IFPRI Discussion Paper 01230 December 2012 The Supply of Inorganic Fertilizers to Smallholder Farmers in Tanzania Evidence for Fertilizer Policy Development Todd Benson Stephen L. Kirama Onesmo Selejio Development Strategy and Governance Division INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE The International Food Policy Research Institute (IFPRI) was established in 1975 to identify and analyze national and international strategies and policies for meeting the food needs of the developing world on a sustainable basis, with particular emphasis on low-income countries and on the poorer groups in those countries. IFPRI is a member of the CGIAR Consortium. PARTNERS AND CONTRIBUTORS IFPRI gratefully acknowledges the generous unrestricted funding from Australia, Canada, China, Denmark, Finland, France, Germany, India, Ireland, Italy, Japan, the Netherlands, Norway, the Philippines, South Africa, Sweden, Switzerland, the United Kingdom, the United States, and the World Bank. AUTHORS Todd Benson, Insternational Food Policy Research Institute Senior Research Fellow, Development Strategy and Governance Division t.benson@cgiar.org Stephen L. Kirama, Universityof Dar es Salaam Lecturer, Department of Economics Onesmo Selejio, University of Dar es Salaam Lecturer, Department of Economics Notices IFPRI Discussion Papers contain preliminary material and research results. They have been peer reviewed, but have not been subject to a formal external review via IFPRI’s Publications Review Committee. They are circulated in order to stimulate discussion and critical comment; any opinions expressed are those of the author(s) and do not necessarily reflect the policies or opinions of IFPRI. Copyright 2012 International Food Policy Research Institute. All rights reserved. Sections of this material may be reproduced for personal and not-for-profit use without the express written permission of but with acknowledgment to IFPRI. To reproduce the material contained herein for profit or commercial use requires express written permission. To obtain permission, contact the Communications Division at ifpri-copyright@cgiar.org. mailto:t.benson@cgiar.org iii Contents Abstract iv Acknowledgments vi 1. Introduction 1 2. Overview of Fertilizer Supply and Use in Tanzania 5 3. Supply—Fertilizer Importation and Marketing in Tanzania 11 4. Survey of Traders Supplying Fertilizers 20 5. Survey of Farmers in Areas Where Fertilizer Is Used 28 6. Discussion 34 References 37 iv Tables 2.1—Fertilizer prices, comparison of Tanzania retail price to FOB price from international suppliers, in US dollars per mt: Average August 2010–July 2011 8 4.1—Fertilizer trader scale of operations; size of largest order from supplier in 2010 21 4.2—Fertilizer trader characteristics 21 4.3—Fertilizer trader business characteristics 22 4.4—Fertilizer sales, by type 23 4.5—Location of principal fertilizer supply source, by percentage of fertilizer traders 24 4.6—Breakdown of costs of obtaining fertilizer by trader 25 4.7—Breakdown of customers for fertilizer traders 26 5.1—Household characteristics of farmers in survey sample 29 5.2—Engagement in off-farm income-generating activities and agricultural experience of household head, farmland characteristics 29 5.3—Maize, rice, and vegetables: Proportion producing crop and using fertilizer on crop (in percentages) 30 5.4—Crop management characteristics, by crop and fertilizer use on crop 30 5.5—Fertilizer use, by crop 31 5.6—Farmer access to fertilizer 32 5.7—Fertilizer purchases by farmers 32 5.8—Transport of fertilizer from dealer to farm and time from purchase to application 33 Figures 2.1—Total annual fertilizer imports for Tanzania, 2006–2010 5 2.2—Components of the average price of fertilizer delivered to several up-country centers in Tanzania, 2006, in US dollars per mt 7 Box 3.1—The Fertilizers Act of 2009: Key elements 12 v ABSTRACT Inorganic fertilizer is one of a handful of agricultural technologies that have immense potential for raising the productivity of poor smallholders, enabling them to increase income, accumulate assets, and set themselves economically on a pathway out of poverty. This paper presents the results of a broad study of fertilizer supply to smallholder farmers in Tanzania that was done to assess whether the taxes (explicit or implicit) that are applied at various points along the fertilizer importation and marketing chain or the absence of key public goods and services reduces the access that smallholder farmers have to fertilizer. The study involved a review of the literature of fertilizer supply, demand, and use; interviews with key participants in fertilizer importation and marketing in Tanzania; and two surveys—one with farmers and the other with input suppliers—in three farming areas where more fertilizer is used than is the norm for the country as a whole. The broad finding is that the government of Tanzania has taken some action that has been conducive to improving farmer access to fertilizer. Although the pool of importers and wholesalers of fertilizer in Tanzania remains quite small, a competitive market exists. Efforts are being made to strengthen the retailing sector of agricultural inputs by building the commercial skills of private