Fertilizer Markets and Agricultural Production Incentives - Tegemeo ...

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However, with the exception of the central highlands, zones where a higher percentage of households used manure had a lower percentage of households using fertilizer, and vice versa. In addition, usage of both manure and mineral fertilizer was very low among households in the Western Lowlands. The highest levels of mineral fertilizer use were found in the High-Potential Maize Zone, the Western Highlands and the Central Highlands where, on average, 90% of the households used fertilizer in 1997 and 1998 (Table 4). Fertilizer use levels are also reasonably high in the Western Transitional and Eastern Lowlands (79% and 51% for 1998, respectively), but then they fall off dramatically for the Western Lowlands; in 1998 only 13% of these households used mineral fertilizer. Dose rates (i.e., the amount of fertilizer nutrient applied per acre among fertilizer users) also vary across zones. In 1998, only households in the Central Highlands and High-Potential maize zone applied more than 30 kg of mineral fertilizers nutrient per acre (47.9 and 33.5 kg per acre, respectively). Table 4. Fertilizer Nutrient Use Per Acre in 1996/7 and 1997/8 Zone Year Percent Percent of Fertilizer Fertilizer nutrient application per acre of householdholds house- Nutrient applied 2 used using 0 0-10 10-30 30-50 50 + manure fertilizer 1 kg kgs kgs kgs kgs ----- Percent ----- -kg/acre- -------- Percent of Households -------- Eastern 1996/7 n.a. 45 5.31 55 35 11 0 0 Lowlands 1997/8 84 51 6.54 49 37 13 0 0 Western Lowlands Western Transitional High Potential Maize Zone Western Highlands Central Highlands 1996/7 n.a. 11 8.79 89 7 2 1 0 1997/8 18 13 13.7 87 6 7 0 0 1996/7 n.a. 69 15.1 31 29 32 5 3 1997/8 48 79 16.6 21 31 32 16 0 1996/7 n.a. 92 32.2 8 10 35 37 11 1997/8 48 88 33.5 12 9 32 29 18 1996/7 n.a. 91 19.5 9 27 50 10 4 1997/8 51 86 19.4 14 27 46 10 3 1996/7 n.a. 99 37.6 1 12 43 20 24 1997/8 91 97 47.9 3 8 22 24 42 1996/7 n.a. 74 27.3 26 17 31 17 9 Total 1997/8 57 73 30.4 27 17 26 17 14 Note: The total number of households is 612 for both year. 1) DAP is applied on 48 percent of the total 2216 plots on which fertilizer was applied; CAN 21 percent; NPK 16 percent; Urea 5%. 2) Among households who used fertilizer. 13
In the High-Potential Maize Zone, about 90 percent of households used fertilizer in 1997 and 1998. In Central Highlands, 99 percent of households used fertilizer in 1997, and 97 percent of households used fertilizer in 1998. Although the percentage of households that used fertilizer is high in the Western Highlands, the average dose rate is much lower than the Central Highlands and High-Potential maize zone. The difference comes from a lower number of high-end users. In the Western Highlands, only 14 percent of households used more than 30 kgs of fertilizer nutrient per acre in 1997, and in 1998 that figure was 13%, while more than 40 percent of households used more than 30 kgs of fertilizer nutrients in the Central Highlands and High- Potential maize zone. 4. ACTORS AND INSTITUTIONS IN THE FERTILIZER SUBSECTOR 4.1. Fertilizer Traders in the Private Sector 4.1.1. Importers Importers are the principal commercial purchasers of fertilizer in a marketing channel. Importers determine the quantity of fertilizer to import for the coming season. Their import decisions take into account how much other importers will be importing, weather conditions, and maize prices. Importers place orders for fertilizer with overseas producers, establish credit arrangements with suppliers and local banks; solicit and process orders from customers; and extend credit to clients. The fertilizer import business is highly risky, primarily due to the uncertainty of local demand, exchange rate fluctuations, and changes in world market conditions.. Fertilizer imported into Kenya is sourced from the United States, Europe, the Middle East, and South Africa. In 1999 there were 46 importers registered with the Ministry of Agriculture (MOA). However, only 22 firms imported more than 1,000 tons of fertilizer per year, and of these, only 10 imported over 10,000 tons in 1999. Therefore, these latter 10 are regarded by MOA as the major players in the fertilizer import business. The rest tend to enter the market on a speculative basis to take advantage of projected high demand for a particular year. Five of the 10 major importers were interviewed for this study. Four of them had their headquarters in Nairobi, and one in the upcountry city of Kitale. Three of the five importers were Kenyan-owned companies at the time of the interviews, and two were subsidiaries of international fertilizer manufacturers. 3 Only one of these five entered the subsector after the government withdrawal in 1993; the rest had been involved in fertilizer trading for at least 10 years. All the importers interviewed were diversified into other related distribution activities such as other agricultural inputs, grain trading, and hardware. The one exception is Norsk Hydro for whom fertilizer importing and distributing was its only activity in 1999. 3 One of these importers is Norsk Hydro, the largest fertilizer manufacturer in the world. It has been selling fertilizer in Kenya under a USAID donor grant since the 1960’s and its fertilizer, DAP, dominates the grain market in Kenya today. 14
Page 1 and 2: Tegemeo Institute Of Agricultural P
Page 3 and 4: LIST OF TABLES Table 1. Annual Fert
Page 5 and 6: Figure 1. The Fertilizer Subsector
Page 7 and 8: 17:17:17 and MOP (Muriate of Potash
Page 9 and 10: Figure 3. Trends in Fertilizer Cons
Page 11 and 12: A second possible explanation for t
Page 13 and 14: Table 2. Farm Budgets for Selected
Page 15: Table 3. Sample Characteristics, Ra
Page 19 and 20: een perfect. Therefore, some of the
Page 21 and 22: Table 6. Distribution of retailers
Page 23 and 24: Figure 6. Multiplicity of Marketing
Page 25 and 26: Table 8.1. PORT TO FARMGATE COST BU
Page 27 and 28: Table 8.2. PORT TO FARMGATE COST BU
Page 29 and 30: TABLE 8.3 PORT TO FARMGATE COST BUI
Page 35 and 36: that losses of fertilizer in transi
Page 37 and 38: Table 9. Simulated Changes in Maize
Page 39 and 40: 30% in Bungoma, 17% in Lugari, and
Page 41 and 42: APPENDIX A. COST-REDUCTION SCENARIO
Page 43 and 44: APPENDIX A. COST-REDUCTION SCENARIO
Page 45: Koch, J. 1980. Industrial Organizat

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