Fertilizer Crisis 2021/22: Challenges and Solutions for Africa’s Farmers

The report titled “Causes and Consequences of the 2021/22 Fertilizer Price Spike on Sub-Saharan Africa” explores the severe impact of rising fertilizer prices on the region, especially on smallholder farmers who rely heavily on inorganic fertilizers for crop production.

The price spike, initially triggered by disruptions from the COVID-19 pandemic and later aggravated by the Russia-Ukraine war, has had a disproportionately lasting effect on Sub-Saharan Africa (SSA). Despite a gradual global reduction in fertilizer prices by the end of 2023, SSA continues to face elevated costs, a situation that has not returned to pre-crisis levels.

This disparity between global and local prices—described as the “price wedge”—remains a burden on millions of farmers across countries like Kenya, Ghana, Malawi, Nigeria, Tanzania, and Zambia.

Factors such as government corruption, currency depreciation, and high diesel prices, which drive up transportation costs, are key elements that have prolonged this crisis. These challenges have severely strained agricultural productivity, which is crucial to the livelihoods of over 60% of the region’s population.

The global rise in fertilizer prices was felt in many parts of the world, but SSA has been hit particularly hard. While prices rose in tandem with global markets in 2021, the region’s costs began to decouple from global trends shortly afterward. By mid-2024, most SSA countries were still grappling with inflated fertilizer prices, which had far-reaching consequences for agricultural output and food security.

The rising cost of fertilizers has increased the price of food production, putting a significant strain on smallholder farmers. Crops like maize, a staple for millions of people, were particularly impacted, as farmers could not afford sufficient fertilizer to maintain their yields. The inability to buy essential inputs has only worsened food insecurity in the region.

The report, co-authored by experts from Purdue University, Michigan State University, the University of Ibadan, and other leading institutions, points out several underlying factors contributing to this prolonged crisis. Corruption within public institutions has played a significant role in inflating prices, with more transparent governance correlating with lower costs.

In countries that took steps to curb corruption, fertilizer prices dropped by around 3%. Currency fluctuations also affected prices, as a 1% depreciation of local currencies against the U.S. dollar led to a 0.34% increase in the cost of urea fertilizers. Additionally, the report found that a 10% increase in demand for urea in SSA countries resulted in a 0.3% rise in local prices.

The rising costs of raw materials, especially natural gas—a key input in urea production—further contributed to the local price surge. Transportation costs, driven by increasing diesel prices, added to the crisis. Since fertilizers often need to be transported over long distances, higher diesel prices made the supply chain more expensive, pushing prices even higher in remote regions.

The report also examines the effectiveness of government fertilizer subsidies across SSA. While these subsidies were meant to alleviate the cost burden on farmers, their success was mixed. In some cases, subsidies distorted local markets and discouraged commercial fertilizer sales.

For instance, in Kenya, government intervention in fertilizer distribution excluded private agro-dealers, limiting access for farmers who lived far from government depots. This shift undermined Kenya’s once-thriving private-sector fertilizer market.

To address these challenges, the report offers several recommendations for building resilience against future fertilizer price spikes. One key suggestion is improving fertilizer use efficiency. By making fertilizers more productive, farmers can achieve higher yields from the same amount of inputs, justifying the costs even during price surges. Additionally, promoting competition within the fertilizer market and fostering transparent procurement processes can help bring down prices in the long term.

Another important recommendation is providing farmers with access to training and extension services. By equipping them with the knowledge to use fertilizers effectively, governments can help improve productivity and reduce input costs.

Moreover, investing in soil health and capacity-building initiatives is essential to enhancing agricultural resilience. Although some countries, like Nigeria, have invested in local fertilizer production, more needs to be done to ensure that these locally produced fertilizers are accessible and affordable for smallholder farmers.

In conclusion, as SSA continues to recover from the fertilizer price shock of 2021/22, the report provides valuable insights for policymakers, donors, and agricultural stakeholders. By addressing issues like corruption, improving market transparency, and investing in long-term solutions, SSA can strengthen its agricultural sector and better withstand future crises. The recommendations outlined in the report offer a roadmap for building a more resilient and food-secure future for the region.