traders. Although Tanzania provides an expensive fertilizer subsidy for several million smallholder farmers, the design of the subsidy program, when compared to such programs in other African countries, generally does not work against the interests of private fertilizer firms. Although a few direct taxes and fees on fertilizer supply activities remain that seem difficult to justify, in general fertilizer importation and marketing activities in Tanzania are relatively unencumbered in this regard. But there are areas where government inaction is having an adverse effect on efforts to increase use of fertilizer. The most important of these missing public goods is not specific to fertilizer but is implicated in broad efforts for increased economic growth in Tanzania—extending the transportation infrastructure; upgrading Dar es Salaam port; and enhancing access to credit for small enterprises, including farmers; among others. However, there are several fertilizer-specific initiatives that the government of Tanzania should undertake to enhance farmer uptake: • Overcoming information constraints that smallholder farmers who might use fertilizer face. This includes information both about the proper agronomic use of fertilizer on specific crops under specific agroecological conditions and about the proper economic use of fertilizer under changing input and output market conditions so that farmers can derive reliable profits from their use of the technology. • Regulatory reform. A considerably lighter regulatory regime than what is now under consideration would allow more fertilizer into Tanzania, resulting in lower costs for farmers. We argue that efforts to ensure the quality of fertilizers in open and competitive markets are best achieved through self-regulation processes tied to sufficient information about product quality for farmers and ample choice in suppliers, rather than through heavy regulation and costly enforcement. • Addressing agricultural development policy inconsistencies. It is illogical that the government of Tanzania spends a substantial portion of its budget on fertilizer subsidies at the same time as it restricts the market for the maize and rice produced using that fertilizer by closing its borders to trade in staple foods in the interest of national food security. Strengthening agricultural output markets for Tanzanian farmers, both domestically and regionally, is as important to sustainably increasing uptake of fertilizer by farmers as undertaking any fertilizer-specific initiatives. The government of Tanzania must seek other mechanisms to ensure national food security than restricting output markets for its farmers. Keywords: fertilizer supply, agricultural input policy, Tanzania vi ACKNOWLEDGMENTS This research was carried out using financial support from the Alliance for a Green Revolution in Africa (AGRA) that was granted for a three-country study of inorganic fertilizer supply in Uganda, Tanzania, and Mozambique. We are particularly grateful to Dr. Augustine Langyintuo of AGRA for his support. 1 1. INTRODUCTION Most of the poor in Tanzania, as throughout Sub-Saharan Africa, are members of rural farming households. To escape poverty in a sustainable manner, households must enter into a process of savings and accumulation of productive assets whereby, based on the returns in income over time to those assets, they are able to enter a pattern of continual improvement in their welfare and move out of poverty. A key factor that enables smallholder farming households to enter into this beneficial pattern of household economic growth is enhanced agricultural productivity to increase the economic returns that they enjoy from their agricultural assets. Without improving the productivity of the assets that they possess, households are unable to save and accumulate, produce little, and are unable to invest in assets to increase their scale of household economic production. They remain in poverty, stuck in what is often termed a poverty trap (Carter and Barrett 2006). Where insufficient plant nutrients in the farming system are limiting production, inorganic fertilizer is a technology that can be used at all scales of agricultural production—from the small vegetable plot to large plantations—to enhance production. As such, fertilizer is seen as one of a handful of agricultural technologies that have immense potential for raising the productivity of poor smallholders, enabling them to increase income, accumulate assets, and set themselves economically on a pathway out of poverty. However, poor farmers face important cash constraints within a context of limited credit availability. The poorest generally are unable to save sufficient cash from one cropping season to the next to enable them to purchase fertilizer. During the past 50 years, overcoming these constraints on access by smallholders to fertilizer has received considerable attention by policy researchers and governments through a range of interventions. The study reported on here is in line with these efforts: The focus is on identifying where the policies of the government of Tanzania on fertilizer importation and marketing increase the farm gate cost that smallholder farmers pay for fertilizer