inexpensive way to replenish their depleted soils. "Replenishing soil

fertility" is important because it is the number-one natural resource in Africa that is being

depleted (Sanchez et al. 1997): the nutrient capital of African countries is being mined, just like

mineral deposits of metals or fossil fuels.5 Soil fertility depletion on smallholder farms is the

fundamental biophysical root cause of declining per-capita food production in Africa, and society

as well as farmers must invest in soil fertility as a form of natural capital.

The costs of soil fertility depletion in Africa are both private, on-farm costs (like

decreased crop production and more runoff and erosion) and public, national and global costs.

The latter costs (termed externalities in Table 1 by Sanchez et al., even thou Alan Randall may

tell us externalities are out) include decreased national food security, exacerbated rural poverty

and the resulting increased migration to urban areas, increased urban unemployment and social

unrest, as well as increased stream sedimentation and decreased water quality due to on-farm

erosion, loss of soil carbon to the atmosphere, and loss of adjacent forests and decreased

biodiversity (as land extensification occurs).

Replenishing Africa's soils is possible, however, on the high phosphorous fixing soils of

Africa, an estimated 530 million hectares where phosphorus-fixation is now considered as an

asset, and not a liability as previously thought. Inorganic fertilizers, however, are absolutely

necessary to overcome phosphorus (P) depletion on these soils. Large applications of P fertilizer

can become P capital as sorbed or fixed P, almost like a savings account, because most P sorbed

is slowly desorbed back into the soil solution during 5-10 years. The larger the application rate,

the longer the residual effect. If P is applied as a one time application of phosphate rock, it can
















1 Box 1-1. Summary of on-farm and off-farm consequences of soil fertility depletion in Africa.


On-farm effects:

* Decreased crop production

* Less fuelwood to cook with

* Less crop-residues returned to the

soil

* Less soil permeability

* More runoff and erosion

* Less fodder for livestock

* Decreased milk and meat

production

Less manure from livestock

Less nutrients recycled

Reduced cropping options


Externalities:

* Decreased food security

* Exacerbated rural poverty

* More acute effects of droughts

* Increased stream sedimentation

* Decreased water quality

* Loss of soil carbon to the

atmosphere

* Encroachment of adjacent forests

* Decreased biodiversity

* Increased migration to urban areas

* Increased urban unemployment

and social unrest


*,.. -










High Phosphorous Fixing Soils of Africa


ICRAF








9

be helped to desorb by the decomposition of organic inputs which produce organic acids which

help acidify the phosphate rock, e.g., the organic acids in Tithonia diversifolia, a common shrub

in W. Kenya.

To reverse nutrient depletion of Nitrogen (N), however, Africa needs a combination of

inorganic fertilizer, biological nitrogen fixation (BNF) technologies, biomass transfers of organic

matter into the field, animal manure/compost, and/or trees whose deep roots capture nutrients

from subsoil depths beyond the reach of crop roots. The nutrients are transferred to the topsoil

via decomposition of tree litter. Subsoil nitrate accumulation is not significant in all soil types,

but are in Nitisols and similar soils which comprise 260 million ha in Africa.

Can N demands be met biologically? Yes, to produce mid-range level yields of 4 tons/ha,

but not at 6 tons/ha, where combinations of organic and inorganic fertilizers are needed.

(Recovery by crop of N from leaves of leguminous plants is lower (10-30%) than recovery from

N fertilizers (20-40%).)

ICRAF's solution to soil fertility depletion is thus to replace P lost over the last 20 years

on these Nitisols, by importing Minjingu phosphate rock from Tanzania, and replacing N lost

over last 20 years with N from agroforestry innovations (such as hedgerow intercropping with

Leucaena, biomass transfer with Tithonia, manures improved with Calliandra, and improved

fallow systems using N2-fixing shrubs like Sesbania sesban.) How to pay for this one-time

application of phosphate rock? Since there are national and global benefits to farmers' use of

fertilizer in Africa, national and global institutions should also share the costs.

Is Cost-Sharing Just Another Word for Subsidizing?

But is "cost-sharing" just another word for fertilizer subsidy? Is ICRAF's unique way of








10

viewing soil fertility replenishment just a clever way to get around donors' avowed aversions to

input subsidies? What do economists have to say about this issue of the public benefits to private

fertilizer use? To find out, we asked three fellows of the American Association of Agricultural

Economists (AAEA) for their reactions at the 1997 AAEA meetings in Toronto, Canada. Here

are their reactions.

