Monday, April 21, 2008

A place at the table: What value for fertilizer in Africa’s green revolution?

From the Guardian:

The underinvestment and neglect of African farming go back to colonial times, but became increasingly apparent as the western development agenda gathered force. In the 60s and 70s agriculture was squeezed to pay for industrial development. But with the arrival of structural adjustment packages - deregulation, trade liberalisation and sharp cuts in state expenditure - imposed by the west in the 80s, the damage began to bite. The Washington consensus ruled that, freed from state intervention, the market would stimulate African agriculture, explains Steve Wiggins, a research fellow at the Overseas Development Institute. State funding was stripped out of state agricultural extension services, research and development, and farmers' marketing and credit facilities - all elements critical to Asia's green revolution.

The effect was catastrophic. Without improved seeds and availability of credit for fertiliser, productivity limped along. At every turn, farmers were knocked back. Kevin Watkins, of Oxford University, points out that where they did manage to improve yields, they faced exorbitant costs for transporting goods to market because of inadequate rural roads. Often when they got to market, they found it flooded with imports dumped by the west.

Through the 90s, aid flows began to increase as anxiety grew about how African development had stagnated. But the orthodoxy that the state had a role only in health and education - not in fostering economic growth - persisted. Donors were hostile to investment in agriculture: between 1990-02 and 2000-02 aid was rising but the amount going into developing agriculture dropped by 43%. It currently amounts to only 4% of all development assistance to the continent. Malawi in 2006 was the case study that proved the orthodoxy wrong: to avert famine after a catastrophic harvest, the government subsidised seed and fertiliser. The results were a good harvest, thousands of lives saved, and continuing economic stability.

One of the untold stories about Malawi’s now infamous move to reintroduce fertilizer subsidies is the fact that small farmers were being slowly squeezed out because global fertilizer prices were slowly, but steadily increasing for most of the decade. By at least one account, in 2007 alone, prices skyrocketed 200 percent.

Fertilizer, our friend
African farmers use much lower levels of chemical fertilizers than farmers elsewhere, even though the continent’s fertilizer use has doubled since 1970. According to a study by Oumou Camara and Ed Heinemann, up through the mid-1980s, national governments delivered fertilizer inputs, often as loans, which farmers repaid at harvest time. To increase farm productivity, governments also began subsidizing these crop inputs. As pointed out above, when structural adjustment policies went into effect across sub-Saharan Africa, governments were forced out of the fertilizer business – subsidy programs were thrown aside as well as state-run distribution systems. However, the private sector could only pick up fertilizer input distribution chains in a number of states, resulting in the overall decline of the crop manures.

Today, the situation is different. Each country more or less has its own sector that purchases and distributes products depending on weather conditions, credit availability, etc. In some more urban countries, farmers can strike deals directly with producers and sellers. However, small farmers in remote areas remain under served by the free market system.

With population density increasing and many of Africa's farmers continuing to farm single cash crops, much of Africa’s soils today lack the nutrients they once had, degrading farmland and further depleting agriculture production – all in the face of increasing population.

What keeps prices high? Up to 90 percent of potash and nitrogen fertilizer sprayed on African crops is imported; although six African countries produce phosphate fertilizers. We can blame high transport costs and increased production costs, which have lead to African farmers running deficits to pay for fertilizers while crop yields have stagnated.

Another problem, until recently, was falling world food prices. When prices do increase, fertilizer use rises, creating demand and further augmenting costs. The problem remains that many countries have a limited number of suppliers, which keeps supply low and prices high, especially when factoring in transportation costs farmers must pay to go and find the products.

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