The Supply of Inorganic Fertilizers to Smallholder Farmers in Uganda: Evidence for Fertilizer Policy Development

Abstract

Inorganic fertilizer is one of a handful of agricultural technologies that has immense potential for raising the productivity of poor smallholder farmers, enabling them to increase income, accumulate assets, and set themselves economically on a pathway out of poverty. The very low prevalence of fertilizer use by Ugandan farmers — well below 5 percent — is evidence that farmers find it difficult to access fertilizers for their crops at a price that will allow them to obtain sufficient and reliable returns from their investment in fertilizer.

This paper presents the results of a broad study of fertilizer supply to smallholder farmers in Uganda that was done to assess whether the taxes (explicit or implicit) that are applied at various points along the fertilizer importation and marketing chain or the absence of key public goods and services reduce the access that smallholder farmers have to fertilizer. The study involved a review of the literature of fertilizer supply, demand, and use; interviews with key participants in fertilizer importation and marketing in Uganda; and two surveys — one with farmers and the other with input suppliers — in four farming areas where fertilizer is used more than is the norm for the country as a whole.

Our broad finding is that the government of Uganda has taken several actions that have been conducive to improving farmer access to fertilizer. Over the past 10 to 15 years, fertilizer importers and traders have seen a growing market for inorganic fertilizers. Moreover, the relatively small margins that fertilizer traders obtain provide some evidence that a generally competitive market for the supply of fertilizers is now in place within Uganda. However, in some areas government inaction is having an adverse effect on efforts to increase use of fertilizer. The most important of these missing public goods are not specific to fertilizer but are implicated in broad efforts for increased economic growth in Uganda. However, the government of Uganda should undertake several fertilizer-specific initiatives to enhance farmer uptake: Overcome information constraints: for fertilizer traders — on the regulatory regime within which they must operate; for smallholder farmers — on the proper agronomic use of fertilizer on specific crops under specific agroecological conditions, and on the proper economic use of fertilizer under changing input and output market conditions so that they can derive reliable profits from their use of the technology; Reform regulations. A considerably lighter regulatory regime than what is now in place would allow more fertilizer into Uganda, resulting in lower costs for farmers; Exercise a cautious attitude toward undertaking direct interventions to promote increased fertilizer use by Ugandan smallholder farmers. Strengthening agricultural output markets is as important in this regard as undertaking fertilizer-specific initiatives.

Keywords: fertilizer supply, agricultural input policy, Uganda, East Africa, Africa South of Africa, Africa