Comments by Alan Randall,

Ohio State University

Why am I here? I have not had a secret career as an Africanist, but I think I know why

I'm here. And that is because of a sneaking suspicion that anybody who would be comfortable

with the notion of passive use values for environmental amenities might be able to stretch far

enough to find the public good in this problem as well. I guess that's probably it.

When you think about public goods, a couple of things come in: the notion of preferences,

i.e., something has to be preferred by at least somebody or some group of people, and the notion

of an isolation paradox, i.e., that there is something produced which is of some value to lots of

folks, but not enough value that anybody in particular can afford to pay the cost of it. But if a

way was found to break the isolation and bring them all together, to develop a cost share...and

as such generate benefits for each one that exceeded their own costs, that is, a private benefit that

exceeds cost share individual by individual, then you clearly have an isolation paradox that is

loosely called a public good.

What are some of the sort of things that might or might not be public goods? Here I

think we have relatively little to guide us. The notion that extensification of land use for farming

that would diminish biodiversity in Africa or elsewhere might represent a public bad and there








11

might be a public good for doing something about that. Soil as natural capital? Maybe, maybe

not in the ordinary sense of the word. But at least we can keep that open. Is poverty itself a

public bad? Certainly lots of people prefer to live in a society where others are doing reasonably

well. I, however am a bit nervous about that -- tell you why in a minute. What about social

stability? Gladwin didn't tell a story about that, but I imagine she might have told a story about

people leaving the land, congregating around the edge of the cities and creating all kinds of

nuisances and disruptions to the supply of services, additional demands, etc. I don't know if that

happens in Africa. It certainly happens in some other continents and so that there might be a

public good in keeping people productive and in place where they are, rather than set these

streams of willy nilly migration going. So maybe; but it's risky.

Poverty and Social Instability as Public Bads

Now the reasons why. They've got to be formulated very carefully. The notion of

defining other people as public goods -- the idea that poverty in the Caribbean is a public good

to those tourists who enjoy observing it on a two-week vacation and therefore it ought to be

maintained at public expense is a little bit scary. Yet it could follow from treating people as

goods. So I think we ought to recoil from that one. Yet some of the impacts of loss of soil

fertility in Africa -- demands on services, losses of biodiversity, etc. -- can be thought of as

potential public goods and I think that's a useful way to go.

The question arises next to my mind is this. Let us assume that Gladwin is right and

something ought to be done about replenishing Africa's soil fertility and everybody is in this

room today because they know that something ought to be done. The questions arises: why do

we have to dress this up as some kind of extended micro economics? It perhaps might be








12

sufficient to say in fact that it's a good thing to go ahead and do it and that ought to be enough.

Why? Spending the last fifteen years interacting with biodiversity people has been a big help to

me. It's taught me that very few people see the world in quite the same way as welfare

economists do, as utilitarian consequentialists. We impose that sort of framework on everything

we do; and it's not economics unless it fits into that framework.

But there are lots of other folks out there who do see the world that way: champions of

various kinds and libertarians and contractarians and people who invent what seem to me to be

very far fetched stories starting in the notion of natural rights and whatever else. And there's two

ways, I guess, to think about the sort of pleuralism that emerges from that. One is is that there

is a stand-off between people who are consistently consequentionalists about everything or

Kantian about everything. There's certainly a literature; Bernard Williams is somebody writing

eloquently at the moment for that notion of pluralism. But there's another view as well, that is,

that we are all ourselves pluralist in some kinds of ways, and we draw upon different traditions

to answer different questions. I guess I go back to thinking about my childhood when I was

raised by rules. It was a revelation to me when I encountered a genuinely utilitarian teacher in

the tenth grade who said it's okay to wonder if the rules made sense. That was a big surprise

to me, because we weren't raised that way. So, there's a conversion process that turns us into

consequentialists -- economists -- and makes us want to put everything in that framework. But

the rest of the world doesn't necessarily do it and there is room, I think, for arguments that

something needs to be done to allow reasonably productive and prosperous farming in Africa at

the expense of people beyond that sector. That doesn't necessarily need a contrived economic

argument to justify it. I'm taking a raincheck on the degree of contrivance, but the public good









13

argument doesn't seem to hold water. Some of it is scary, I think, for reasons that have to do

with how we think about other people.

