Soaring food prices stress urgency of increasing fertilizer use by African farmers

NEPAD, FAO AND WORLD BANK RESPOND TO GLOBAL FOOD CRISIS At the Africa Fertilizer Summit held in Abuja, Nigeria in June 2006, African Heads of State endorsed the Abuja Declaration on Fertilizers which calls for a substantial increase in average fertilizer use from 8kg/ha to 50kg/ha by 2015. The importance of implementing the Abuja Declaration on Fertilizers has been accentuated by the current global climate of soaring food prices which has translated into increased prices for basic foods for the African consumer.

Global maize and wheat prices have risen by as much as 80% in the past year and the cost of rice has doubled causing countries such as India to ban rice export.

Consequently, food prices faced by the African consumer have increased. For example, in South Africa the cost of wheat has increased by 120% in the past year and the price of maize has more than doubled since the beginning of 2006.

This increase in food prices has achieved what seven years of trade negotiations under the Doha Round failed to do : convince developing countries to reduce import tariffs that protect their farmers, and the United States and the European Union (EU) to reduce or eliminate farm subsidies.

In the wake of high and rising food prices, at least 24 developing countries have reduced duties and value-added taxes, including Burkina Faso which suspended taxes on four food staples in February 2008 after food riots over price increases.

Similarly, due to expectations that food prices will remain high, European Union farm subsidies fell by 10 billion euros between 2004 and 2006 and U.S. Government support to farmers is anticipated to fall this year to less than $8 billion from $13 billion in 2006. (Star newspaper, Johannesburg,15/4/2008).

Key cause : decline in cereal production A key cause of the increase in food prices is the decline in world cereal production by 2% from 2.05 billion tons to 2.01 billion tons between 2005/06 and 2006/07, partly due to drought (related to climate change) which reduced Australia’s wheat crop.

Furthermore, during the same period the world’s cereal reserves have dropped by more than 9% to the lowest level in the past 20 years – from 471 million tons to 428 million tons (IFDC, 2008).

Consequently, world market prices for cereals and cereal products are increasing, as are the prices of livestock products (meat, milk) where maize is used as livestock feed.

These price increases are passed on to consumers in Africa and other developing regions whose staple foods are mostly manufactured from imported maize.

The African Union and NEPAD, with the support of the United Nations Food and Agriculture Organisation and the World Bank, have decided to respond to the global food crisis by convening a workshop in May 2008 to support the efforts of countries to develop urgent responses to high food prices and food insecurity through Pillar 3 of the Comprehensive Africa Agriculture Development Programme (CAADP).

These solutions will include :

increasing accessibility through the development of a strategic response to cushion the effects of rising food prices in the short to medium term (via price subsidies for example) ;

increasing production to improve the availability of staple foods. This will include the development of programmes and projects to increase accessibility, availability and incentives to use productivity-enhancing inputs such as fertilizers.

These programmatic responses to increase fertilizer use will have to take into account the fact that world market prices of fertilizers have been increasing steadily since 2004, and in 2007 they skyrocketed to unprecedented levels.

The US Gulf is the main source of diammonium phosphate (DAP) which is a popular basal fertilizer for the production of maize in many African countries. The US Gulf price of DAP increased from 252 $/ton in January 2007 to 752 $/ton by January 2008.

The Arab Gulf is the main source of urea for many African countries ; urea is a popular topdressing fertilizer for maize production in Africa, and during this same period the price of urea increased from 272 $/ton to 415 $/ton.

Therefore, during the last year alone, African farmers have faced fertilizer price increases of approximately 200% which has severely dampened their incentive to use this agro-input.

Shift in maize production from food to fuel These unprecedented increases in fertilizer prices are partly due to increased demand for fertilizers in major cereal producing countries that supply the world market, most notably the U.S.

Farmers are applying larger amounts of fertilizers to maximise production of maize and other crops for the production of ethanol and other biofuels. This is because oil prices at over $100 per barrel have increased the incentive to produce grain-based substitutes like biofuel.

Production of maize in the U.S. increased by 24% between 2006 and 2007 to 333 million tons, the largest U.S. maize harvest since 1933, and 18-20% of this maize produced was used for ethanol.

