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March 16, 2009

African ministers call for a return to farm subsidies


by George Omondi

African ministers have joined the race to restore confidence in key sectors of their economy, as the world’s economy contracts, with calls for the return to targeted farm subsidies.

At a pan African workshop held in Nairobi in early March, African finance and agriculture ministers called for speedy adoption of the Africa Fertilizer Financing Mechanism (AFFM) mooted four years ago by 40 heads of state in Abuja, Nigeria.

The programme championed by the African Development Bank (AfDB) and the Alliance for a Green Revolution in Africa’s (AGRA) aims at increasing six-fold the fertilizer use in the continent.

“This would mean boosting the current average of 8kg per hectare to at least 50 kg of nutrients by 2015 to enable the continent’s farmers to compete on equal footing with foreign staples imports like maize and rice,” said Mr Aly Abou Sabaa, the AfDB’ director in charge of agriculture and agro-industry department.

Experts argue that in a continent where agriculture remains the economic mainstay, it defeats logic for finance ministers to continue to allocate huge chunks of national budgets to education sector and neglect the sector that provides up to 70 per cent of available jobs.

“The choice we face here is stark. We either choose to subsidise food or inputs. If we choose to continue subsidising food imports like we always do, we end up creating employment for EU farmers and Asian transporters as poverty and joblessness grow in Africa,” said an unidentified Food and Agricultural Organisation’s delegate.

While the debate on agricultural subsidy remains a touchy issue within international realm, African ministers are buoyed by the fact that even countries in the EU and US that once championed capitalism are devising their own bailout schemes to bolster their critical sectors of the economies.

Moreover, Asian countries like China, Philippine and Japan have already announced huge subsidy programmes with China and Philippine alone announcing $8 billion and $2 billion in subsidy packages to their farmers respectively.

Traditionally, African trade experts have had a long standing quarrel with EU countries which usually dedicate 50 per cent of their budgets ($285 billion) to providing farm subsidies blamed for distorting the international commodities market.

In Africa, the price of fertilizer alone is still estimated to constitute 25 per cent of commodities' sale’s value.

“Africa needs a one-off investment of $39 billion dollars in the agricultural sector to transform from a food deficit continent that spends $18 billion every year to import food to a net exporter of food,” Dr Akinwumi Adesina, the Alliance for a Green Revolution in Africa’s (AGRA) vice president in charge of policy and partnerships told the workshop

The AFFM seeks to among other things, improve the economies of scale of fertilizer production, procurement, and distribution.

For instance instead of each country placing its individual orders, Kenya and all the landlocked countries can place procurement order with one supply and same transporters to gain from the economies of scale.

Alternatively, countries such as Kenya which lack natural ingredients for manufacturing fertilizers can use the AFFM’s model to either provide financial support of technical skills (manpower) to countries such as Tanzania and Uganda which have the fertilizer ingredients or Zambia which though has fertilizer production plants, is experiencing low output due to use of outdated technology.

According to Kenya’s agriculture minister, Mr William Ruto, the country has so far managed to bring the cost of fertilizer, which had shot to Sh6,500, down by 50 per cent just by procuring in bulk at the right time from one particular supplier.

“Studies by the ministry technocrats have shown that use of fertilizers can increase our crop yields by 400 per cent and that’s why the government intends to make fertilizer available to all farmers,” he said.

Mr Ruto said that while all farmers are expected to obtain fertilizers at the National Cereals and Produce board’s outlets at reduced prices, some 78,000 vulnerable farmers, among them widows and the internally displaced, will be given fertilizers free of charge by the government

Business Daily Africa

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