Finally, why does it seem important to make a welfare and efficiency argument for taking

care of what seems to be a serious problem? In about 1976 there was a series of revolutionary

laws enacted to deal with the management of America's national parks. They simply said that

we as a country would manage our forests by implementing efficiency-based rational planning,

textbook style. We would use the world's biggest mixed integer linear programming model and

we would optimize these forests, etc; and we would run this thing as a rationally planned benefit

maximization enterprise. By 1982, committees were in place to redefine benefits as a result of

this. And what happened? Very bad economics was done, officially in the name of the forest

service, to redefine benefits. The reason for that was that the commitment to maximization of

benefits was simply premature. The support for that really wasn't there. People started looking

at the outcomes from that and said, "This isn't right -- this isn't what we want. But since we're

committed to benefit maximization, we'd better go to work redefining benefits in such a way that

we'll get outcomes that are handleable."

A little bit of that is going on here, where we've got donor agencies that are committed

to imposing world prices right down to the local level of people who are substantially distanced

from world markets. And in some ways, we might pragmatically be forced to contrive an

efficiency-type argument to do something which very likely should be done for quite different

and thoroughly honorable reasons.










Comments by Andrew Schmitz,

Ben Hill Griffen Chair,

University of Florida

When I was asked to talk about fertilizer, I thought what I'd do is not talk about Africa

as much as talk about my own experiences with farming and fertilizer as well as my experience

on the board of the Potash Corporation of Saskatchewan, the largest potash producers in the

world. Recently we had a conference in Lucia, Saskatchewan. We have that every year and it's

called, "Farming for Profit." In one symposium was Grant Devine, who was on the board of

directors of a large fertilizer producer. His session had to do with competition in the fertilizer

industry, and his argument was that this industry was totally competitive and there had been no

money in the fertilizer business for years so that people went out of business. But I thought: we

have learned something about predatory pricing. Some firms exit the industry because other

firms drive them out and then they drive the prices right back up. What happens as a result?

The last day I was on the Potash board, not very long ago, after they had privatized the Potash

Corporation of Saskatchewan, potash shares were selling somewhere in the neighborhood of

seventeen dollars a share. This morning, these same potash shares are trading somewhere in in

the range of a hundred and twenty dollars a share. Now that is an amazing increase in the price

of a share of the Potash Corporation, from eighteen dollars to a hundred and some in the course

of three to four years.

Second thing is, if you take a look at the total demand for fertilizer worldwide, the large

growth in demand is obviously from India and China. And the largest growth by far is from

China; I think they have something like fifty percent of the import market now in terms of









fertilizers.

Third, with respect to fertilizer applications and prices, I still am totally confused about

the use of fertilizer, whether it be in Africa or Saskatchewan or Montana or wherever. Here I'm

thinking about our own farming experience in Saskatchewan, and more importantly, about the

work that Chuck Moss is doing with our son Troy Schmitz on precision farming. They're trying

to find out whether there's any benefits to precision farming with very specific applications of

fertilizer to different subplots of a field. They take a random sampling of a field and do an

average fertilizer response function, and then ask whether that is much worse than trying to do

fertilizer tests on each subdivision of each plot -- and then do fertilizer applications specific to

those subplots.

I guess I conclude the following: we don't have the foggiest clue what fertilizer response

functions are in any area of the world, never mind Africa.. The reason is that my family farms

on three farms in three different areas of Saskatchewan with three different soil groups. This

year, on some of the best land in Saskatchewan, we tried three different fertilizer rigs. We tried

fifty pounds, we tried a hundred pounds, and we tried a hundred and fifty pounds. If you people

came out there, I'll guarantee you that you could not see any difference in those fields. You could

see it from fifty to a hundred, but you can't see it from a hundred to a hundred and fifty. You

might see the difference at harvest time, but you can't see it visually in the field.

If we had applied some of the neighbor's rates of two hundred pounds, we would have

gone bankrupt this year, because we have two other farms which have been extremely dry.

Fertilizer there would have made crop yields worse, so that we would have been throwing our

money away on fertilizer use there; because even if we know how fertilizer responds when we









16

know the rainfall, we don't know how it would respond when we don't know the rainfall. These

production functions, in my opinion, just vary all over the map.

