Allow private sector involvement in fertiliser distribution - Government urged
Ghana Initiative-Based Risk-Sharing System for Agricultural Lending Project (GIRSAL) has urged the government to introduce a private-sector-led approach in the distribution of fertilisers to farmers under its Fertiliser Subsidy Programme (FSP).
The private sector, it said, should be allowed to compete openly in the market for the distribution of the fertiliser instead of the government playing this role.
Through this approach, GIRSAL is proposing that the government adopt an in-kind subsidy policy instead of cash subsidy to make the programme more effective and also reduce cost of fertilisers.
This formed part of recommendations by GIRSAL on an assessment of the fertiliser subsidy programme under the government agricultural flagship programme, Planting for Food and Jobs (PFJ).
At a stakeholder validation workshop on the assessment last Wednesday in Accra, the Chief Operating Officer (COO) of GIRSAL, Takyi Sraha, who presented the findings, said the in-kind subsidy would enable certain charges and levies along the fertiliser cost build up to be absorbed by the government.
The buildup cost, he said, included the port charges, transport /logistics and cost of the PFJ bags used for bagging the fertiliser.
Mr Sraha said: "The government will absorb the cost buildup and allow the private companies who want to participate in the programme to bring their fertiliser, benefit from these charges and sell it at the retail point under a reduced price," he said.
Currently, the farmers pay 85 per cent of the price of fertiliser while the government absorbed 15 per cent subsidy.
He explained that per the analysis, if a company delivered fertilisers at retail point at GH¢215 per a bag of fertiliser and the build-up cost were absorbed, it would reduce the cost of the fertiliser by GH¢33.
"The government does not have to give that money out as subsidies to the companies but will direct that the companies bring their fertilisers, the government then absorb these cost and the companies take the fertiliser to the farmgate for farmers to buy. So you cut out rent seeking behaviour and this will reduce the cost," he added.
From the 2017 to 2021, about 1.36 million metric tonnes of fertilisers were supplied, in terms of seed, 93,219 metric tonnes were supplied, expenditure on fertiliser and seed supply was GH ₵2.7 billion and over 5 million farmers benefitted from the PFJ programme.
The government was also urged to support indigenous fertiliser importers with special initiatives, including guarantee-backed credit system and other interventions to enable them to meet the local demand.
Other necessary actions for the government to take were to increase percentage of government subsidy, add agrochemicals to the programme and ensure the quality of subsidised inputs under the programme.
Mr Sraha said the FSP had generally been successful as most of the commodities under the programme had witnessed and increase in productivity and production.
However, he said some of the challenges identified in the assessment of the FSP included poor fertiliser quality issues, financial challenges, political interference in fertiliser distribution, smuggling and hoarding.
Also he said the bureaucracy associated with the payment process had resulted in excessive delays, which had caused some fertiliser companies to opt out from the programme.