Returns to fertiliser use: Does it pay enough? Some new evidence from Sub-Saharan Africa

Abstract

The low level of modern inputs adoption by African farmers is considered to be a major impediment to food security and poverty reduction in Sub-Saharan Africa. The government of Burkina Faso, following the example of a number of other countries in the region, launched a subsidy programme in 2008 to encourage farmers' uptake of chemical fertilisers and foster cereal production. This article explores the importance of fertiliser profitability in explaining the relative, apparent low use of chemical fertilisers by farmers in Burkina Faso. Using large-scale plot data, we estimate maize yield response to nitrogen to be 19 kg/ha on average and to vary with soil characteristics. Profitability, which we measure through the calculation of a marginal value cost ratio, is estimated at 1.4 on those plots which received fertilisers, with significant variations across regions. For those plots on which fertilisers were not applied, we predict that fertilisers should have been profitable in most cases under the current level of subsidised fertiliser prices. These findings suggest that the low uptake of chemical fertilisers might have been driven by factors other than profitability, including insufficient supply of subsidised fertilisers to farmers in need. Our results also call for increasing the availability of credit to farmers in order to encourage adoption of chemical fertilisers. Finally, our results also show that not taking into account the endogeneity of nitrogen use in the yield equation may produce biased estimates of the maize yield response to nitrogen.