A recent research assessment has revealed that the rising cost of input packages for farmers is significantly undermining the government’s Planting for Food and Jobs (PFJ) programme. The study indicates that while the government’s subsidy made agricultural inputs affordable in 2017 and 2018, a sharp increase in input costs since 2019 has made these inputs increasingly inaccessible to farmers.
Dr. Faustina Obeng, a researcher with the Third World Network-Africa (TWN-Africa), presented these findings at a workshop in Accra. Her research, titled “Contribution of Planting for Food and Jobs (PFJ) and One District One Factory (1D1F) to Ghana’s Structural Economic Transformation,” highlighted the troubling trend in rising input prices.
“For instance, the price of maize seeds increased from GH¢2 in 2017 to GH¢18 in the 2021 farming season, depending on whether the variety was Open Pollinated Varieties, local hybrid, or imported hybrid.”
Dr. Faustina Obeng, Researcher with the Third World Network-Africa (TWN-Africa)
She further noted that while PFJ intervention prices for maize seeds were slightly lower, ranging from GH¢5 to GH¢12 in 2021 and GH¢7 to GH¢15 in 2022, they were still prohibitively high for many farmers.
A recent report from International Fertilizer Development Center (IFDC) has highlighted the potential impact of the soaring fertilizer costs on farmers’ access to the essential input needed for effective crop production. This is despite a decline in demand for the product.
Comparing the first quarter of 2024 to the previous quarter, prices of fertilizers have seen increases. Ammonium Sulphate, which averaged GHS 277 previously, now sells at an average of GHS 281.00, marking a 2% rise.
Moreover, NPK compound fertilizers, including NPK 15-15-15, NPK 20-10-10, and NPK 23-10-5, have experienced price hikes ranging from 3% to 5%. Urea, which was priced at GHS 406.00 in the last quarter of 2023, has risen to GHS 421.00 in the first quarter of 2024, reflecting a 4% increase.
This substantial increase has made it difficult for farmers to maintain their productivity levels, as many cannot afford the necessary fertilizers to ensure good crop yields.
Dr. Obeng pointed out that the PFJ programme was less targeted and less inclusive of resource-poor farmers. Agricultural extension agents tended to prioritize farmers who were considered trustworthy and creditworthy, rather than adhering to the PFJ’s criteria of supporting productive-poor and resource-poor farmers.
“The PFJ input subsidy had little impact on the overall net increase in fertilizer use,” Dr. Obeng explained. Although the PFJ supply of fertilizer increased, commercial sales dropped because only five percent of PFJ beneficiaries were first-time fertilizer users. This indicates that the subsidy programme did not significantly expand the base of fertilizer users among farmers.
Overreliance on Imported Fertilizer
Dr. Obeng urged the government to invest in factories that could manufacture fertilizers locally. This investment would help reduce the reliance on imported fertilizers, which are subject to global price fluctuations and high shipping costs.
“Local manufacturing of fertilizer is necessary to offset the unintended consequences of import uncertainties on the availability and affordability of inputs for farmers.”
Dr. Faustina Obeng, Researcher with the Third World Network-Africa (TWN-Africa)
Dr. Obeng emphasized that increasing the use of locally produced fertilizers could lead to growth in agricultural outputs.
The current fertilizer system, heavily reliant on imports, has been adversely affected by the exponential increase in shipping costs. Smallholder farmers, in particular, struggle to afford imported fertilizers, which are essential for the optimal performance of seed varieties.
Recommendations for Sustainable Agricultural Development
To address these challenges, Dr. Obeng recommended several measures. She called for the government to invest in sustainable intensification methods that are less dependent on imported inputs in the short to medium term.
Additionally, she advocated for the establishment of a robust fertilizer manufacturing industry in the long term, similar to efforts in the seed production sector.
“A mass input subsidy programme with a selective credit scheme is needed for a sustainable and equitable input subsidy programme,” Dr. Obeng said.
She suggested subsidizing all inputs at source to make them relatively affordable on the open market, which could mitigate issues of crowding out, diversification, and profiteering at the expense of the intended beneficiaries.
Dr. Obeng also highlighted the importance of building effective storage facilities and warehousing systems. These systems would help connect periods of glut to periods of scarcity, thereby stabilizing prices and avoiding production gluts that lead to significant drops in market prices.
The rising cost of agricultural inputs poses a significant threat to the success of the Planting for Food and Jobs programme. Without addressing these cost increases and ensuring that subsidies reach the most resource-poor farmers, the programme’s goal of transforming Ghana’s agricultural sector and enhancing food security may remain unmet. Dr. Obeng’s research underscores the need for strategic investments and policy adjustments to support farmers effectively and sustainably.
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