The thing that's even more disturbing is what I learned as a kid farming, that yields have

actually gone down in a large part of the world, even with heavy applications of fertilizer. Now

people think that's a startling fact, but it's supported by our farming experience. When I was a

kid, we could easily grow crops continuously and get somewhere between thirty-five and forty

bushels an acre with no fertilizer. Currently, if you put on heavy fertilizer in the same fields, you

may get thirty-five bushels. And also at one time, if you left the land idle for a year, land called

"summer-fall land," you didn't need to use any fertilizer at all to get good crops. Now we're

applying heavy fertilizer use, even on summer-fall land. That's the part of the story that's scary

to me; the uncertainty of fertilizer use is due not only to the impacts of variations in amounts of

fertilizer applied, but also to the impacts of soil degradation and soil fertility loss with continuous

cropping. As a result, we're going to have to add more and more fertilizer just to keep yields

constant. That's an amazing fact, given that this land was only broken up in the 1900's. So

what does this mean to Africa? It appears those soils have been cultivated for hundreds of years.

How can you maintain the quality of those soils? We've got a serious, serious problem of soil

degradation.

On this whole topic, until we solve these problems I question the applicability of

Economics 101. We say we know how fertilizer use changes relevant prices. But do we even

have a clue about the production function that we're talking about? From my experience in this

business, from a farming standpoint, from what I have seen worldwide, I really question this

whole issue about whether we really know much about how soils respond to fertilizer. But I'm








17

sure at Purdue or Indiana it's a whole different ballgame, that these people are much more

sophisticated and know much more about fertilizer responses than we do in the wheat lands of

Montana or Saskatchewan or maize fields of Africa.

Two more points. We recently did a book on Bulgaria on the topic of privatization in

Eastern Europe. And there, what really scared me was -- and I don't know what Africa's like,

but Ed Schuh's going to talk about that -- how could the Bulgarian farmers fertilize at the world

market price of fertilizer, when government capped the price of wheat at $2.00 a bushel? What

government policy was doing was charging farmers essentially the full price of fertilizer at the

international market price and then placing a cap on what they could export and at what price.

On the one hand government charged them the border price on fertilizer, and on the other hand

didn't allow the market price of wheat to adjust to the international market price. It essentially

squeezed them right out of the fertilizer market, because at $2.00 wheat, we all know you can't

use any fertilizer. With respect to fertilizer use in Africa, this means one also has to know the

pricing policy of the main commodities to get a feel for whether fertilizer can be applied at any

profitable price.

Finally, under these conditions, I can prove to you that you can subsidize fertilizer because

all I have to do is refer to our arguments for "the second best" spelled out in Chapter 6 of Just

and Schmitz's Applied Welfare Economics. I can prove to you that if you're in a world of

"second best," which in Africa it seems that you are, you can easily justify an international cost

sharing or subsidy of fertilizers.










Comments by G. Edward Schuh,

Orville and Jane Freeman Professor International Trade and Investment Policy,

University of Minnesota

Let me give you just a little bit of background of my involvement in Africa. Most people

tend to think of me as focused on Latin America and Brazil; but I've been working with the

Sasakawa Global 2000 project (SG 2000) in Africa now for about six or seven years, a project

that combines the agronomic genius of Nobel Peace Prize laureate Norman Borlaug with the

political skills of Jimmy Carter with the commitment to African development of the late Ryoshi

Sasakawa and his son. Carter really has an open door in Africa, because he's the only American

president who's ever set foot in Africa. In the 1980s, these three started what's basically a

technology transfer project that's now operating in twelve African countries. But they soon

realized they needed some policy advice and so they created a group that has a rather pretentious

title, Agriculture Council of Experts (ACE), and I've been chairing that since its beginning. Part

of our mandate is to put together policy papers, because among members of the SG 2000 board,

staff, and country directors, there's a thirst for information on what to do and why they should

do it. The first policy paper we put together was called, "Fertilizer Policy in Africa: Recurring

Issues and Recommendations" (Ndayisenga and Schuh 1997). It's fairly short, but it describes

policy recommendations that increase fertilizer use.

Our main theme is that if you want to increase fertilizer use, you must address the issue

of fertilizer profitability and a whole set of what we call barriers or constraints to increased

fertilizer use. A set of recommendations follow from that. I'm going to go through these

without a lot of elaborations, except for a couple of cases, mainly so we get a view of the broader








19

issues. The puzzlement about fertilizer use is that the low level of use is due to a large number

of factors; and implementation of any fertilizer policy requires tradeoffs between some of these

factors. I'll finish my discussion by dealing with some of these tradeoffs concerning the larger

issue of fertilizer subsidy.

