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Publication | 2024

Fertilizer Price Shocks in Smallholder Agriculture: Cross-Country Evidence from High-Frequency Phone Surveys in Sub-Saharan Africa

Global Food and Nutrition Security

Summary

Introduction: Since 2020, countries in Sub-Saharan Africa (SSA) have faced numerous disruptions in agricultural activities due to various crises, including the COVID-19 pandemic, domestic conflicts, and the Russian invasion of Ukraine. These crises have significantly impacted the region's agriculture sector, particularly concerning the prices and availability of inorganic fertilizers. This study investigates the effects of these disruptions on smallholder agriculture using high-frequency longitudinal phone survey data from six SSA countries: Burkina Faso, Ethiopia, Malawi, Nigeria, Tanzania, and Uganda.

Data and Methods: The study utilizes data from the World Bank's Living Standards Measurement Study (LSMS), which includes high-frequency phone surveys (HFPS) conducted from April 2020 to 2024. These surveys collect information on agricultural practices, fertilizer use, and coping strategies in response to price shocks. The analysis covers 34 waves of survey data across the six countries, providing a comprehensive view of the smallholder farmers' experiences.

Key Findings:

1.Increase in Fertilizer Prices:

  • Inorganic fertilizer prices have risen significantly since 2020, driven by global supply chain disruptions and the geopolitical tensions from the Russian invasion of Ukraine.
  • Smallholder farmers, who rely heavily on imported fertilizers, have faced increased costs and reduced access to these inputs.

2. Coping Strategies:

  • Farmers have adopted various coping mechanisms in response to high fertilizer prices. These include reducing the quantity of fertilizer used, applying it to smaller areas, and switching to less productivity-enhancing methods.
  • Some households have resorted to selling assets or borrowing money to afford fertilizers, thereby increasing their vulnerability to future shocks.

3. Impact on Agricultural Productivity:

  • The reduction in fertilizer use has negatively impacted agricultural productivity, making smallholder farmers more susceptible to food insecurity and economic instability.
  • The study highlights a persistent low rate of fertilizer use in SSA, which is further exacerbated by the current crises. Historical data shows that SSA countries already had lower fertilizer application rates compared to other regions.

4. Policy Implications:

  • The study calls for urgent policy interventions to support smallholder farmers in building resilience against such price shocks. Recommended measures include subsidies, improved access to credit, and the development of more robust agricultural support systems.
  • There is also a need for better market access and supply chain improvements to stabilize fertilizer availability and prices in the region.

Conclusion: The study provides valuable insights into the challenges faced by smallholder farmers in SSA amid global crises. It underscores the importance of targeted policy actions to enhance the resilience of the agriculture sector and ensure sustainable food production. Policymakers are urged to prioritize support mechanisms that can mitigate the adverse effects of fertilizer price shocks and other related disruptions on smallholder agriculture.

Disclaimer: This summary has been generated by an artificial intelligence (AI) language model developed by OpenAI. For comprehensive information and context, please refer to the full document.