How Kenya can boost agricultural productivity with fertiliser subsidy

Workers arrange bags of fertilizer.

Photo credit: File | Nation Media Group

Kenya has a long history of implementing fertiliser subsidy programmes aimed at supporting smallholder farmers.

These initiatives have evolved over the years, from targeted programmes for resource-poor farmers to broader, non-targeted schemes like the the National Fertiliser Subsidy Programme (NFSP) implemented in 2022 to boost food production and stabilise prices in the wake of global supply chains disruptions related to the Russia-Ukraine conflict and the Covid-19 pandemic.

The NFSP provides subsidised fertiliser to all registered farmers, with the quantity allocated based on the size of registered land holdings.

To assess the impact of the NFSP on farm productivity, researchers collected data in main maize producing counties and conducted appropriate econometric analysis to isolate the effect of fertiliser subsidy on maize yield by accounting for other factors such as seed, rainfall, access to credit, irrigation, gender, education, etc.

Results of analysis showed that the NFSP significantly enhances maize yield among participating farmers, with a one percent increase in subsidised fertiliser usage leading to a 5.0 to 7.0 percentage point yield increase.

However, various challenges hinder effective participation, including financial constraints, information gaps resulting in late registration or lack of awareness about the program, and logistical challenges such as long distances to the distribution centers.

Additionally, disparities in adoption exist based on factors like land size, household characteristics, and education levels. Farmers with larger landholdings are more likely to purchase subsidised fertiliser, while those located farther from pick-up points and less educated farmers are less inclined to avail themselves of the subsidy. Furthermore, the absence or delay of SMS notifications from the government significantly affects the uptake rate of the fertiliser subsidy.

The exclusive distribution of subsidized fertiliser through the National Cereals and Produce Board at a lower cost than the private sector input dealers pose a risk of crowding out the private sector.

The findings highlight the importance of addressing barriers to participation to maximise the impact of fertiliser subsidy programmes. Policymakers should focus on improving access to information, enhancing financial support mechanisms, and optimising distribution networks.

By fostering sustainable agricultural growth and inclusive development, these programmes can contribute to poverty reduction and economic transformation in Kenya.

Moving forward, targeted interventions aimed at addressing barriers to participation and to efficient use of fertiliser are essential for maximising the potential of fertiliser subsidy programmes in promoting inclusive and sustainable agricultural development.

For economic sustainability, the program design should address concerns about crowding out the private sector from the fertilizer value chain. In addition, for a longer-term perspective and to ensure that scarce public resources are used wisely, it is important to compare the benefits of the program against its costs. This would entail conducting a detailed cost-benefit analysis of the program.

In preparation for the Financing Agriculture Sustainably (FINAS 2024) Conference slated for March 27th and 28th, a pre-conference dialogue themed "Combining short-term response and long-term vision: Rethinking the approach to fertilizer subsidies" is scheduled.

Hosted by GIZ, IFPRI, and the CGIAR Research Initiatives on National Policies and Strategies and Excellence in Agronomy in partnership with the Ministry of Agriculture and Livestock Development, this event will delve into Kenya's fertilizer subsidy program and strategies for achieving longer-term soil health objectives outlined in the Agricultural Soil Management Policy 2023.

Bringing together policymakers, private sector representatives, farmer organizations, and researchers, the dialogue aims to share experiences, lessons learned, and research-based findings.

The writer is a Research Fellow at the International Food Policy Resesarch Institute.

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