Increasing Soil Fertility in Africa: Indispensable but Insufficient

Solving soil fertility management via increased fertilizer and organic inputs is an indispensable but insufficient element of agricultural and rural development in sub-Saharan Africa (SSA).

From my recent research findings I find that suggest that biophysical factors, significantly affects the economic returns to fertilizer inputs. Some farmers cultivating more degraded soils may find it unprofitable to invest in soil nutrient inputs, not necessarily because the fertilizer/crop price ratio is too high or due to credit, information or risk constraints, or because of supply-side impediments, but because marginal yield response to fertilizer application is low on soils that have already undergone serious degradation, suggesting soil fertility mediated poverty traps. Thus using the ‘indispensable but insufficient’ as a key principle, it is possible to outline why taking a broader focus on the soil fertility problem stands a better chance of success. This broader approach will provide complementary (and sufficient) conditions to buttress these programs as part of a broader rural economy.

In this debate I am most interested in the bullet point that asks: What happens when there is no market – or when market mechanisms don’t reach certain places or people?. In my experience, I find that people involved in Agricultural development often look at the process of agricultural development as that of transforming low-productivity subsistence farms into ‘small-scale business firms’ producing and selling some agricultural product for own consumption, sale or both and at the end of the day generating incomes and profit.  I use the term ‘business firm’ because to achieve the kind of increases in the use of fertilizers and other labor intensive soil fertility investments these investments must provide adequate profit or financial returns for individual farmers and for society these investments must also be economically sensible especially where public resources are to be expended. How realistic is it to aim at turning millions of subsistence farmers into businesswomen and men?

The conditions which have made investments in soil fertility inputs (SFI) to become both financially and economically unremunerative (and hence the preponderance of subsistence modes of production) have well been documented which I broadly summarize as follows:

• Lack of physical and market infrastructure which has stifled the development of commercial fertilizer supply networks.

• The preponderance of low value agricultural enterprises creates high input-output price ratios making their use infeasible.

• Lack of requisite financial capital (associated by missing credit markets) to invest in SFI even if such investments offer decent returns.

Therefore, the outcome in many parts of sub-Saharan Africa (SSA) are exactly as predicted by basic tenets of microeconomic theory. These conditions reflect rational responses of economic players in SSA’s agricultural sectors to unfavorable input-output prices for farmers and for potential fertilizer dealers, the resulting thin input markets make fertilizer merchandizing an unprofitable proposition at various levels, hence the low supply of fertilizers.

In order to develop key policy principles for soil fertility recapitalization we need therefore to look more keenly at rural household goals and incentives. This is because incentives should be at the heart of efforts to increase investments in SFI:

• Is food self sufficiency an overriding incentive for all or just some households? Does food self sufficiency translate into adequate household incomes?

• Are there rural households in SSA who can solely rely on agricultural markets for their food supply through earning income in rural and peri-urban labor markets or through production of non-staple commodities including livestock products?

• What might the optimal balance between partly supplying own food and partly relying on agricultural markets for food look like?

Below I sketch three scenarios with attendant policy foci in a way that I believe will broaden the approach to solving soil fertility problems and rural development.

• Households in areas with little or no reach to markets

In simple terms, these places are cut off from national markets by reason of lack of transport and communication infrastructure or their economic bases have no link to the broader national or regional economies.  In the former case, neither state nor non-government actors can do anything about low supply of fertilizers until there is infrastructure in place to enable commercial or publicly supported delivery.  Self provision of food in these environments may be high on the household’s agenda and should therefore be a legitimate concern for public policy.

In the latter case it is apparent that there is no realistic way of increasing food production without opening up these areas and linking them to the wider world. Will that require increased food production with attendant increases in the use of SFI? Will other natural resource based economic activities such as forestry, livestock production or fishing (which may require more natural resource management than external fertilizers) develop?

Key Policy Principle: If there are realistic chances of increasing the use of SFI excluding fertilizers (and that is a big ‘if’) then these may offer the best chance in the short term for improving soil fertility and food production. Focus on the natural resource management (NRM) aspects of SFI to promote local production of food and inter-household trade within the region may be the most feasible in the immediate term. The most important adjunct is to integrate these areas to national economies by bringing in infrastructure investments in order to allow the importation of food and exportation of niche products from these areas.

