Targeting fertilizer subsidy to enhance food production

fertilizer1703bvfThe 2015 fertilizer subsidy programme by the government, through the Ministry of Food and Agriculture, has been formally launched. Since 2008, one of the key agricultural policy intervention programme introduced by the government was aimed at enhancing food production and security in the country besides the introduction of the national fertilizer subsidy programme.

Apart from the year 2014, the programme has been progressively pursued to meet national aspirations and it is the opinion of many stakeholders, especially in the agriculture sector that the introduction of the subsidy has been a major contributory factor towards increased food production in the country.

According to research, it was realized that fertilizer application rate in Ghana was not the best. Indeed, one of the lowest in the world.

It is estimated that in Ghana as compared to other geographical areas, the application rate was 8kg per hectre compared to 20kg/ha in sub-Saharan Africa, 99kg/ ha in Latin America, 109 kg/ha in South Asia and 149 kg/ha in east and south-east Asia.

The low application rate was attributed to the high cost of fertilizers. Invariably, the end result was the inability of many farmers to afford the product, and this may possibly translate into low productivity.

The introduction of the programme, therefore, was to address the challenges and increase crop production and productivity for food security and sustainability.

The target set was to increase fertilizer use rate to at least 50kg per hectre by 2020 as recommended in the Medium Term Agricultural Sector Investment Programme of the Ministry of Food and Agriculture.

The records indicate that since the inception of the programme from 2008 to 2013, a total of 724, 055 metric tons of fertilizer has been subsidized at the cost of Gh¢345.244 million cedis.

The year 2011 saw the roll out of the largest application programme worth 176,746 million cedis. Unfortunately, however, there was no subsidy programme in 2014. The two types of fertilizer in the subsidy category are the compound fertilizer (all types) and Urea.

At the beginning of the year, the sector minister, Mr Fifi Kwetey, indicated that the ministry will launch the 2015 programme by the end of the first quarter. The launch of the programme in March, therefore, was to signify the commencement of the programme for the year.

For the compound fertilizer of 50kg/ha, out of the full cost of GH¢115.00, government subsidy amounts to GH¢26.00 pegging the selling price at GH¢89.00, representing 26% in price reduction. For the Urea, government subsidy on 50kg/ha costing GH¢105.00 is GH¢21.00 which is also 20% of subsidy.

The market prices for both the compound fertilizer and the urea are GH¢89.00 per 50kg bag and GH¢84.00 per 50kg bag respectively. By these price reduction therefore, it is estimated that the government is subsidizing fertilizer at an average of 21%.

Six companies which took part in the bidding process and were evaluated to have qualified for the award of the contract for the programme include the following:

Yara Ghana Ltd; Chemico Gh. Ltd., Afcott Ghana Ltd, AMG West Africa Ltd., Louis Dreyfus Commodities Ltd and ETC Ghana Ltd. They become the marketing and sales companies through their accredited sales agents for the products.

According to Mr Kwetey, the programme is within the national development agenda with a view to promote the agriculture sector to contribute significantly to the structural transformation of the economy.

It will also maximize the benefits of accelerated growth of the country. Undoubtedly, this will raise the average income of Ghanaians, especially the peasant farmer and again impact on the attainment of at least five of the eight millennium development goals.

It will also enhance farmer access to increase crop productivity and consequently growth in the agriculture sector.

The targeting measures under the programme include the small holder farmer cultivating maize, rice, sorghum and millet with priority on food crop; farmers registered under recognized nucleus farmers and companies and cotton farmers operating under recognized nucleus farmers in the north of the country.

Coincidentally, the launch of the fertilizer subsidy programme went with the inauguration of the board for the Cotton Development Authority in Tamale charged with this responsibility to work closely with the Authority to revamp the cotton industry. The last but not least target of the subsidy programme are the women farmers who will receive priority under the programme.

With the full implementation of the programme, it is the expectation of the Ministry of Food and Agriculture that the present application rate of 12kg per hectre will increase to 20kg/ha projected in the Abuja declaration of fertilizer use by the African Green Revolution.

According to Mr Kwetey, the fixing of the price will make it unattractive to smuggle the facility to our neighbouring countries.


The author is a Public Relations Officer at the Ministry of Agriculture.

By Nelson
Kofi Akatey


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