and, thereby, inhibit their profitable use of the input. The policies of interest include any duties, taxes, fees, or other charges that are levied on the fertilizer importation and marketing chain actors, costs that they will then pass on to the end user—the smallholder farmer. However, in addition to these direct additional costs, this study considers where government has not sufficiently invested in public goods to facilitate the access of farmers to fertilizer. These inadequate or missing public goods might include insufficient and costly transport infrastructure, poor quality or missing information related to fertilizer—whether in fertilizer markets or for farmers seeking to maximize the efficiency with which they use the costly input on crops on their farm to derive maximum profits, or deficient institutions involved in promoting fertilizer use or regulating fertilizer trade. The economics of fertilizer use by many Tanzanian smallholder farmers can be challenging. In 2008, only 9 percent of farmers in Tanzania regularly used the input on their crops (National Bureau of Statistics [NBS] et al. 2010), although this level can be expected to have gone up in recent years with the agricultural input subsidy program in place since then. This rather low prevalence of fertilizer use by smallholders is evidence that farmers find it difficult to access the correct inorganic fertilizers for their particular crops at a price that will allow them to obtain sufficient and reliable returns from their investment in the input. There are several reasons for this. • The input is costly, being a bulky commodity produced overseas and shipped inland from Dar es Salaam principally by expensive road transport. • Information for farmers about how they can make most efficient and profitable use of fertilizer is limited. Although there is a better understanding of yield response patterns to the application of inorganic fertilizer for the major crops grown in Tanzania than in many of its neighboring countries, what knowledge exists is not communicated in a manner that can be understood easily by farmers or by agricultural extension staff. 2 • Inadequate or costly credit markets and significant household cash constraints present added barriers to fertilizer use by smallholder farmers. The deficiencies in Tanzanian credit markets also make it difficult for fertilizer suppliers and traders to efficiently supply fertilizer at low cost. • On the crop output side, there are substantial risks to fertilizer use. Farmers may not obtain the returns in crop yields or revenues from crop sales necessary to pay for the fertilizer used. − Rainfed, low-input agriculture is inherently risky. Although the important cropping areas of Tanzania, particularly in the Southern Highlands, have high potential productivity with infrequent crop failure, variability in seasonal rainfall is an added source of risk in the use of fertilizer. − Output markets are volatile. For staple foods in Tanzania, cycles of crop surpluses and deficits commonly follow crop price booms and busts, respectively. Government policies about crop marketing have proven to be inconsistent in recent years, with farmers sometimes prevented by government directive from exporting the staple foods that they produce. Uncertain crop prices make it difficult for farmers using fertilizer to be confident that they will obtain a sufficient return from the sale of the additional harvest that they obtain from the use of fertilizer to pay for the input. Many of the staple food crops grown in Tanzania are not extensively traded regionally. In consequence, local crop production conditions affecting supply principally determine the prices that farmers receive for these less widely traded crops. • Finally, although many rural areas of Tanzania are densely populated, the country as a whole still has uncultivated arable land, even if it may not be of high production potential—about 40 percent of the total land area is put to agricultural use (World Bank 2011). It generally will be less costly for farmers in Tanzania to open new land to cultivation to produce more crops than to invest in yield-enhancing technologies, such as fertilizer, on existing land. In those areas of Tanzania, particularly in the high potential zones in the Southern Highlands, around the northern mountains, and in northwestern Tanzania, where uncultivated arable land generally is not available to bring into production, the output prices for crops that are traded in local markets nonetheless will be determined in part due to the integration of crop markets across Tanzania, by the lower costs of production in the land-surplus areas.1 The lower output prices for staple food crops that result render profitable use of fertilizer on such crops by all smallholders in Tanzania more difficult to achieve. The government of Tanzania has adopted a quite consistent interventionist approach to the use of fertilizer by smallholder farmers. From the late 1960s to the early 1990s, the government held a monopoly on fertilizer importation and marketing. During the period of its monopoly, the government regularly provided significant subsidies on fertilizer using various mechanisms. However, in the face of high fiscal