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Improving Fertilizer Supply through Zoning and E-Procurement

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Zoning of blended fertilizer coupled with improved management of the distribution system involving the private sector can increase access to subsidized fertilizer by resource poor farmers in Kenya. The use of fertilizer is generally expected to increase crop productivity among cereal growing farmers. Majority of the small holder farmers who produce about 64% of maize in Kenya are resource poor. Land which is their main factor of production is suffering from declining soil health due to continuous use in maize and wheat production. To ameliorate this situation, the government has introduced a fertilizer subsidy program in an effort to enhance food security through increased cereal production and productivity in Kenya. Fertilizer accounts for about 30% of the cost of production and has the potential to increase yields by 50%-75%. In order to increase access at a lower cost, the government has been supplying subsidized fertilizer to motivate its use. However, the approach used in supplying the fertilizer has not been effective in reaching needy farmers who do not have access to the input. This has raised concerns whether the national subsidy programs achieve the intended purpose. Fertilizer use or the lack thereof by Kenyan farmers is an issue that has received varied attention from practitioners in the agricultural sector. The program intended to encourage fertilizer use, support local fertilizer manufacturers and strengthen fertilizer distribution. The private sector imports about 600,000 tonnes of fertilizer annually and can only sell if the government imports of about 500,000 tonnes delays. While the government alone can meet the annual national fertilizer demand, its resource base is limited, therefore, the need for private sector involvement. Its partnership with the Toyota Tsusho company will further reduce the cost of fertilizer by 40%. Supplying the right fertilizer will be incumbent on the firm producing the appropriate fertilizer for specific soils. The expansion of the subsidy program to cover other crops such as tea, coffee and sugarcane will impact negatively on the private sector’s share in the fertilizer market. The significant reduction of their returns due to decreasing sales margins will drive out from the fertilizer market those actors who cannot breakeven.

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