Ian has provided an excellent summary of the issues: how do we chart a way forward?

Picking up on some of the points Ian has made, I would like to put forward five starting points which I suggest have wide but of course not universal validity:

1. In most situations complementary use of both inorganic and organic fertilisers will be needed to promote soil health and fertility
2. The critical issues for both organic and inorganic investments are profitability and affordability. Profitability involves soil fertility investments (of labour and working capital) yielding a return greater than their cost (allowing for seasonal interest rates and opportunity costs). Profitability depends upon farmgate input and output prices, input effectiveness (in terms of crop response), and risks (of price changes and low yields). Affordability depends upon farmgate input prices, opportunity costs of seasonal labour, working capital, and access to and costs of seasonal credit. Problems of both profitability and affordability of soil fertility investments are often compounded by inequity and insecurity in land tenure and in gender roles, rights and responsibilities.
3. Soil fertility for the production of staple foods is of critical importance but also very challenging. Around 50% of African farmers are poor net buyers of food. Investments in soil fertility may be more profitable for these farmers than for surplus producers, as they value staple production at consumer purchase prices – but their soil fertility investments are critically constrained by major affordability constraints. Surplus producers may face lower affordability constraints than poor deficit producers, but since they earn lower farmgate sales prices, the profitability of soil fertility investments is lower, particularly in good years. Risks of low yields and bad years with high prices encourage low input subsistence production, but risks of low prices in good years discourage investments in high input surplus production. The result is large amounts of land and labour locked into low productivity staple cultivation. This reduces farm incomes, and this constrains demand for local non-staple products (livestock products, horticultural products) and for local non-farm goods and services.
4. The need for large scale solutions to diverse problems suggests market mechanisms for matching supply to diverse demand. However affordability and profitability problems in staple food production lead to (and are maintained by) low level traps inhibiting the development of inorganic input markets (with low volumes and small transactions raising delivery costs, risks and margins), while supply of and demand for higher value local horticultural and animal products (which could otherwise boost agricultural productivity, input market development, and organic systems) is itself constrained by low staple productivity. Credit market failures are a critical feature of this, but microfinance initiatives are markedly absent from poor, low staple productivity rural areas.
5. High food and fertiliser prices exacerbate these problems. Although high food prices should stimulate profitability of staple production, they also increase the affordability problems of the 50% of African farmers who are poor net food buyers, and depress demand by these people for non staple products and non-farm goods and services. High fertiliser prices lead to increased affordability problems for surplus producers as well.

Given these very difficult starting points, how can soil fertility investments, agricultural productivity, rural incomes and poverty reduction advance?

Historically large scale credit and input subsidies with output price stabilisation and heavy extension emphasis on high input packages underpinned both the Asian Green Revolution with its subsequent pro-poor growth  and dramatic increases in fertiliser use and maize yields in various countries in Africa in the 1970s and 80s. These gains were achieved at very significant cost and in Africa could not be sustained without continued donor support, which was not forthcoming. There has been widespread recent interest in the use of smart input subsidies, most notably in Malawi from 2005/6. Much can and must be learnt from the Malawi experience, which demonstrates both the potential for such subsidy programmes and their weaknesses – potential and weaknesses as regards both the technical aspects of soil, market and subsidy management and inherent political economy paradoxes.

Recent growth in fertiliser use on maize in Kenya has followed a very different path. Lack of government intervention in a dynamic fertiliser market supplying large and small scale cash crop producers and large scale maize producers (in a protected and relatively stable maize market) has attracted private sector investment (by both national and international firms) and fostered competition and economies of scale. This, with reduced road haulage costs, has both pushed down importer and distributor margins and (with judicious donor support) stimulated a network of small agrodealers selling small fertiliser packs in rural areas – to both cash crop and maize producers.

There are major questions about the wider applicability, strengths and weaknesses of different aspects of both these models: how can their complementary strengths be exploited, and what are the necessary and sufficient conditions for their different elements’ success? The common challenge is how to foster stable conditions that promote increasing profitability and affordability for both farmer and private input supplier investments promoting soil fertility in both staple and cash crop production. This has to be linked to the need for rapid improvements in food security and incomes of poor rural people, and for more emphasis on complementary organic soil fertility investments.

Unfortunately high global food and fertiliser prices undermine both these models. In the first case they increase the costs of subsidies while at the same time reducing subsidies’ ability to drive wider growth and investment through lower food prices. In the second case lower cash crop profitability (from lower price increases in traditional export crops as compared with food and fertiliser prices) and higher fertiliser prices will increase affordability problems and depress growth in input demand – and hence depress input supplier investment incentives. How much is the increased relative attractiveness of complementary organic soil fertility investments and hence greater incentives for such investments a silver lining in these challenging conditions? These of course also face market, technical and political economy challenges.

Andrew Dorward, Professor
School of Oriental and African Studies, London
andrew.dorward@soas.ac.uk

References:

Minde, I., et al. (2008) Fertilizer Subsidies and Sustainable Agricultural Growth in Africa: Current Issues and Empirical Evidence from Malawi, Zambia, and Kenya

http://www.aec.msu.edu/fs2/responses/ReSAKSS_Fert_report_draft.pdf

School of Oriental and African Studies, et al. (2008) Evaluation of the 2006/7 Agricultural  Input Supply Programme, Malawi: Final Report. https://www.future-agricultures.org/pdf%20files/MalawiAISPFinalReport31March.pdf
Dorward, A.R. and C. Poulton (2008) The Global Fertiliser Crisis and Africa, https://www.future-agricultures.org/pdf%20files/brieffertilisercrisis.pdf
Poulton , C. and A. Dorward, (2008) Getting agricultural moving: role of the state in increasing staple food crop productivity with special reference to coordination, input subsidies, credit and price stabilisation, Paper prepared for AGRA Policy Workshop, Nairobi, Kenya, June 23–25, 2008.
Scoones, I. (2008) Policy frameworks for increasing soil fertility in Africa: debating the alternatives. https://www.future-agricultures.org/soilfertility_main.html