The process may lead to these areas joining category number 2 and eventually category 3 below with attendant policy focus.

• Households in areas with some (moderate) market access.

Households in these regions have some rudimentary access to local labor and agricultural markets. These markets provide some employment opportunities but not sufficient to make them rely solely on labor incomes and agricultural markets for their food consumption. For these households, the greatest benefit will be adequate self-provision of (and perhaps even self sufficiency in) basic foodstuffs. If this can happen and these households are able to spare some labor for off-farm income generation there will be a significant dent on poverty.

Key Policy Principle: Focus on infrastructure investment and ‘Smart Subsidies’ until such a time that  these areas are fully integrated into the national and global economies leading to expansion of economic opportunities and less reliance on subsistence economic activities and more on employment in high-productivity agricultural production as well as in alternative sectors.

• Households in areas with good (adequate) access to markets

These areas are on average likely to be situated in high potential agro-ecozones which is why infrastructure and markets have developed in these areas. These are also the same areas where input use are likely to be above national average even if not necessarily at par with international averages in similar areas outside SSA. Households in these regions may have greater off-farm employment opportunities and therefore can reasonably rely on local agricultural markets for their food supply. These areas also offer the greatest opportunity for expanding agro-dealer networks. These regions should receive as much attention in terms of fertilizer programs and policies as the low potential areas. Some may worry that such an approach may stretch public resources too much leading to perhaps ‘anti-poor’ outcomes. I disagree. If national policies lead to increased commercial food production in high potential areas and hence lower food prices, the greatest beneficiaries will be the poor households who rely on markets for their food production.  There will always be households for whom own production will be a better alternative. For these I have outlined key principles in category 1 and 2 above.

Key Policy Principle: The chief policy principle in these zones should be increased use of fertilizer to achieve productivity levels at par with international levels while ensuring environmental sustainability. Any macroeconomic policy lever which can be used to reduce fertilizer costs and increase its supply should be fully exploited.

Summary
A generic focus on soil fertility management will fail to generate the needed response from farmers or even achieve economic and equity goals unless there is adequate compartmentalization of the problem. It is apparent that there are households and regions where the most economical approach is to enable households use just enough fertilizers and other SFI to achieve a degree of household food self sufficiency and to sustain the soils for continued household food supply. These households generate extra incomes from labor markets. In these areas, public resources in the form of smart subsidies and other approaches may dominate fertilizer and SFI programming.  On the other end of the spectrum is a situation where households will need to increase the use of fertilizers and other SFI considerably for commercialized food and cash crop production. It will be easier to develop market based mechanisms for increased fertilizer supply in these areas.

In this contribution, I have tried to provide an archetypal scheme that can be used for separating out policy approaches suitable for different market circumstances. The key principle that should permeate the whole discussion is that the problem of soil fertility depletion is both a cause and a consequence of underdevelopment. It is possible that progress in non-agricultural sectors within rural areas can stimulate enough economic growth and linkages to agriculture and improve incentives for SFI use without resorting to subsidies to encourage increased use of SFI.

It has been recognized in the background document to this debate that increased use of SFI will not provide the same level of incentives for all households. It may be desirable heighten policy focus on market-based fertilizer (SFI) programs in areas with the greatest financial and economic returns. Other areas may require greater publicly-supported investments in NRM to accompany fertilizer programs. This is especially so if investments in NRM have been hampered by high labor and financial costs.

Agricultural development will require more than increased use of SFI, rather it will require investments in public goods needed for broad rural development. These investments will benefit all sectors of the rural economy providing the best incentives for investing in SFI and reversing soil fertility depletion because these SFI investments will now yield adequate returns by reason of increased and diversified demand for agricultural products. This in my view will provide the best chance for soil fertility recapitalization and agricultural development as part of the rural and national economies.

P. Phiri Marenya, Lecturer
Department of Agricultural Economics University of Nairobi
ppm3@cornell.edu