To facilitate access to subsidized fertilizer for smallholder farmers, IFDC has developed a fertiliser voucher programme that relies on a public-private partnership
This initiative has met with resounding success, even if some limitations remain to be addressed.
More than 1.5mn farmers and thousands of agro-dealers have access to agricultural inputs (fertilisers, improved seeds and crop protection products) because of IFDC voucher programmes implemented in Afghanistan, Albania, Ghana, Kyrgyzstan, Malawi, Mozambique, Nigeria and Rwanda. Vouchers are often called ‘smart subsidies’ because they help farmers obtain inputs while simultaneously building business for rural agro-dealers.
Vouchers are coupons that transfer purchasing power to targeted smallholder farmers either by reducing the input’s price below market cost or by providing liquidity as production credit, with repayment at a later date. Farmers redeem the input vouchers through agro-dealers. In turn dealers receive payment for redeemed vouchers and a specified margin for operating expenses and profit from the programme sponsors.
“This approach provides income benefits to both smallholder farmers and agro-input dealers and increases the long-term sustainability of the agro-input supply network and farmers’ productivity,” stated Dr Deborah Hellums, senior programme support specialist at IFDC. “To be successful, input voucher programmes require careful analysis, transparency, detailed planning and rigourous implementation.”
The programmes must be designed specifically for a country’s particular circumstances and reach farmers who most need inputs. IFDC voucher programmes also provide benefit that direct subsidies cannot provide – training and technical assistance to both farmers and agro-dealers. Agro-dealers are trained to introduce new technologies and teach their farmer-customers how to correctly use inputs.
IFDC uses a variety of security measures such as watermarks, barcodes, indelible link, photo identification, thumb-printing and serial numbers to protect against fraud and programme abuse. An exit strategy is also an important component of successful voucher programmes. As farm incomes increase, the value of vouchers can be gradually reduced or become a vehicle for providing crop production credit.
Historically, subsidised fertiliser in Nigeria failed to reach smallholder farmers. “In rural areas you can find items such as cell phones, Coca-Cola and salt for sale, but in many places you cannot buy fertiliser,” says Scott Wallace, IFDC’s country representative in Nigeria.
In collaboration with the National Programme for Food Security, IFDC implemented a pilot voucher programme in 2008 in Nigeria’s Kano and Bauchi states and then a larger programme in 2009 in Kano and Taraba states. In 2010 activities were expanded in Kano and Taraba and extended into Bauchi and Kwara states. The programmes were funded by the Nigerian National Food Reserve Agency, federal and state governments, USAID and the Alliance for a Green Revolution in Africa (AGRA).
Using vouchers nearly 200,000 Nigerian farmers purchased fertiliser in both the 2009 and 2010 programmes. 90 per cent of the subsidised fertiliser reached smallholder farmers – a substantial increase from the 20 per cent prior to the programmes. It was the first time in ten years that many farmers had gained access to subsidised fertilisers.of the system on a larger scale.
In 2008 IFDC designed and helped implement the voucher component of Rwanda’s Crop Intensification Program, an initiative of the Ministry of Agriculture and Animal Resources (MINAGRI) to help the country become self-sufficient in food production. Farmers used the vouchers to buy fertilisers and improved wheat and maize seeds.
More than 17,000 vouchers were distributed during Rwanda’s first cropping season of 20009, MINAGRI and IFDC’s Catalyze Accelerated Agricultural Intensification for Social and Environmental Stability (CATALIST) project helped farmers increase production – maize yields rose by 2.5t/ha and wheat yields rose by 1.5t/ha.
The latest vouchers in Rwanda utilize bar-coding technology that produces a voucher specific to each farmer based on the farmer’s national identification number.
IFDC voucher programmes are effective in numerous ways. For federal and state governments, a voucher programme reduces fertiliser subsidy costs, decreases fraud, abuse and waste and reaches intended recipients more effectively. For farmers, vouchers help to increase their crop yields, income and often their standard of living. By developing a market for agricultural inputs, vouchers help build the private sector while improving the knowledge, marketing skills and professionalism of agro-dealers.