costs and inefficiencies, in 1994, the government liberalized agricultural input markets. With the liberalized market, no subsidies were offered for several years. Starting in the early 2000s, however, subsidies on transport of fertilizer were provided to dealers. Then in 2008 a more ambitious subsidy scheme at the farmer level, the National Agricultural Input Voucher Scheme (NAIVS), was introduced for maize and rice production and continues, covering about half of the districts of the country, primarily in high agricultural potential areas. A total of 1.5 million farmers in 2009/10 and 2 million in 2010/11 were to benefit from NAIVS, out of an estimated 2.5 million eligible farmers nationally. It is within this challenging economic context of fertilizer use by smallholder farmers and the strong intervention by the government of Tanzania in fertilizer supply that this study is situated. Its focus is on private-sector procurement of fertilizer for wholesale or retail trade and how smallholder farmers then access that fertilizer offered by traders. 1 This relationship will not apply to internationally traded cash crops as their prices are determined in the international market and not in Tanzanian or regional markets. 3 Problem Statement and Design and Organization of Study The policies of the government of Tanzania on fertilizer importation and marketing, including any subsidies that they offer farmers, can either promote or inhibit the profitable use of fertilizer by smallholder farmers. Where policies are shown to increase the farm gate price for fertilizer, a close assessment should be made of the social value of such policies. This paper presents the results of a broad study in Tanzania of fertilizer supply to smallholder farmers to assess whether the taxes (explicit or implicit) that are applied at various points along the fertilizer importation and marketing chain or the absence of key public goods and services inhibits the efficiency with which those chains operate and reduces the access that smallholder farmers have to inorganic fertilizer. The evidence offered by this study is to support efforts by the Tanzanian government to streamline its engagement in fertilizer importation and marketing chains to improve the profitability of fertilizer use by smallholder farmers. The overall objective of the study is to investigate supply-side constraints for fertilizer use by smallholder famers in Tanzania in which the government is implicated. However, this objective is met in an indirect manner by taking a broader look at how fertilizer is supplied to smallholder farmers and how they do or do not make use of it. So although the objective is to determine which policy changes might reduce fertilizer costs for farmers, the identification of these policy changes is done through a broad assessment of how the input is supplied. Inefficiencies in activities related to supply and information deficiencies will be identified, as will regulations on fertilizer supply that are poorly designed for accomplishing their intent. The principal data collection activities in this study were as follows: • First, quite an extensive review of the literature on fertilizer supply, demand, and use in Tanzania was undertaken. • About 20 interviews were conducted with key participants in fertilizer importation and marketing in Tanzania, primarily in Dar es Salaam. • Finally, two surveys were conducted in three farming areas of Tanzania where more fertilizer is used by smallholders than is the norm for the country as a whole—the Hai district in the western Kilimanjaro region, the Iringa rural district in the Iringa region, and the Songea rural district in the Ruvuma region. Maize is the principal crop receiving fertilizer in all three study areas. (See Figure 1.1 for a map of the locations of the study areas.) − A total of 31 traders based in market centers in the study areas were interviewed using a questionnaire containing about 210 questions. Both large- and small-scale traders were interviewed. − A questionnaire of about 230 questions was administered to a sample of 193 smallholder farmers in the farming areas of the study, primarily fertilizer users, which focused on their cropping practices and, for users, how they acquired and made use of fertilizer. The presentation in this paper draws on these data sources in a somewhat sequential fashion. The following section provides an overview of fertilizer use in Tanzania drawing from the literature review, interviews, and available data. Following this overview, the information collected through the interviews of key participants in the fertilizer importation, distribution, and marketing chain in Tanzania is used to more closely describe how fertilizer is brought into the country and made available to farmers. The results from the trader survey are then discussed in some detail, followed by a similar discussion of the results of the farmer survey. The final section reviews some of the key policy and market issues emerging from the study. 