First, let me start with the barriers to increased fertilizer use. First, the lack of

profitability in using fertilizer is due to unprofitable and unstable ratios between the prices of

fertilizers and product prices. That's been mentioned here a couple of times. If you look at any

of the current price ratios (of nitrogen fertilizer to maize, for example), you can sure see why

farmers don't use any fertilizer. And then if you look at the instability in the price range, you

can see why they don't spend a lot of time trying to learn how to use it, unless it's highly

subsidized.

Second, past dependence on heavy government intervention in the economy has led to

unstable supplies, inappropriate fertilizer mixes, and lack of timeliness in supplies for profitable

use. On the lack of relevance of fertilizer mixes, a lot of the fertilizer supplies have been the

byproduct of aid programs. That doesn't necessarily mean that the market really isn't useful, it's

that some companies are trying to get rid of unwanted fertilizer blends and sell them to the

agencies at lower prices. The United States is not the only country that's guilty of doing that.

Third, there is uncertainty about the responses to fertilizer due to unstable weather

patterns, lack of irrigation, and more importantly, unstable public policies. Andy touched on the

consequences of this uncertainty for farmers in his remarks. Africa doesn't have irrigation

systems, but has very little amount of irrigation and very unstable weather, even more so than

Saskatchewan.








20

Fourth, there is lack of knowledge on the part of farmers about the use of fertilizers.

African farmers implement all kinds of complex systems of multiple cropping and rotations of

numerous crops, staggering when thay plant the crop and that sort of thing. When they get down

to decisions about how much fertilizer to use, where to apply it, how to apply it, it really

becomes a very complicated issue.

The fifth barrier to increased fertilizer use is lack of sufficient distribution systems for

modem fertilizers that would facilitate delivery of input supplies to the farmers in a timely

manner. The sixth barrier is lack of appropriate fertilizer mixes for local conditions. The seventh

is lack of credit for both the small farmer and the wholesaler and retailer in the entire fertilizer

distribution system. The eighth barrier is lack of foreign exchange for importers to acquire

adequate and appropriate supplies; while the ninth barrier is lack of adequate research and

extension systems to generate knowledge about fertilizer use and to diffuse that knowledge to the

farm population.

The tenth and final barrier is an inadequate world transportation and communication

infrastructure to reach distant areas and to insure timely delivery. It's interesting how neglected

this issue is. People go to Africa and assume that there is a physical infrastructure there similar

to what there is in other parts of the world, and it's just not there. Subsequently, when we start

to look at the costs of getting fertilizer to the farms and getting the product back out, we're

talking about horrendous problems and escalating costs. Ultimately, the question boils down to

whether government wants to use fertilizer subsidies to offset some of those kinds of costs.

Policy Recommendations

We suggest eleven policy recommendations for reducing and eliminating these ten barriers.








21

I'm going to start with one that shouldn't surprise most of you: trade and exchange rate policies

are still very badly out of whack in most African countries, even though they had structural

adjustment reforms and programs in the 1980s. But if you start to look at fertilizer price, relative

to product price at the port, they're still very unprofitable -- even at the port. So that tells you

that something is wrong -- out of whack -- with exchange rate policies and trade policies.

Exchange rates, when you get down to it, are the most important price of the economy. If

government doesn't get those right, it's not going to be able to do much about the profitability

of fertilizer.

In addition, Africa still has rather large export taxes. Africa sort of specialized in export

taxes -- complications, if you will -- which limited their own farmers' access to international

markets. And of course that's what drives the internal prices -- the domestic prices -- down to

a very low level. Until you begin to get some of those policies right, you're not going to go very

far in terms of other things that you might do. If you try to offset all of that with subsidies,

which is really the way some of the subsidies are rationalized, it becomes a very costly process,

and right away the questions are raised about obtainability. How long can we continue to provide

those kinds of subsidies?

Second policy recommendation. Present trends towards the privatization of the economy

should be continued. It is imperative that a private distribution sector for fertilizer should be

developed and that government withdraw from this activity. So much of the fertilizer industry

has been in the public sector and is filled with people who have no sense of what agriculture's

like, or what farming is like, or even what the fertilizer market is like. And then the public

sector is dull and slow and unresponsive.








22

Third. Little can be done about the weather in the short run, but a great deal can be done

about unstable policy. Out of unstable monetary policy and fiscal policy one gets unstable

exchange rates. Out of that is created all this price uncertainty. Some of you have heard me say

that whenever I hear any economists talking about the weather, I always want to say they've gone

as far as they can go. They don't know what else to talk about. They ought to look at all of the

sources of the instability of the pricing; and it's not always the weather.

