Posted on September, 4, 2024 at 09:49 am
Reforms in Kenya’s fertiliser distribution channels have led to a 20.5 per cent drop in the country's fertiliser usage, new findings by AGRA show.
The organisation, in its annual Survey -Africa Agriculture Status Report 2024 points out that the government led changes have seen consumption drop from 835,000 tons in 2020 to 663,400 tons in 2022, with further declines anticipated in 2023.
According to data from the World Bank (2024), fertiliser consumption in Kenya averaged 59 kg per hectare of arable land between 2017 and 2021, with per capita consumption increasing by 2.3 percent annually up to 2021.
By 2020, fertiliser usage in Kenya peaked at 835,000 tonnes; however, the introduction of the second phase of the National Fertiliser Subsidy Programme (NFSP II) in 2020 marked a turning point.
“The government shifted its delivery model, opting to distribute subsidised fertiliser through the state-owned National Cereals and Produce Board (NCPB) instead of relying on micro, small, and medium-sized enterprises (MSMEs) for last-mile delivery,” the report reads in part.
The government had initiated a subsidised fertiliser programme to bolster Kenya’s agricultural sector productivity to stabilise food prices.
This led to a nationwide registration of farmers to deliver subsidised fertilisers by use of an e-voucher system to ensure traceability and full accountability of the farm input.
Soy MP David Kiplagat has been pushing the Ministry to consider giving farmers vouchers to purchase fertilisers from retailers at a subsidised price of Sh2500 per bag, in the event of shortage at NCPB depots.
The report however notes that this decision effectively sidelined existing private sector input distribution networks, resulting in a significant drop in the volumes handled by last-mile agro-dealers, which fell by between 77 to 88 percent in 2023.
AGRA says the disruption in the supply chain has forced SME agro dealers to cease operations, leading to a dysfunctional fertiliser distribution system.
“Medium to large-scale blenders are now likely to downscale their operations due to unsold stock, reversing years of growth in a sector that has traditionally been led by the private sector,” reads the survey.
Despite growing demand for fertiliser, particularly blends, and an increase in local blending capacity from 22,100 tons per year in 2004 to 73,000 tons per year by 2022, the policy shift has stifled private sector investment.
“Policy triggers are therefore equally effective in inadvertently causing disinvestment that either halts or reverses years of growth in a sector that is private sector-led,” said AGRA
Most of the additional capacity, 92 per cent came from medium and large-scale firms such as Yara East Africa Limited, Timac Agro, Elgon Kenya Limited, and ETG Kenya Limited (AfricaFertilizer, 2024).
The report also highlighted a shift towards more inclusive agribusiness investments by medium and large-scale agribusinesses.
The trends reveal a growing focus on integrating smallholder farmers and enhancing rural livelihoods.
“By harnessing the power of the private sector, we can drive meaningful food systems transformation and achieve sustainable growth. This report provides actionable insights on supporting MSMEs to enhance their impact on food security and economic development,” said president of AGRA Agnes Celibate.
Source: The Star