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BRACING FOR THE LOOMING FOOD CRISIS
Godswill Aguiyi canvasses fertilizer subsidy regime for farmers in this year’s farming season
Nigerians may have to brace up for an inevitable food crisis in the next few months if nothing strategic is done to absorb the impact of the current high food prices and most importantly, the high cost of fertilizer.
The cost of fertilizer today has skyrocketed indicating that farmers will be spending more on the purchase of inputs in the 2022 farming season. Currently, a bag of NPK fertilizer costs over ₦20,000 in the retail market and the same goes for Urea. These are the two major fertilizer products being used by farmers, particularly for the cultivation of cereals like rice, and maize. For instance, one hectare of rice farm requires four bags of NPK and two bags of Urea fertilizer. The total average cost of the fertilizer needed for a hectare of rice farm is ₦120,000. This is aside from other costs like agrochemicals, labour, and other input. This development can further worsen the lingering food crisis, as the farmers are becoming agitated about the accessibility and affordability of fertilizer.
Nigeria’s fertilizer use today is just about 19kg per hectare which is already far lower than the global average of over 100 kg per hectare. Consequently, per hectare productivity is also low when compared with other countries even in Africa. As noted by many stakeholders, due to human activities such as over-cultivation of a particular piece of land and the consequences of climate change, soils are no longer as fertile as they used to be. Therefore mineral fertilizers are used to supplement the soil’s nutrient stocks with minerals that can be quickly absorbed and used by crops. In many places, without the addition of fertilizers, crop yields would be significantly reduced. Given the importance of fertilizer to Nigeria’s agricultural productivity, the federal government had created many initiatives to ensure the availability of fertilizer to farmers.
One of the several initiatives was the Presidential Fertilizer Initiative (PFI), an agreement signed in 2016 between President Muhammadu Buhari and the King of Morocco to support the blending of NPK fertilizer. The core of the PFI was for a state-owned Moroccan company and a world leader in phosphate and its derivatives to supply discounted phosphate to Nigeria, to help support the domestic blending of NPK Fertiliser. In reality, the PFI supported an input subsidy regime that allowed the finished products to be delivered to Nigeria’s farmers at a starting price of about ₦5,500 per bag, compared to the ₦8,000 – ₦9,000 cost of imported fertilizer as of 2018-19. Also, before the implementation of the PFI, only 10 percent of the production capacities of the five blending plants in operation across the country were being utilized. However, during the PFI, many blending plants across the country were revived and new ones were born. Although farmers did not get the fertilizer at exactly ₦5,500, the cost of the PFI fertilizer was relatively lower in the open market. A few years down the line, the cost of fertilizer almost tripled as it appears that the federal government has abandoned the PFI.
Information gathered suggests that the federal government is no longer implementing the PFI as it used to be where the blending plants blend for the government, but has liberalized the process such that the government through the Nigerian Sovereign Investment Authority (NSIA) imports phosphates and its derivatives from Morocco for interested blending plants. So, given the rate of depreciation of the Naira against the Dollar, the earlier subsidized cost is no longer translating as a significantly reduced cost in Naira. Secondly, Muriate of Potash (MOP) which is a major raw material for blending NPK fertilizer sourced from Europe (majorly Russia, Ukraine, and Belarus) is now scarce, because of the war in the region and sanctions on Russia. So the looming food crisis may take a global dimension. Food crisis occurs when rates of hunger and malnutrition rise sharply at local, national, or global levels. As it stands, experts have predicted low yield and poor harvest for the 2022 farming season, and the implication of that is a looming food crisis. A recent report by the United Nations Food and Agriculture Organization (FAO) in collaboration with the Federal Ministry of Agriculture and Rural Development –(FMARD) and other stakeholders stated that about 19.4 million people will face food insecurity across Nigeria between June and August 2022.
The government and other stakeholders must act fast to ensure that Nigeria does not further slide into a worse food crisis. In the short run, the federal government needs to revisit the PFI and quickly intervene in the importation of raw materials for the fertilizer blending plants. Going forward, there is the need to consider a fertilizer subsidy regime for farmers for the 2022 farming season. Thirdly, the federal government may have to consider strengthening the capacity of blending plants through the creation of a dedicated fund that fertilizer producers’ can access at a low-interest rate for the production of fertilizer. Finally, other options for the importation of the needed raw material must be explored as a way to absorb the current scarcity of basic raw materials.
