Fertilizer Consumption and Agricultural Productivity in Ethiopia

This study analyzes fertilizer application rates, trends in the number of users, its effects on agricultural productivity and, finally, the determinants of its consumption. The major data sources are the Central Statistical Authority (CSA) and the Ethiopian Rural Household Survey (ERHS). The national level evidence shows incremental increases in total fertilizer imports as well as in the applied volume of fertilizer. The household level data show that the average number of farmers that apply fertilizer is high especially in teff and wheat. The percentage of farmers who apply Urea in particular is, however, low as it does not exceed 36% in any of the five crops. The data also show some decline in the number of adopters, especially in 2004. The high price of fertilizer is the major constraint for about 47.6% of the farmers under consideration, followed by supply shortage and late arrival of fertilizer. The effect of fertilizer use on the value of agricultural production and yield is positive. Partial correlations and panel regression results support the positive effect. However, the magnitude with which the value of production responds to a change in fertilizer use is low. The smaller marginal effects of fertilizer use might be due to problems arising from applying below recommended rates and failure to use the two nutrients in proper combination. Finally, the consumption model reveals that education status of the household head is the most important variable affecting fertilizer use. Livestock ownership, size of land owned, amount of credit, and number of family members with sub-compulsory education are the other factors affecting fertilizer use positively. The study identified priority areas of interventions to address the problem of fertilizer use and its consumption. The highest priority area of intervention in the supply side is the price of fertilizer. Almost 50% of the farmers reported the price as their biggest constraint. This necessitates thinking about alternative means like crop specific partial subsidies of fertilizer and cash transfers. On the farmers’ side, they are not using the fertilizer as per recommended levels and also they are using only one of the two, mainly Dap. This is again largely caused by the price of fertilizer.