On the Need for Location-Specific Research/Extension

Fourth, we have a specialized recommendation on research that follows up on Andy's

point about precision farming. Expanded research efforts are needed to better understand sub-arid

soils and to solve the very specific problems caused by lack of knowledge of local responses to

the application of fertilizer. Similarly, expansion of extension efforts are needed in most sub-arid

African countries, to help farmers learn new production practices and more economic use of their

resources. There was a time when production economics first became very popular in the US,

and there were a lot of fertilizer trials done. A lot of fertilizer experiments were done so that you

could get at these production relationships. Quite a number of years ago, Glen Johnson did a

study where he tried to see what sense you could make out of these production relationships that

people were estimating. And it turns out you could make very little sense out of it. It accounted

for very little of the variance, and didn't have very much reliability. As near as I can tell, that

situation hasn't changed very much. The farmers in the Midwest know how to use fertilizer,

largely by trial and error, and learning how to figure out what works on their own fields.

The international agricultural research centers (IARCs) I've worked with are dominated

by agronomists and physical scientists, but research on soils often ends up being way down on








23

the list of priorities. And the truth of the matter is, we know very little about soils in most places

in the world. That is the case of the US also, we know very little here. A cubic foot of soil is

a very complicated piece of material. I've done a lot of work within the last six years in Bolivia,

and we know very little about these soils. We go out and talk a lot about what to fertilize and

how to increase fertilizer use, and we talk about which, when, where and how much; but we

don't know very much about it. Mainly because we don't understand very much about the

underlying soil. I don't know how many of you followed the case of development in the Cerrado

in northwest Brazil. It has huge areas of sub-arid soils; and what in the past they always felt was

a drought problem, a lack of water. But about five years ago, they discovered that there's a

problem in the soil that has to do with magnesium and the release of phosphorous that's been tied

up in the soil. And now, they can just make the desert bloom -- literally -- by adding fertilizer

and some lime and changing the acidity of the soil. You see my point. We tend to think that

increased agriculture output comes from the introduction of improved varieties; but the case of

northwest Brazil -- and this is very applicable to large areas of Africa as well -- shows that

underdevelopment can be caused by a soil problem, and the solution can be a technological

innovation produced by soil scientists who know the local soils.

Fifth recommendation: An efficient distribution system for fertilizer will emerge only if

the government withdraws from the sector and the use of fertilizer becomes profitable. Thus,

government parastatals that occupy space in the fertilizer distribution system should be phased

out quickly and macro-economics should be in line to make agricultural production profitable.

There's a whole set of issues involved here about trying to educate people in the private

distribution sector. We make a case where you can justify a strong extension program among








24

fertilizer distributors so that they know something about fertilizer values. In the process we can

teach them something about the risk and uncertainty that's involved in farming.

Sixth recommendation: we're reluctant to generalize about proper fertilizer mixes. That's

what people always want to know but it really varies so much from country to country and from

commodity to commodity. About the only sort of thing that we're willing to recommend is that

in general, preference should be given to high concentration materials, partly because of the high

transportation costs of fertilizer. Government can lower the transportation costs with high

concentration materials. But we also make the point that the fertilizer mixes have to reflect their

local nutrition deficiencies and their commodities.

The seventh recommendation has to do with credit systems. Imperfectly performing credit

markets are really a big issue in Africa and other parts of the developing world. There's hardly

any place in Africa where they have efficient financial intermediaries. Instead, government banks

take money appropriated by the government and channel it into the financial system; and most

of you know who gets that credit when it goes out that way. What are needed are major reforms

in the banking system that create financial intermediaries and institutions that mobilize the savings

and make it available to farmers. Even the World Bank, where I was director of agriculture for

three years, never learned how to create financial intermediaries. They'd preach a lot about it,

but actually knowing how to go out and do it is something else. About the best institutions we

have are the cooperatives and credit unions that mobilize savings from the local farmers and then

provide a mechanism for reinvesting it back. To do something similar to that for the fertilizer

distribution sector is more complicated. Again we need to examine the barriers and constraints

that the fertilizer distributors have. They can't get access to credit either. So again, there is









25

another whole set of institutional innovations badly needed.