The key reason for this shift in producing maize for food to producing maize for the biofuel industry is that production of maize as a feedstock for the biofuel industry is extremely lucrative. The price of maize increased by 70% between 2006 and 2007 due to the increased demand for maize for biofuel production.

Other contributing factors to the increase in fertilizer prices are an increase in energy and freight prices, more sophisticated demands (grain-fed meat) from increasingly affluent people in the emerging economies of China, India, and Brazil, and an increase in the price of natural gas, a major input for the production of ammonia for nitrogen fertilizers.

These increases in fertilizer prices have placed fertilizers beyond the reach of the average small-scale farmer in Africa. However, these are the farmers Africa will have to rely on for an efficacious supply response that will alleviate the food price crisis. Therefore, these farmers need to be capacitated to use fertilizers in sufficient amounts to generate the required supply response.

One way this can be done in the short-term is via market-friendly safety nets which will enable the inclusion of farmers in the market process without destroying the burgeoning private sector.

This can be done through programmes that transfer purchasing power to needy farmers. That is, instead of giving free or subsidised fertilizers or seed, the targeted farmers can be given input vouchers (for the full or partial value of inputs) that they can exchange for inputs from a dealer in their village or town. The dealer can receive payment from an authorised bank which gets its funds from the government or any other implementing agency such as a donor or non-governmental organisation.

The voucher system is a very effective mechanism that can support both poverty alleviation and market development.

On the one hand, it empowers the farmers to produce more food for their families while facilitating their inclusion in the marketplace. At the same time, it strengthens the market development process by injecting additional purchasing power into the marketing system.

Market-friendly input voucher programme In the long run, African countries will have to develop sustainable agro-input markets that will meet the needs of small-scale farmers by providing them with the right types of quality fertilizers in a timely manner at a price they can afford. This will enable the required increase in domestic food production to reduce Africa’s food import reliance and hence its exposure to the vagaries of the global food markets.

During 2003-2005, the International Fertilizer Development Centre (IFDC), an international centre for soil fertility and agricultural development, implemented a market-friendly input voucher programme successfully in Malawi under the “Supporting Productive Livelihoods through Inputs for Assets” (SPLIFA) project. Moreover, initiatives by development partners to establish sustainable input markets are currently underway.

For example, the Alliance for a Green Revolution in Africa (AGRA) has launched its AgroDealer Devlopment Programme (ADP) in Kenya, Malawi and Tanzania, which is being implemented by the Citizens Network for Foreign Affairs (CNFA). The ADP provides training, capital and credit to establish certified agro-dealers who are a primary conduit of seeds, fertilizers and knowledge to smallholder farmers to increase their productivity and incomes.

IFDC is implementing the Mozambique Agricultural Inputs Markets Strengthening Project (AIMS) to provide technical assistance to improve the efficiency and profitability of private enterprises engaged in agricultural input business activities in order to increase the availability of low-cost fertilizers.

With the support and facilitation of the AU and NEPAD, African governments in partnership with development partners should encourage the implementation of such programme to improve farmer access to fertilizers and other inputs, particularly for smallholder farmers located in the rural interiors of Africa.

The sharp rise in the price of mineral fertilizer prices has led for calls in some quarters for the exclusive use of organic fertilizers. However, relying solely on organic sources of plant nutrients is not feasible, nor is it desirable.

Technology to improve efficiency of fertilizer use What is required is a technology that will improve the efficiency of fertilizer use (yield of grain per kilogram of fertilizer nutrient applied) and thus the profitability of using this agro-input by small holder farmers in Africa.

Integrated Soil Fertility Management (ISFM) is such a technology. It combines organic and inorganic sources of plant nutrients (mineral fertilizers which have been chemically processed to meet crop needs, crop residues, livestock manure, phosphate rock, and lime) as soil amendments to produce higher yields.

The African Division of IFDC has applied ISFM to improve soil fertility for 150,000 farmers in West Africa and is expanding the application of this technology to reach 10 million farmers through a four- year project, “From Thousands to Millions”, which was started in 2006.

The project builds on its experiences with ISFM to promote agricultural intensification and strengthen the integration of farmers and local entrepreneurs.

