GIRSAL Assesses Ghana’s Fertilizer Subsidy Program: Stakeholders Validate Key Findings and Recommendations

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GIRSAL, through its Agriculture Stakeholder Convening and Advocacy Platform (ASCAP), held a stakeholder validation workshop to substantiate findings from an assessment of the Fertilizer Subsidy Program (FSP) to ascertain the program’s effectiveness, efficiency, and sustainability.

The ASCAP initiative launched last year aims to bring together government institutions, private sector participants (financial institutions, agribusinesses, farmer-based organizations) and development partners to collaborate in addressing issues in the agricultural and agribusinesses space.

One such vital issues is the assessment of the Fertilizer Subsidy Program, which has been a key component of the Planting for Food and Jobs (PFJ) initiative targeted at improving crop productivity, ensuring food security and creating employment opportunities in Ghana. Over a five-year period (2017 to 2021), the government has spent about GH¢2.7 billion mainly for covering subsidies on selected fertilizers and seeds supplied to smallholder farmers. Eligible farmers were provided a 50% input subsidy, which was reduced to 15% as of 2022.

Although the subsidy program is reported to have increased productivity and outputs of the targeted crops, diverging views among program managers, researchers, and other stakeholders have persisted regarding the program’s sustainability and real impact on farmers and the economy.

Considering the crucial role fertilizer plays in the advancement of agriculture as well the numerous concerns raised by several actors on the subsidy program, GIRSAL, through an industry consultant, commissioned an assessment of the cost and effectiveness of the FSP to determine the programs’ impact in terms of fertilizer usage, crop yield, farmers income and national security of targeted crops and provide recommendations to enhance the efficiency, effectiveness and sustainability of the subsidy program.

The validation workshop was therefore organized to present findings of the comprehensive assessment based on interviews in the field and a review of secondary data gathered.

Stakeholders present at the workshop included the Ministry of Food and Agriculture (MoFA), Peasant Farmers Association of Ghana, Ghana Agri-Input Dealers Association (GAIDA), Financial Institutions, International Fertilizer Development Center (IFDC), and the Ghana Revenue Authority -Custom Division.

Presenting the findings of the assessment, Mr. Takyi Sraha, Chief Operating Officer of GIRSAL, gave a detailed presentation on the rationale, methodology, analysis, findings, and recommendations of the research team based on interviews and data gathered mainly from the beneficiary and non-beneficiary farmers, input dealers, District Directors of the Ministry of Food and Agriculture, Customs, and Immigration Officers.

He further highlighted challenges associated with the subsidy program, such as the late delivery of subsidized inputs, delay in payments to suppliers, perceived lack of transparency in quota allocation, limited availability of preferred fertilizer brands, quality issues, financial constraints, political interference, smuggling, and hoarding.

Upon uncovering these challenges impeding the positive impact of the FSP and having presented an analysis of the data obtained, the consultant and GIRSAL’s technical experts proposed recommendations to strategize the program towards the attainment of its intended purpose.

These recommendations included timely availability of subsidized inputs, providing all-year-round fertilizers to farmers, increased warehouse infrastructure, integration of commercial farmers, digitization of distribution processes, market linkages, higher government subsidies, the inclusion of agrochemicals, quality control measures, and eliminating political interference.

Notably, the team proposed innovative approaches to further optimize the fertilizer subsidy program by providing payment of subsidies in-kind through waivers and cost reduction measures, credit guarantee-backed financing arrangements to reduce interest costs and trigger a drop in fertilizer prices as well as adopting the government-to-government special initiative to enable indigenous fertilizer importers to meet local demand such as the Nigerian Presidential Fertilizer Initiative.

The team further recommended establishing a preferential exchange rate for fertilizer importers, strengthening the fertilizer quality checks, reconciling import data, and establishing a pricing mechanism based on prices in neighbouring countries to deter smuggling.

Stakeholders at the workshop generally agreed with the study’s findings and recommendations and suggested additional inputs to improve the final report.

Going forward, the assessment team will incorporate feedback from the validation workshop to complete their report, which will be disseminated to policymakers, including the Ministries of Food and Agriculture and Finance and other key stakeholders.