We make a point about how to get more realistic exchange rates for our eighth

recommendation. And you all know what those are. Government needs to get trade policy right,

first. It needs to get monetary, fiscal policy at least stabilized, so that they become neutral. And

then with a flexible exchange rate, that's probably about as good as it can be. Government is not

going to eliminate all of the instability generated from the foreign exchange markets, but if it

neutralizes fiscal and monetary policy and gets trade policy at least uniform across sectors, it can

do a lot to eliminate exchange rate distortions -- and at the same time, to stabilize this most

important macro price.

Our ninth recommendation concerns lack of infrastructure in Africa. I think one of the

tragedies of the developing countries is that when the bank got heavily into stabilizing macro

prices and policy reform, it turned away from longer term investments in physical infrastructure.

Consequently, the highway systems in Africa are really non-existent; railroad systems are non-

existent; communication sectors are non-existent except for a few cellular units. It's hard to

imagine that Africa is going to go very far until it gets a halfway decent physical infrastructure.

And it's got a long ways to go. Tenth, we recommend more long-term investment in agricultural

research and extension systems. I think this recommendation is obvious, because the stock of

location-specific knowledge about agriculture in African countries is very, very limited.

Finally, we talk specifically about the subsidy issue because you can hardly talk about

fertilizer or fertilizer policy in Africa without talking about subsidies and the enormous pressure

on African governments to have subsidies. Norman Borlaug thinks I'm just as crazy as I can be

for being cautious about fertilizer subsidies. He feels if he's going to diffuse his varietal








26

improvements, Africa has to have fertilizer use and the only way to get fertilizer use is to

subsidize it. It's a little bit like what Alan Randall said; "If you think that's what you need to

do, just do it." Part of the problem, however, has been that fertilizer subsidies in the past have

not been supplemented by government investments in infrastructure, institutions, and policies that

reduce transportation transaction costs and increase efficiency in the input and output markets

systems, thus permanently reducing farm level fertilizer prices. I conclude that it's both more

equitable and efficient to use scarce development resources to reduce or eliminate these barriers

or constraints to the wider use of fertilizer. Fertilizer subsidies should be conditioned on

investments that reduce the structural impediments to increased fertilizer use in the future.

At the same time, I must confess to a certain degree of ambivalence on the whole subsidy

issue. There's all kinds of reasons why you might need subsidies. Eventually, however, the

question comes up, what are the tradeoffs? If government uses its scarce development resources

to subsidize fertilizer in the short run, it has to be at the expense of longer term investments that

eventually would take care of it by lowering fertilizer costs in the long run. I don't find the

answer to that question at all easy. And the thing that I would add to Alan's comment is what

we as economists can contribute to this debate is to look carefully at the tradeoffs and estimate

just how much long-term physical infrastructure versus how much of the domestic fertilizer

industry can and should government subsidize. How much agricultural research can government

provide if it's also subsidizing short-term fertilizer benefits that nobody would pay for privately?

I leave you with that question.








27

Notes

'It is still cheaper, even at current price ratios, for a maize farmer whose own labor is

costless to her to buy fertilizer and produce her own maize for home consumption than it is to

buy it from a private or public trader (Hildebrand, personal communication).

2Indonesia's implicit subsidy on fertilizer is still 35 percent and on irrigation 75 percent.

Eicher concludes that "a fertilizer subsidy can be justified for farmers who are unfamiliar with

it, to offset risk, and to substitute for a weak or nonexistent credit program, especially for

resource-poor farmers" (Eicher 1995:813).

3An example of free grants of fertilizer is provided by the DRIP and SIP inputs programs

in Malawi in which 32,000 tons in 1994/95 and 23,000 tons in 1995/96 were given to farmers

following the catastrophic drought in 1993/94 and the collapse of the credit system in 1992/93.

4Unfortunately, for reasons we explore elsewhere, in some African countries such as

Malawi, safety net programs will be needed for 40 percent of the rural population for the next

30 to 60 years (Gladwin and Thomson 1997). For a very poor country, this is no small feat!

'Smaling (1993) has estimated the depletion rates of soil nutients as 22 kg/ha/yr for

nitrogen (N), 2.5 kg/ha/yr for phosphorus (P), and 15 kg/ha/yr for potassium (K).










References

Adams, Dale W., and J.D. VonPischke. 1995. Microenterprise credit programs: deja vu. World
Development 20(10): pp. 1463-70.

Benson, Todd. 1997. The 1995/96 fertilizer verification trial Malawi. Report by Action Group
I, Maize Productivity Task Force, Ministry of Agriculture and Livestock Development,
Government of Malawi, Lilongwe, Malawi.