4 Figure 1.1—Study areas for trader and farmer surveys in Tanzania Source: Authors’ surveys. Finally, it should be highlighted that considerable fertilizer is used in Tanzania by large-scale agricultural plantations or through the contract farming systems that some of these large-scale agricultural firms manage—tea, sugar cane, sisal, and tobacco, most notably. These firms generally import their fertilizer stocks directly or through tenders let to fertilizer importers and do not participate greatly in the fertilizer distribution and marketing chains serving smallholder farmers. However, this study does not consider this important component of fertilizer use in Tanzania, focusing rather on the supply of fertilizer to smallholder farmers. 5 2. OVERVIEW OF FERTILIZER SUPPLY AND USE IN TANZANIA In this section of the paper, we review the amount of fertilizer available annually in Tanzania and consider the costs that farmers face in obtaining fertilizer based on the buildup of costs in delivering fertilizer to the up-country fertilizer retailers from international suppliers. Finally, since NAIVS is presently the dominant source of demand for fertilizer in Tanzania, we provide a brief overview of the scheme. Fertilizer Quantities Except for Minjingu Rock Phosphate (MRP), currently all of the inorganic fertilizer used in the country is imported. The annual total fertilizer imports into Tanzania as recorded by the Tanzania Revenue Authority between 2006 and 2010 are graphed in Figure 2.1.2 This chart disaggregates imports of fertilizer by broad type less re-exports to other countries in the region. There has been considerable volatility in the amount of fertilizer imported into Tanzania during the past 20 years. Much of this volatility is due to the putting in place and withdrawal of subsidy programs. For example, total imports of nutrients during the period from 1992 to 2000 varied between 20,000 and 42,000 metric tons (mt). However, without any fertilizer subsidy in place, in 2001 and 2002, imports fell to about 10,000 mt. Imports rebounded and increased significantly to 160,000 in 2004 with the introduction of a new subsidy program (Chemonics International and International Center for Soil Fertility and Agricultural Development [IFDC] 2007). The increase in 2008 in fertilizer imports shown in Figure 2.1 corresponds with the introduction of NAIVS. Figure 2.1—Total annual fertilizer imports for Tanzania, 2006–2010 Source: Tanzania Revenue Authority import-export database. Note: mt = metric tons; NPK = Nitrogen Phosphorous Potassium; DAP = Diammonium Phosphate. 2 Figure 2.1 shows fertilizer imports on the basis of fertilizer product quantities, not nutrient quantities. Based on the mix of fertilizers reported in the trader survey, the average total N, P2O5, and K2O nutrient content of fertilizers imported to Tanzania is about 45 percent. On this basis, imports of nutrients recently have amounted to about 120,000 nutrient tons annually. The data used in Figure 2.1 were obtained from James J. Mbunda and his team at the Modernisation & Quality Assurance Unit of the Customs and Excise Department, Tanzania Revenue Authority, in Dar es Salaam. We are grateful for their assistance. 0 50,000 100,000 150,000 200,000 250,000 300,000 2006 2007 2008 2009 2010 An nu al fe rt ili ze r i m po rt s, m t Re-exports (all types) NPK blends Potassium products Phosphorus (including DAP) Nitrogen products 6 Nitrogen fertilizers make up the bulk of imports—61 percent of all fertilizers imported during this period. Of the specific types of fertilizer imported, urea constitutes the largest portion—during the period from 2006 to 2010, 35 percent of all fertilizer imported and 58 percent of all nitrogenous fertilizers were urea. Nitrogen Phosphorous Potassium (NPK) blends make up the second most common type of fertilizer imported, with 21 percent of fertilizer imports. Diammonium Phosphate (DAP) is the principal phosphate fertilizer, accounting for almost 90 percent of all such fertilizers and 8.5 percent of all fertilizer imports. Very little potassium fertilizer is imported into Tanzania. Briefly considering the fertilizer produced in Tanzania, MRP is produced by the Minjingu Fertilizer Company from its mine just east of Lake Manyara in northern Tanzania.3 The phosphate deposit at Minjingu has a P2O5 content of between 22 and 25 percent, with reserves estimated at more than 9 million metric tons (van Straaten 2002). The fertilizer company beneficiates the phosphate ore mechanically to a P2O5 content of between 28 and 30 percent and granulates the product. In agronomic response, MRP has been shown to be comparable to Triple Superphosphate, particularly on relatively acid soils, and is considered to be among the highest-quality rock phosphates exploited in Africa. However, the agronomic response is not observed immediately—often the major crop response is obtained in the season following application. Consequently, farmer demand for MRP is lower than might be desired— this in spite of the cost per unit of P2O5 being 35 percent less for MRP than for the principal phosphate fertilizer used in Tanzania, DAP. In consequence, although the processing factory has an installed annual production capacity of 100,000 metric tons, in an interview for this study the general manager of the firm reported that current use is only 20 percent of capacity. In part to address the problem of lower demand for the straight MRP product