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Tanzania fertilizer firms to benefit from policy shiftqrcode

Nov. 6, 2012

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Nov. 6, 2012
Overhauling the current fertilizer subsidy policy in Tanzania is expected to benefit companies as the newly launched study into why the status quo has not succeeded, plans to work on the existing gap on information flows.
According to the Assistant Director of Agricultural Inputs at the Ministry of Agriculture, Food Security and Co-operatives, Dr Mshindo Msolla, there are currently two areas where lack of information with regards to fertilizer use results in either higher costs or inefficient use of inorganic fertilizer for smallholder farmers.
Over the weekend that a new study with the objective to improve advisory services on fertilizer-use would increase fertilizer usage. It would also facilitate private- public partnership forums for dialogue with policy makers on alternative delivery and financing mechanisms for the subsidy.
“First, farmers generally have very limited scientific information on the proper agronomic use of fertilizer on their crops in the particular agro-ecological conditions under which they farm,” he said. He said that there has generally been a weak agricultural extension system, mainly caused by implementing the structural adjustment plans whereby the agricultural extension staff were mostly affected.
“Thus to achieve the policy objective, the government needs to be sensitised on the need to allocate more funding to the delivery of fertilizer recommendations through the formal extension services based on evidence of the potential benefits,” he said. In a new two and half year study therefore, they intend to evaluate the current voucher system, returns to extension, fertilizer price build up, impact of removing VAT on fertilizers and a feasibility study of scaling up local fertilizer production.
He said the study follows preliminary evidence that shows the current fertilizer subsidy system has not yet benefited the ultimate target of the programme -- the smallholder farmer. Dr Msolla said the issues to be covered in the new policy study include; how to improve implementation of the fertilizer subsidy to be handled by the Economic and Social Research Foundation (ESRF), improvement of investments in extension and advisory services on fertilizer-use to be handled by the Ministry of Agriculture and the integrated soil fertility management technologies.
The Research on Poverty Alleviation (REPOA) will examine and document evidence for cost reduction in fertilizer policy. Participants at the inception workshop on promoting enabling soil health environment, urged the government to take several issues such as gender mainstreaming more seriously, arguing that some elements of the subsidy programme have captured elite farmers, leaving out poor farmers who the government targets in the programme.
The programme involves soil health coordinators, Regional Agricultural Officers, Director of Public Prosecution and African Green Revolution for Agriculture (AGRA). Dr Msolla said the research would look at such issues like historical data and how the government has been deploying extension officers to several parts of the country.
He said some of the issues affecting low income farmers were fertilizer pricing, access to fertilizer and lack of information on the availability of various types of fertilizer. He said they would do this by revisiting the roles of extension officers, review the cost structure of fertilizer and how it arrives at the Dar es Salaam port to when it reaches farmers in rural areas.
According to him, it is understood that 35 per cent of the cost of the fertilizer is accrued from transport costs from the port including delays at the same. “In some countries, such people are followed up and helped. Thus we don’t want a system that will leave them behind.
Once you leave this group behind, even through policy, then you will have excluded them from development,” he said. Dr Msolla explained, however, that fertiliser use in the country was very low at about nine kilogrammes per one hectare while the current annual nutrient depletion rate is estimated at 41 kilogrammes nitrogen, four kilogrammes phosphorous and 31 kilogrammes potassium per hectare.
The government, he said, is currently working on a National Fertiliser Strategy designed to improve accessibility to and affordability of fertilizer use by reducing procurement and transaction costs, thus, improve the value chain development of both staple and non-staple commodities.
Dr Msolla said the strategy also aims at ensuring fertilizer access, affordability and incentives to farmers through reintroduction of fertilizer subsidy, establish fertilizer buffer stock, strengthening of agricultural inputs trust fund and review taxes and tariffs on agricultural input. 
They would also make studies on evaluation of the voucher system, returns to extension, fertilizer price build-up, the impact of removing VAT on fertilizer and the feasibility study on scaling up local fertilizer production. The outcome of the study will affect the next soil health policies in the country to improve productivity, he said.
Early this year, a multi-national fertilizer company, Yara, started building a 20 million US dollars (about 30bn/-) warehouse at the Dar es Salaam Port and the Manyara-based Minjingu Fertilizer Company is also currently producing fertilizers.
Source: Daily News