Sustain Africa Learning Agenda highlights priorities for building farmer and fertilizer market resilience

While Sustain Africa was initiated as a crisis response mechanism to mitigate the impact of a global fertilizer price spike, the Sustain Africa Learning Agenda aimed at surfacing evidence-based recommendations on a) how to build better resilience in fertilizer markets – particularly at farmer level – to mitigate the impact of price spikes and b) how to improve stakeholder response when a price spike hits.

It was generously funded by USAID, BMGF and FCDO.

Sustain Africa’s learning agenda points to yield improvements as the key to enabling fertilizer use to be consistently profitable for farmers at commercial prices, freeing up government budget for extension services to support yield improvements, and measures to improve soil health.

The four studies carried out as part of the learning agenda also point to the need for better multistakeholder collaboration to monitor fertilizer availability and affordability and also respond swiftly, and with complementary measures, when a price spike occurs. A financing study finds significant financing gaps at the agrodealer and farmer level driven by credit default and business model risk. A price spike and food security forecasting index, building on one of the four studies, is in progress.

Six key recommendations emerge from the studies:

1. Over the long-term, agricultural budgets are best spent on technical assistance to farmers, and measures to improve soil health so that yields improve, making fertilizer profitable at commercial rates.
2. Where subsidies are used, these deliver best return on agricultural budgets if they are short-term and highly targeted – specifically at farmers who are able to be productive, but cannot afford fertilizer at market prices.
3. Governments should avoid sudden changes of direction in fertilizer policy and market structure and should maintain dialogue with private sector to enable suppliers to allocate stock accordingly.
4. Public-private sector stakeholder coalitions that monitor fertilizer market conditions and are ready to take action if a crisis looms will ensure rapid and coordinate response.
5. Functioning commercial fertilizer markets are essential to growing agricultural productivity. Subsidies should be designed to include the private sector to provide a healthy commercial market when subsidies are withdrawn. Crisis funding by multilateral institutions could be directed in part to supporting (derisking) functioning private sector markets.
6. Financial instruments to derisk foreign exchange transactions upstream, combined with products to incentivize lending by commercial financers to a larger farmer and agrodealer base are needed to support increased availability and uptake of inputs.

Overview of the individual studies

Causes and consequences of the Recent Fertilizer Price Spikes

Research commissioned by Sustain Africa from a consortium led by Purdue University in six countries (Ghana, Kenya, Nigeria, Malawi, Tanzania and Zambia) makes recommendations for improving fertilizer market resilience. It looked at:  What the change in the fertilizer price wedge during the global fertilizer price spike of 2021/22 meant for the six countries: The impact of subsidies on commercial fertilizer prices, and how effective fertilizer policy has been at increasing fertilizer use among smallholder farmers both before and during the price spike: The profitability of fertilizer use for farmers  and: The return on the government subsidy spend to see if subsidising fertilizer was a good use of agricultural budget. See the key findings here and download the full report here .

Derisking fertilizer financing

A study by Dalberg on gaps in fertilizer financing showed credit default risk to be a major deterrent to lending. Credit default risk is driven by the low profitability of borrowers, coupled with the high costs associated with reaching, assessing, disbursing, and monitoring loans, frequently restrict lending to underserved and unprofitable segments. Finally, rapid currency depreciation and low forex availability make suppliers cautious about holding large stocks and supplying large stocks to tenders. The study makes recommendations on how to improve both the volume, and reach, of fertilizer financing, particularly downstream at the agrodealer and farmer level. See the key findings here and download the full report here.

Sustain Africa evaluation and forward recommendations

A second study by Dalberg evaluated Sustain Africa’s relevance, impact logic, partnerships and governance, and efficiency and also made recommendations on how to achieve even greater impact if a price spike in the future threatens food security in Sub-Saharan Africa. In particular, Dalberg provides recommendations for engaging a wider range of private sector partners, and also recommends a multistakeholder fertilizer accessibility and affordability monitor to alert stakeholders of a potential crisis See the key findings here and download the full report here.

Fertilizer Monitor Index

Finally, a team at Oxford Economics is building on the econometric models developed by Purdue University to build a forecasting index for the impact of global price spikes on local fertilizer prices in different countries and on food security. The index builds on the factors that the Purdue University consortium team found to be statistically significant in impacting both local prices and the difference between the global and local price. It also factors in the current state of food security to provide a risk assessment for countries that will be hardest hit should global prices spike. The index will be available from 2025 on AfricaFertilizerWatch.