due to the delayed response farmers see, the company installed blending machinery to produce an MRP blend with urea, Minjingu mazao. The additional nitrogen promotes an agronomic response that is comparable to that seen with the principal basal fertilizer used by farmers, DAP. Minjingu mazao has a nutrient content of about 10:25:0 or about half the nutrient content of DAP (18:46:0) per unit of product—two bags of Minjingu mazao are needed to substitute for one of DAP. For application rates of fertilizer, the average of 250,000 mt of fertilizer used in recent years in Tanzania corresponds to national per-hectare (ha) application levels of about 7 kg per hectare (kg/ha) for agricultural land and 25.5 kg/ha on arable land.4 Relative to other countries in the region, these application rates are in the middle of the range—less than Kenya and Malawi but considerably more than Uganda and Mozambique. The preliminary report for the National Sample Census of Agriculture 2007/08 reports that only 7.2 percent of smallholder cropped area in the long rains of 2008 received inorganic fertilizer and 9.2 percent of smallholders who planted annual crops in the same season applied any inorganic fertilizer (NBS et al. 2010). The regions in which the greatest proportion of annual cropland received fertilizer in that season were Kilimanjaro, Ruvuma (Songea), Iringa, and Mbeya, with between 23.6 and 28.2 of annual cropland in these regions receiving fertilizer. Although this prevalence of fertilizer use will certainly have increased in recent years with the implementation of NAIVS since the last agricultural census, levels of use are still relatively low among smallholders, particularly in low 3 Nitrogen fertilizers could potentially be produced in Tanzania. Proven natural gas reserves of 6.5 billion cubic meters are found near offshore the Indian Ocean coast of southern Tanzania. Although these are now being exploited for electricity generation, they also could form the basis for nitrogen fertilizer production. The principal requirement for the production of nitrogenous fertilizer is energy since the nitrogen is freely obtained from the atmosphere. However, the Haber-Bosch process used for nitrogen fertilizer production is a high-pressure and high-temperature process that is characterized by significant economies of scale. A nitrogen fertilizer production complex requires a start-up investment of more than $500 million. To be profitable, minimum production levels from such factories are 1,500 mt per day, far exceeding Tanzania’s national demand today (Gregory and Bumb 2006). Although technically Tanzania could be a producer of nitrogen fertilizer, it is likely that current demand both nationally and regionally is insufficient for profitable returns to be obtained from such an investment. However, with expansion of demand nationally and regionally, in time sufficient scales of production might be obtained for profitable operation. As such, the economics of the use of Tanzania’s natural gas for nitrogen fertilizer production should be regularly assessed. 4 Agricultural land is defined as land that is arable, under permanent crops, or under permanent pasture. Arable land is land under temporary crops (double-cropped areas are counted once), temporary meadows for mowing or for pasture, land under market or kitchen gardens, and land temporarily fallow (World Bank 2011). 7 potential farming systems where maize is not dominant and subsistence production is the principal objective for farmers. In spite of increasing uptake of inorganic fertilizer during the past 10 to 20 years and recent acceleration of this uptake with the NAIVS program, fertilizer use by smallholder farmers in Tanzania remains more the exception than the rule. Components of the Price for Fertilizer in Tanzania As primarily an imported commodity from international suppliers, global commodity and transport prices are the principal determinants of the price that fertilizer users in Tanzania pay for the input. A study in 2006 of fertilizer supply in Tanzania estimated the average delivered cost of fertilizer to several up- country regional trading centers to be US$ 419 per mt (see Figure 2.2) (Chemonics International and IFDC 2007). Of this price, the free-on-board (FOB) commodity price at the source accounted for 65 percent of the total price, whereas transport from the shipping port to Dar es Salaam and on to the trading centers accounted for 22 percent. The margins obtained by the importers and traders were an estimated 6.1 percent of the cost, somewhat higher than what importers in Uganda obtained, for example. Nonetheless, a relatively competitive market situation is in place in Tanzania. Figure 2.2—Components of the average price of fertilizer delivered to several up-country centers in Tanzania, 2006, in US dollars per mt Source: Chemonics International and IFDC (2007). As one of the motivations for our study of fertilizer supply in Tanzania was to assess the taxes levied on fertilizer importers and traders, it is important to note the low level of direct taxes in accounting for the costs of fertilizer: Direct taxes and levies were estimated in the Chemonics International and IFDC (2007) study to account for only 0.5 percent