managing access to farm inputs - world...

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Amit RoyAmit Roy IFDCIFDC

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Managing Access to farm InputsManaging Access to farm Inputs

Presented at the World Bank Symposium

Cultivating Innovation: A Response to the Food Price Crisis

Washington, D.C.

September 26, 2008

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Fundamentals of Fertilizer Fundamentals of Fertilizer ProductionProduction

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Air(80% Nitrogen)

Ammonia

Energy & Feedstock (Natural Gas)

NitrogenNitrogen

Urea

Energy (Natural Gas)

Total Energy and Feedstock: Equivalent to 4 Barrels of Oil


Phosphate Rock

PhosphoricAcid

DiammoniumPhosphates (DAP)

AmmoniaSulfur(Sulfuric

Acid)

PhosphatesPhosphates

1 Ton Sulfur Produces ~ 2 ton of DAP


Sylvaniteor Carnallite

Potassium Chloride (Potash)

Beneficiation

PotashPotash

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Fertilizer Prices (FOB, bulk)Fertilizer Prices (FOB, bulk) Monthly AveragesMonthly Averages

January 2000 January 2000 –– July 2008July 2008

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What Can Be Done What Can Be Done in the Short Term?in the Short Term?

1.1. Transfer proven efficient nutrient Transfer proven efficient nutrient management technologies to farmersmanagement technologies to farmers

2.2. Make fertilizers available to farmers Make fertilizers available to farmers thru purchasing power supportthru purchasing power support—— e,g.,targetede,g.,targeted vouchers vouchers

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Urea Deep PlacementUrea Deep Placement BangladeshBangladesh

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2 Out of 3 Bags of Urea Lost for Split Application in Wetland Rice

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Conversion Conversion of Prilled Urea of Prilled Urea to USG Using to USG Using a Briquettera Briquetter

Prilled Urea

Briquette Machinefor USG

USG

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2 Out of 3 Bags of Urea Lost for Split Application

1 Out of 3 Bags of Urea Lost for USG


Average Impact on Paddy YieldAverage Impact on Paddy Yield BangladeshBangladesh

6,432

7,676

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Broadcast Deep Placement

(kg/

ha)

Paddy Yield(Kg/ha)

125 kg N/ha

77 kg N/ha

6,432

7,676

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Broadcast Deep Placement

(kg/

ha)

Paddy Yield(Kg/ha)

125 kg N/ha

77 kg N/ha


Impact of Urea Deep Placement Impact of Urea Deep Placement Technology on FarmersTechnology on Farmers’’ RevenuesRevenues

BangladeshBangladesh

324

19

342

0

50

100

150

200

250

300

350

400

RevenueIncrease

Fertilizer CostSavings

Total AddedRevenue

Benefits to Farmer($/ ha)

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Fertilizer Program RwandaFertilizer Program Rwanda Auction/VoucherAuction/Voucher

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MINAGRI

• Buyer Qualification Requirements• Bid Documents• Bid Evaluation• Award• Delivery Authorization

Dealer/Cooperative

•Confirm Qualifications•Sealed Bid/Bid Bond•Complete Procurement

• Approve Finance

• Application for Finance• Make Down Payment @ 30%• Complete Payment After Award

CommercialBank

Confirmation of Payment

List of Approved Buyers

Fertilizer Auction—Flow of Documentation

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Rwanda Agricultural Intensification Program – 2008/09 SeasonSubsidy Through Voucher Program – Flow Diagram

Bank (s)Dealer/Retailer

Co-opsNetwork

RegionalNGOs

Farmer

World BankMinistry of Agriculture

(MINAGRI) IFDCAdvisory Services

Special CellProgram

Management

Fertilizer Auctions

Financial Assistance Technical Assistance

Subsidy Vouchers

Voucher Distribution

Voucher

+

Cash

Fertilizer

+

Seed

Voucher Redemption

Used

Vouchers

Subsidy Funds

Commodity, Subsidy

ProgramPromotion

ProgramExtension

ProgramMonitoring &Evaluation

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Africa Specific InterventionsAfrica Specific Interventions

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Cereal Production, 1961Cereal Production, 1961––20012001 (% change)(% change)

Yield

Are

a

South Asia Sub-Saharan Africa

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Fertilizer Price Formation: Fertilizer Price Formation: Thailand vs. SubThailand vs. Sub--Saharan Africa (2006)Saharan Africa (2006)

X

X + 49%

X + 80%

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Actions on the Fertilizer SectorActions on the Fertilizer Sector

Eliminate taxes and tariffsEliminate taxes and tariffsAssess economic viability of fertilizer production Assess economic viability of fertilizer production and blendingand blendingEvaluate regional procurement optionEvaluate regional procurement optionPromote intraPromote intra--regional traderegional tradeDevelop capacity for quality controlDevelop capacity for quality controlDevelop and scale up networks of input dealersDevelop and scale up networks of input dealersFacilitate financial arrangements for importers and Facilitate financial arrangements for importers and dealersdealersTargeted support to the smallholder farmers to Targeted support to the smallholder farmers to access fertilizer and other inputsaccess fertilizer and other inputs

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Longer Term InterventionsLonger Term Interventions

Conduct research to improve nutrient Conduct research to improve nutrient management efficiencymanagement efficiency•• New productsNew products

•• Better water and soil management Better water and soil management

•• Better fertilizer recommendationsBetter fertilizer recommendations

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ConclusionsConclusions

Global fertilizer supply/demand will Global fertilizer supply/demand will remain tight for next 2remain tight for next 2--3 years3 yearsNew investments will increase global New investments will increase global supply but may not reduce prices to the supply but may not reduce prices to the 20052005--2006 levels2006 levels

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ConclusionsConclusions

ShortShort-- term interventions should term interventions should •• Provide purchasing power support to Provide purchasing power support to

farmersfarmers•• Promote productivity enhancing Promote productivity enhancing

technologiestechnologies•• Remove taxes and tariffs on inputsRemove taxes and tariffs on inputs•• Accelerate dealer developmentAccelerate dealer development

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Conclusions (contConclusions (cont’’d)d)

Simultaneous interventionsSimultaneous interventions•• Promote public private partnershipPromote public private partnership•• Increase private sector participationIncrease private sector participation•• Evaluate regional procurement optionsEvaluate regional procurement options•• Assess economic viability for fertilizer Assess economic viability for fertilizer

productionproduction•• Improve access to finance for private Improve access to finance for private

sectorsector•• Market support servicesMarket support services

MISMISQuality control Quality control

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