This has become known as the “Competitive Agricultural Systems and Enterprises” (CASE) approach, and focuses on agribusiness clusters consisting of the farmers, entrepreneurs, technical, financial and business development services that are involved in a particular commodity within a well-defined target region.

Further expansion of this approach throughout Africa should be undertaken to enable farmers to increase yields and build stronger linkages with input and output markets, while protecting the environment. Source : NEPAD, april 21, 2008

NEPAD-Spanish Women’s Fund

The NEPAD Secretariat would like to announce the extension of the deadline for applications for the position of Portuguese-speaking Project Manager for the NEPAD-Spanish Women’s Empowerment Fund to 30 April 2008. All candidates who meet the requirements are invited to apply for the position via the NEPAD website, where the job description and application procedure are described.

The NEPAD Secretariat would also like to thank all organisations that submitted the required funding documentation in time. Your speedy response is greatly appreciated.

There are, however, a number of organisations with whom communication has been difficult and from whom the required documentation has not yet been received. These organisations are :

African Centre for Empowerment Gender ; CLEAR ; NEPAD Country Structures ; African Union Commission ; COMESA, ECOWAS, SADC, ECCAS, CENSAD, ECA, IGAD ; AFFRO ; African Leadership Institute ; Fund for African Women ; Lubelo Rural Development Foundation ; Church of Central Africa Presbyterian Synod of Livingstonia ; Women for Women Foundation ; Women’s Bureau (Ministry) ; Women and Children Affairs ; Young Women Facilitators Promoting Employment for Young Persons, Rwanda ; Jewels of Faith Academy Learning Centre, Nigeria ; Women of Liberia Peace Network ; Women of Uganda Network ; Ligue Africaine Pour la Non-Violence Active, Burundi ; YEYA Agricole, Cote d’Ivoire. Source : NEPAD, april 21, 2008

NEPAD e-Africa Commission and Global Digital Solidarity Fund to work together

The NEPAD e-Africa Commission and the Global Digital Solidarity Fund (DSF) signed a Memorandum of Understanding in Johannesburg, South Africa, on 17 April 2008 to collaborate in bridging the digital divide between Africa and the rest of the world and within the continent.

The MoU was signed by Dr. Henry Chasia, Executive Deputy Chairperson of the NEPAD e-African Commission and Alain Clerc, Executive Secretary of the DSF.

The MoU creates a framework for the two parties to collaborate in supporting activities related to ICT development and will contribute to the building of an information society by promoting and facilitating equitable and affordable access to ICTs in Africa.

Says Dr. Henry Chasia : "Both the commission and DSF have made history that will have a positive impact in bridging the digital divide in Africa. The commission will definitely benefit by increasing its resources base for its various ICT undertakings".

It is expected that the MoU will result in substantial support from the DSF to the NEPAD e-Schools Initiative, which is now going into the roll-out stage.

Says Alain Clerc : "Specifically, the Global Digital Solidarity Fund is looking at helping the NEPAD e-Africa Commission in the areas of ICT infrastructure development ; e-services and applications ; and human capacity building. The NEPAD e-Schools Initiative is definitely one of the key areas where strong collaboration could be developed".

The Commission and DSF will identify common projects in ICT development and will collaborate in fundraising activities, by facilitating contact with regional stakeholders, including governments, development banks, local authorities and companies.

The commission and the DSF will also jointly explore innovative financial mechanisms to reduce the digital divide, including the promotion of the DSF "1% digital solidarity principle". This innovative financing mechanism, which may be adopted voluntarily, is a 1% contribution on public ICTs procurement contracts.

The NEPAD e-Africa Commission is the ICT task team mandated by the NEPAD Heads of State and Government Implementation Committee to develop policies, strategies and projects at continental level as well as manage the structured development of the ICT sector in the context of NEPAD.

The Geneva-based Global Digital Solidarity Fund is a global financing foundation which strives to reduce the digital divide, to put information and communication technologies at the service of human development and to build a solidarity-based and inclusive information society. It was created during the Geneva Phase of the World Summit on the Information Society (WSIS) in December 2003, following a NEPAD proposal. Source : NEPAD, april 21, 2008

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