of the delivered cost of fertilizer up-country. Globally fertilizer prices have been quite volatile during the period from 2007 to 2011 and significantly higher than the 2006 prices shown in Figure 2.2. Table 2.1 compares average international export prices to local Tanzania retail prices (average of prices from retailers in several market centers) for the period from August 2010 to July 2011. Although the export and local Tanzania retail prices are somewhat higher than seen in 2006, the proportion of the Tanzania retail price made up by the international export cost is similar to the 65 percent seen in the 2006 study. The exception to this is Ammonium Sulphate, which, as a lower analysis fertilizer, is significantly cheaper on the international market than urea and DAP on a product weight basis (but not on an NPK nutrient weight basis). $- $50 $100 $150 $200 $250 $300 $350 $400 $450 Product Transport Finance Overheads Margins Taxes 8 Table 2.1—Fertilizer prices, comparison of Tanzania retail price to FOB price from international suppliers, in US dollars per mt: Average August 2010–July 2011 Local Retail Price Inter-national Export Price Export Price Component of Local Price (%) Export Source Urea (46:0:0) 592 381 64.3 Arab Gulf Ammonium Sulphate (21:0:0 + 24S) 424 190 44.7 Black Sea Diammonium Phosphate (18:46:0) 872 573 65.8 Baltic Source: http://www.amitsa.org. Notes: mt = metric tons; FOB = free-on-board. Although the focus of the research from which this paper was developed is on assessing whether there are taxes or missing public goods and services that account for some of the high price of fertilizers in Tanzania, it is clear that these elements of the price are relatively small. Tanzania is a price taker for fertilizer from international markets, so it can do little about that element of the landed cost of fertilizer in the country. However, there is more scope for action related to transport, in particular. This includes both improving port operations in Dar es Salaam, where virtually all fertilizer imported to Tanzania is off- loaded, and improving domestic transport infrastructure to reduce the costs of distribution after the fertilizer comes into the Dar es Salaam port. Smaller gains can be achieved through improving access to finance by importers, reducing the overhead charges that dealers incur and removing any indirect taxes and fees levied on fertilizer importers and dealers that work against the objectives of improving agricultural productivity and the profitability of farming for Tanzanian smallholders. National Agricultural Input Voucher Scheme As was highlighted in the introduction, the government of Tanzania has invested considerable resources since the early 1970s to promote the use of fertilizer by smallholder farmers. The justification for these investments was and continues to be to achieve both national agricultural development and food security objectives. Government established a parastatal corporation, the Tanzania Fertilizer Company, to manage fertilizer procurement, distribution, and after building a fertilizer factory in Tanga (now defunct), production. The government, working with the Tanzania Fertilizer Company and government-managed crop-marketing institutions, implemented various fertilizer provision schemes through which fertilizer was provided to farmers at sharply subsidized prices. Consumption levels nationally increased from about 10,000 mt annually in the late 1960s to 30,000 mt in the late 1970s to 45,000 mt in the late 1980s (FAO 2011). However, these efforts were costly and generally implemented inefficiently. As part of broader efforts to reduce the scope of government in the economy and promote private- sector investment, the Tanzanian government withdrew from its monopoly position and liberalized input markets. Several private firms quickly entered the market, importing stocks from international fertilizer manufacturers and selling from their wholesale depots in Dar es Salaam or through their own up-country depots. Some developed their own retail networks. Several of these early entrants remain important importers and wholesalers of fertilizer. Notably, the Tanzania Fertilizer Company, still government owned, has stayed in business in this competitive market environment. However, in spite of the relative success of the liberalization of fertilizer markets in Tanzania, there appears to have been a falling off in fertilizer consumption through the 1990s, although the data are not consistent. Following the opening of input markets to the private sector, the government did not strongly intervene in fertilizer supply for several years. Starting in 2003, the government developed a program to offer subsidies to input suppliers on the transport costs that they faced, plus some subsidy on part of the fertilizer (Msolla and Masagasi 2010). As this was done to ensure that the prices farmers faced for their fertilizer were reduced, price enforcement mechanisms were established for the subsidized fertilizer. The transport subsidy program ran through 2007 but generally was found to be inefficient, with many farmers http://www.amitsa.org/ 9 not having access to the subsidized fertilizer; many dealers not having sufficient financial