#1FERTILIZER SUPPLY CHAIN IN NIGERIA Adetola ADEOTI I. Department of Agricultural Economics, University of Ibadan, Ibadan.#2o Context INTRODUCTION o Increases in agricultural productivity is linked with significant increase in inorganic fertilizer use. o This is not the case for many developing countries including Nigeria where low agricultural productivity/yields have been attributed to the low fertilizer application rates (Morris et al. 2007). o Despite the low rate of fertilizer consumption (about 7.7 kilogram per hectare [kg/ha] in 2008 (World Bank, 2008), Nigeria alone accounted for 23 percent of the entire fertilizer consumption in Sub-Saharan Africa in 2008/2009 (IFDC 2009).#3OVERVIEW OF NIGERIA'S FERTILIZER MARKET o It is the largest in the West Africa region, consuming approximately 600,000 to 800,000 product tons per year and accounting for more than 60 percent of the West African market (Bumb et al. 2012). o The most common types of fertilizers purchased by states are nitrogen, phosphorus, and potassium (NPK) 20-10-10 and NPK solutions, urea, single super phosphate (SSP), and calcium ammonium nitrate (CAN). o The involvement of the Nigerian government in procurement and distribution of fertilizer dates back to the 1970s where fertilizers were provided at subsidized rates as high as 95% (Nagy and Edun, 2002).#4By the late 1990s, the government-led procurement and distribution of subsidized fertilizer were highly inefficient, was riddled with corrupt practices such as late delivery of fertilizer with significant diversion of fertilizer from intended beneficiaries (Nagy and Edun 2002). o Leakages of subsidized fertilizer into the regular market were common, leading to market price distortions as well as providing arbitrage opportunities. o In 1997, the fertilizer sector was abruptly liberalized (Nagy and Edun, 2002).#5● However, the private sector was neither experienced nor developed enough to respond to the government's sudden exit from the sector, and fertilizer use fell from a peak of 1.2 million metric tons in 1992 to 56,700 metric tons (mt) in 1997 (Banful and Olayide 2010, IFDC 2010). o To address this decline, the federal government resumed fertilizer subsidy at 25 percent of cost in 1999 under the Federal Market Stabilization Program (FMSP), with further subsidy added by many state governments. o This led to varied fertilizer prices across Nigerian states, with a wide range in the extent of subsidies.#6o Rent-seeking is not uncommon in the process, but most disturbing is that a significant proportion of subsidized fertilizer comes to the open market (round-tripping) and is sold at below the market price. o This creates unfair competition in the market, leading to uncertainty and losses for the market players and discouraging private-sector investment in the development of agrodealer networks.#7○ These challenges encouraged the promotion of fertilizer vouchers in Nigeria in 2004 with a pilot in two states (Kano and Taraba) in 2004 and again between 2008 and 2010. However, in 2009, the voucher program was administered across the entire state in the federation. o Following the voucher program, the Agricultural Transformation Agenda (ATA) was initiated in 2011 and implemented in 2012 to provide a unique connecting link as it targets the farmers directly with critically needed modern farm inputs on real-time basis.#8Ketbi Sokołu Niges Kashi Jigawa Yati Воклю Kaduna Bauchl Plotosu Cps Nasarawa One Eki Kogi Taraba Benue Ondo Agam Dekame Cross River Beb bom#9Seikefo www.theodora.com/maps Higer Kapuna Ede Abujay Pinema Donus www.dora commans#10Raw materials Domestically blended fertilizer Federal Government Fertilizer Supply Chain Importation /Procurement by private fertilizer Companies Total Supply State Govt. Imported Fertilizers State Ministry of Agric. State Inputs Supply Companies Agricultural Development Programme (ADP) Local Govt. FARMERS Private Sector Distr Agrodealers/retailer Agrodealer /wholesaler#11NUMBER OF FERTILIZER IMPORTERS AND MANUFACTURERS STATES IMPORTERS MANUFACTURER Lagos 12 8 Abuja 8 4 Niger 1 Kaduna 4 20 5 Kano 3 Katsina 2 22 Zamfara 1 Sokoto 1 Gombe 1 1 Plateau 1 Benue 1 Edo 1 Rivers 1#12Quantity in Tonnes FERTILIZER PRODUCTION 400000.00 350000.00 300000.00 250000.00 200000.00 150000.00 100000.00 50000.00 0.00 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Years Source: FAOSTAT online database Production (Tons)#13Quantiy in Tonnes FERTILIZER PRODUCTION BY MACRO-NUTRIENTS 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 2009 2010 Nitrogen 2011 2012 2013 Years Phosphate Source: FAOSTAT online database#14Quantity in Tonnes FERTILIZER IMPORT (TONNES) 900000.00 800000.00 700000.00 600000.00 500000.00 400000.00 300000.00 200000.00 100000.00 0.00 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 Source: FAOSTAT online database 1986 1987 1988 1989 1990 1991 Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006#15FERTILIZER CONSUMPTION (KG/HECTARE OF ARABLE LAND 12 10 10 80 9 Kg/hectare of arable land 2 0 2002 2003 2004 2005 2006 Year 2007 2008 2009 2010 Source: WDI, 2014#16Consumption (Tonnes) CONSUMPTION OF FERTILIZER BY MACRO-NUTRIENTS (2002-2013) 500000 450000 400000 350000 300000 250000 200000 150000 100000 50000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year Nitrogen Fertilizers (N total nutrients) Phosphate Fertilizers (P205 total nutrients) Potash Source: FAOSTAT Online database#17Kg/Ha 7 6 5 LO 4 3 2 1 FERTILIZER-USE INTENSITY 0 2002 2003 2004 2005 2006 2007 Year Source: World Resources Institute#18Consumption (MT) 450000 400000 350000 300000 250000 200000 150000 100000 50000 UREA CONSUMPTION IN NIGERIA Urea Consumption (MT) 0 2002 2003 2004 2005 2006 2007 Years 2008 2009 2010 2011 2012 Source: FAOSTAT online database Consumption (MT)#19Import (MT) 450000 400000 350000 300000 250000 200000 150000 100000 50000 UREA IMPORT Urea Import (MT) 0 2002 2003 2004 2005 2006 2007 Years 2008 2009 2010 2011 2012 Source: FAOSTAT online database -Import (MT)#20METHODOLOGY Scope of study: The scope of study is the whole country and it has been divided into the five agroecological zones namely: Sahel savannah Sudan savannah Guinea savannah Derived savannah Rain Forest Sampling Technique: In all zones, there are various actors along the fertilizer supply chain. Since it is impossible to go round all the zones, zones will be sampled based on the number of actors in the zone. Two zones will be sampled; one in the north and one in the south. In each selected zones, all the actors along the chain will be sampled Data: Both secondary and primary data will be used. The detailed description on the type of data to be collected is presented in the tables below. The secondary data will be collected from the Federal Ministry of Agriculture, FEPSAN, National Bureau of Statistics, Agrodealers Association, FAOSTAT, IFDC and African Fertilizers. Method of analysis: Descriptive statistics including frequency, mean, percentages Also, charts, trend analysis and narratives will be used.#21Aggregate Indicators What we have and source What we need and prospective source Production Import Consumption -2001-2010 -Disaggregated by states -1970-2008 -1970-2000 and 2011-2015 -Disaggregated by states -2009-2015 -NBS -1994-2010 -Disaggregated by states -1970-1993 and 2011-2015 - Disaggregated by states Intensity of use FAO Fertilizer supply to states Prices along the supply chain 2002-2007 -2001-2010 -Disaggregated by states -1994-2006 -Disaggregated by states -Units in Million naira -Type of fertilizer not specified -1970-2001 and 2008-2015 We need the area of cropland cultivated by states from 1970 to 2000 and 2011 to 2015. -1970-2000 and 2011-2015 -Disaggregated by states -1970-1993 and 2007-2015 -Disaggregated by states -Specification on type of fertilizer From African Fertilizer -Oct. 2013-Feb 2016 -Market name specified -Type of fertilizer (Urea, SSP, NPK(15:15:15, 20:10:10 and 27:13:13)#22Dealers Main markets Farmers From African Fertilizer -Name of company -Location of operation -Services rendered Production (Blending and granulation) Logistics (transport and warehouse) Distribution (wholesalers and retailers) FEPSAN, FFD -Disaggregated by states -Capacity of production -Type of ownership -Main fertilizer sold -Quantity of fertilizer sold List of the main markets in all the states for fertilizer List of farmers that are on e-wallet in all the states Farmer characteristics, quantity of fertilizer sold by agrodealer, price of fertilizer before and after the program, distance farmer to nearest agrodealer, distance to market, fertilizer use intensity#23Supply Chain Production Actor Manufacturers Importers Companies Wholesalers Retailers -Private sector distributors -Min. of Agric./LGA -State Input Supply Companies -Agricultural Development Projects (ADP) -Agro dealers Agrodealers Main Market centers Questions Name and Location Type of fertilizer Quantity produced Quantity sold Sale price Date produced Annual capacity Name and Location Type of fertilizer Quantity imported Purchase price (FOB) Quantity sold Sale price Country from which it is imported Date imported Name and Location Type of fertilizer Quantity purchased Purchase price Quantity sold Sale price Source of purchase Date of purchase Name and Location Type of fertilizer Quantity purchased Purchase price Quantity sold Sale price Source of purchase Others Age, education and gender Year of establishment Production capacity Number of workers Access to and type of credit Own a bank account Cost of production sales credit or price subsidy Transport cost Age, education and gender Year of establishment Number of workers Access to and type of credit Own a bank account Import credit and import subsidy sales credit or price subsidy Transport cost Age, education and gender Year of establishment Number of workers Access to and type of credit Own a bank account Purchase credit and purchase subsidy sales credit or sales subsidy Price subsidy Transport cost Age, education and gender Year of establishment Number of workers Access to and type of credit Own a bank account Purchase credit and purchase subsidy sales credit or sales subsidy Price subsidy#24THANK YOU FOR LISTENING