Developments in Fertilizer Marketing in Zambia: Commercial Trading, Government Programs, and the Smallholder Farmer
The debate on fertilizer reform process in Zambia has two contrasting views. Some stakeholders continue to be convinced that the private sector is unable to adequately serve the needs of smallholder farmers, especially in the more remote parts of the country. Only 20 per cent of smallholder farmers used fertilizer in 1999/00. There are serious concerns over private traders’ willingness to deliver inputs on credit for low-resource farmers. According to this view, government fertilizer and credit distribution are indispensable for promoting smallholder agricultural productivity growth. Others believe that the fertilizer market should be restructured even more fully to remove the constraints on the private sector and reduce the drain on the public treasury. This latter line of argument is based on the premise that the continuation of government programs, while intended to meet the needs of remote and poor smallholder farmers, may actually undermine the market for private traders more generally and weaken the prospects for building a vibrant market-oriented fertilizer distribution system. Proponents of this view also contend that the private sector can indeed meet the needs of poor smallholder farmers in remote areas if the policy environment is conducive and if adequate investments in infrastructure are made to support a market economy. This study was identified by the Advisory Board of the Food Security Research Project, composed of government and private sector stakeholders in Zambia’s agricultural sector. The objectives of the study were to describe how the fertilizer industry has developed under the process of liberalization, to examine the effects of liberalization, to identify feasible opportunities to reduce farm-gate fertilizer prices and increase smallholder farmers’ access to fertilizer. Particular attention was given to the impact of government programs on the objective of increasing the private sector’s capacity and incentives to distribute fertilizer, and policy options for increasing fertilizer use in areas where it is profitable and contributes to agricultural productivity. This summary provides the main results of the study and recommendations for consideration by government. First, the general trends in the importation of fertilizer into Zambia and the contributions of different players are shown. This is followed by a presentation of the alternative marketing channels prevalent in Zambia during 1999/2000 and their respective market shares and other characteristics. Thirdly, key suggestions on how to reduce the price farmers pay for fertilizer are presented. Finally, the recommendations emanating from these findings are provided.
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