Editorial: Time to do away with fertiliser subsidies

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High food prices in north pushes inflation up again to 9% July
Minister of Food and Agriculture, Dr. Owusu Afriyie Akoto

Subsidies in agriculture are great, just ask the American farmer. Direct United States federal government aid to America’s farmers increased from US$22.4billion in 2019 to US$46.5billion in 2020 – which accounted for 39% of net farm income. This is according to data from the Economic Research Service of the United States Department of Agriculture (USDA).

If these subsidies in Ghana target farmers who are mostly rural poor and seek to reduce cost of operation and improve their income levels, and at the same time guarantee food security nationally, they are more than welcome.

But that does not appear to be the case in Ghana currently. Due to government’s inability to pay input suppliers, fertilisers and other subsidised inputs are not getting to farmers on time – which in effect is disrupting the farming process ans thereby posing a severe threat to food security.

The Ministry of Food and Agriculture (MoFA) has confirmed that government has owed fertiliser importers some GH¢940million since the beginning of last year. Out of the amount, only GH¢250million has been paid so far. That is not good news.

This huge debt is strangling government’s flagship agriculture programme, Planting for Food and Jobs (PFJ). It also appears the PFJ itself is definitely reaching an anti-climax, as MoFA for the first time since the programme’s inception five years ago in 2017 has had to reduce subsidies on fertiliser – from the 50% enjoyed by farmers over the last five years to 38% beginning from 2021.

In 2020, MoFA under the PFJ procured and distributed 364,233 metric tonnes of organic and inorganic fertiliser to 1.2 million farmers at 50% subsidy. This year, MoFA seeks to distribute a total of 521,380 metric tonnes of organic and inorganic fertiliser to 1.5 million farmers under the programme, with 38% subsidy on chemical fertilisers and 40% on organic fertilisers.

The minister himself, Dr. Owusu Afriyie Akoto, recently expressed serious worry about sustainability of the programme, which just three years ago was so successful that Ghana actually exported some maize to our landlocked neighbours.

In the view of this Paper, it is time to completely remove these subsidies since they appear to do more harm than good. Yes, the removal of these subsidies would mean farmers have to purchase fertilisers at market prices – but then they will get the product on time and be able to apply them to crops at the right time.

One must not forget that agriculture must be done in a timeous manner to obtain efficiency and ideal output. It is our view that farmers would rather purchase the fertiliser at the right time at a slightly higher price than at cheaper rate but late – which severely impacts harvests and their overall income.

Already, a major farmers’ union alongside distributors are pushing for the removal of these subsidies. The Peasant Farmers Association of Ghana (PFAG) and some fertiliser distributors who supply the input under the PFJ initiative are calling for a total cancellation of fertiliser subsidies under the programme.

Some farmers told the B&FT that they are hoping to see fertiliser subsidies on the programme come to an end to enable them buy from the open market, where they could have an improved access to these inputs which have seen excessive hoarding and smuggling under the PFJ.

Similarly, some input distributors also desire that subsidies be cancelled for fertiliser to enable these companies maintain extensive import programmes to ensure inputs are available on the market to farmers at all times.

While dealers are complaining of government’s inability to promptly make payment for fertiliser supplied to farmers since last year, most beneficiary farmers are worried about their consistent inability to plant crops due to unavailability of inputs.

PFAG’s Head of Programes and Advocacy, Dr. Charles Nyaaba said: “Government, after this crop season, must undertake serious reforms of the PFJ fertiliser subsidy programme”.

He explained that farmers have become so dependent on these subsidies, to the extent that the current delays in distribution and unavailability of this fertiliser are posing serious challenges to the over-one million farmers under the policy.

“We are of the opinion that immediately the season is over, government should call a meeting to ensure we get a support system that support farmers differently from fertiliser’ so government will take off the subsidy and enable farmers to know where to get fertiliser when they need it. If this meeting is not called, the PFAG will call its own meeting,” Dr. Nyaaba said.

This Paper could not agree more with these farmers and distributors. Government must remove the subsidies and allow the market to operate without too much interference.

One can easily recollect the days when Ghanaians queued at fuel stations due to subsidy-induced shortages. Ever since deregulation of the market, which included the removal of subsidies on fuel and fuel products, there are hardly any reports of shortages and unavailability of fuel at stations.

Remove the subsidies…as soon as possible!

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