Bumb, B.L., J.F. Teboh, J.K. Atta, and W.K. Asenso-Okeyre. 1996. Policy environment and
fertilizer sector development in Ghana. Paper presented at the National Workshop on Soil Fertility
Management Action Plan for Ghana, 2-5 July. Efficient soil resources management: A challenge
for the 21st century, Cape Coast, Ghana. Mexico City: Sasakawa Africa Association.

Chege, Michael. 1997. Paradigms of doom and the development management crisis in Kenya.
Journal of Development Studies 33 (4): 552-567.

Eicher, Carl K. 1982. Facing up to Africa's food crisis. Foreign Affairs 61(1): 151-174.

Eicher, Carl K. 1995. Zimbabwe's Maize-Based Green Revolution: Preconditions for Replication.
World Development 23(5): 805-818.

Gladwin, Christina H. 1992. Gendered Impacts of Fertilizer Subsidy Removal Programs in
Malawi and Cameroon. Agricultural Economics 7: 141-153.

Gladwin, Christina H. 1996. Gender in Research Design: Old Debates and New Issues.
Achieving Greater Impact from Research Investments in Africa. Steven Breth, ed. Mexico City:
Sasakawa Africa Association.

Gladwin, Christina H. 1997. "Targeting women farmers to increase food production in Africa.
Women, Agricultural Instensification, and Household Food Security, S. Breth, ed., pp. 61-81.
Mexico City: Sasakawa Africa Association.

Goldberg, Jeffrey. 1997. Their Africa problem and ours. New York Times Magazine, Section
8, March 2: 34-77.

deJanvry, Alain. 1981. The Agrarian Question. Baltimore: Johns Hopkins University Press.

Just, Richard, and Andrew Schmitz. 19 Applied Welfare Economics. ??

Khandker, Shahidur R., Baqui Khalily, and Zahed Khan. 1995. Grameen Bank: Performance and
Sustainability. Washington, D.C.: The World Bank.

Kennedy, Paul M. 1983. Preparing for the twentieth century: winners and losers. New York:










Random House.

Leonard, David. 1991. African successes: four public managers in Kenya's rural development.
Berkeley, CA: University of California Press.

Ndayisenga, Fidele, and G. Edward Schuh. 1997. Fertilizer Policy in sub-Saharan Africa:
Recurring Issues and Recommendations. ACE Agricultural Policy Series 1. Minneapolis:
Humphrey Institute of Public Affairs.

Peters, Pauline, and M.Guillermo Herrara. 1989. Tobacco Cultivation, Food Production, and
Nutrition among Smallholders in Malawi. Agricultural Commercialization, Economic
Development, and Nutrition, eds. Joachim VonBraun and Eileen Kennedy, pp. 309-327.
Baltimore: Johns Hopkins University Press.

Sachs, Jeffrey. 1997. The limits of convergence. The Economist, June 14: 19-22.

Sanchez, Pedro, A.M. Izac, R. Buresh, K. Shepard, M. Soule, U. Mokwunye, C. Palm, P.
Woomer, and C. Nderitu. 1997. Soil fertility replenishment in Africa as an investment in natural
resource capital. Replenishing Soil Fertility in Africa, R. Buresh, ed. Indianapolis: Special
Publication of the American Society of Agronomy.

Sanders, John. 1997. Developing technology for agriculture in sub-Saharan Africa: evolution of
ideas, some critical questions, and future research. Paper presented at the International Food
Policy Research Institute, Washington, DC, June 5.

Smale, Melinda. 1995. Maize is life: Malawi's delayed Green Revolution. World Development
23:819-831.

Smaling, Eric. 1993. An agroecological framework for integrating nutrient management, with
special reference to Kenya. PhD Thesis, Agricultural University, Wageningen, Netherlands.

Thomson, Anne, and Manfred Metz. 1997. Implications of Economic Policy for Food Security.
Rome: Food and Agriculture Organization.

Timmer, C. Peter, Walter P. Falcon, and Scott Pearson. 1983. Food Policy Analysis. Baltimore,
MD: Johns Hopkins Press.

Tomich, Thomas P., Peter Kilby and Bruce F. Johnston. 1995. Transforming Agrarian Economies.
Ithaca, N.Y.: Cornell University Press.




University of Florida Home Page
© 2004 - 2010 University of Florida George A. Smathers Libraries.
All rights reserved.

Acceptable Use, Copyright, and Disclaimer Statement
Last updated October 10, 2010 - - mvs