resources to acquire an inventory of subsidized fertilizer or, if they had fertilizer, possessing little information to guide farmers on how to make profitable and productive use of the subsidized fertilizer they offered; and delays and other bureaucratic bottlenecks occurring (World Bank 2009). In 2007/08, a pilot of a more ambitious subsidy scheme that provided the subsidy directly to farmers in the form of vouchers for use in obtaining fertilizer and improved seed, the National Agricultural Input Voucher Scheme (NAIVS) was successfully conducted. The scaled-up program was launched in the 2008/09 long rains (first season) with about 750,000 farmers in 53 districts in high agricultural potential areas of the Southern Highlands (districts in the Iringa, Mbeya, Rukwa, Ruvuma, and Morogoro regions), the Northern Highlands (Arusha, Manyara, and Kilimanjaro), and a few districts in the Tabora and Kigoma regions (World Bank 2009). The program was designed to cover 65 districts and 2.5 million farmers in these high potential areas during a six-year time horizon. In implementation, NAIVS expanded to 74 districts in 2009/10 (World Bank 2010a) and 87 districts in 2010/11. Farmers in the project areas can receive vouchers for up to three years, after which they are expected to have generated sufficient additional productivity from their use of the fertilizer and improved seed to finance future input purchases themselves. The peak years for the program as designed should have been 2009/10, when greater than 2 million farmers were to have received vouchers, and 2010/11, with 1.8 million beneficiaries. The current program is to wind up in 2013/14. Farmers are selected for the voucher scheme by a Village Voucher Committee using a set of criteria that include, among others, the recipient’s being a full-time farmer with a maize- or rice-cropping area of less than one hectare and the ability to manage the cofinancing required to obtain the subsidized inputs. Given the still significant cash outlay required from beneficiaries, in essence the program is targeting middle-income smallholders. Selected farmers are provided with vouchers covering half of the cost of inputs sufficient for application to 0.4 ha (one acre) of maize or rice that they redeem with local private input dealers (Msolla and Masagasi 2010). The vouchers enable farmers to acquire at a 50 percent subsidy either one 50-kg bag of DAP or two 50-kg bags of the Minjingu mazao blend of MRP for a basal dressing, one 50-kg bag of urea for top-dressing, and either 10 kg of improved maize seed (open pollinated variety or hybrid) or 16 kg of rice seed. Farmers take the vouchers to local input dealers to acquire the inputs. The input dealers then take the redeemed vouchers for reimbursement to a branch of the National Microfinance Bank, which was contracted to manage voucher redemptions. NAIVS also seeks to strengthen agricultural input dealers in the program areas as well as the input market in Tanzania more generally. Only dealers who have received business training, technical instruction on proper input marketing and use, and training on crop output marketing through the Tanzania Agro-dealer Strengthening Program, implemented by the Tanzania Agricultural Market Development Trust (TAGMARK) and its international affiliate, the Citizens Network for Foreign Affairs (CNFA), were authorized to accept vouchers and submit them for reimbursement (World Bank 2010a). Overall, 3,000 dealers were to receive training in the NAIVS program areas during the course of the program. A certificate of having received such training was also required for agricultural input dealers to obtain loans from commercial lenders to build sufficient fertilizer and seed inventory to respond to demand from NAIVS voucher holders (World Bank 2009). At the importation and wholesale level, the government, through the NAIVS secretariat, the Agricultural Inputs Section of the Crop Development Department of the Ministry of Agriculture, Food Security, and Cooperatives, informed the key importers of fertilizer into Tanzania of the expected demand at the district level for fertilizer under the NAIVS program for the following season so that importers would obtain the stocks required and position them accordingly in a timely fashion. The government of Tanzania has itself not engaged in any procurement or distribution of fertilizer under the NAIVS program. For the added fertilizer demand created by the NAIVS program, at the maximum of 2 million farmer beneficiaries in a program year, 100,000 mt of urea and some combination of up to 100,000 mt of DAP or up to 200,000 mt of the Minjingu mazao MRP blend is required by the program. Although these voucher sales will displace some sales that would have taken place in the absence of the program, nonetheless the fertilizer used in Tanzania has increased substantially under the program. The increase in 10 net fertilizer imports of about 100,000 mt annually between 2007 and 2009 shown in Figure 2.1 can be attributed principally to NAIVS. NAIVS represents a major investment on the part of the government of Tanzania and its development partners, particularly the World Bank. Total annual costs of the project are estimated at US$100 million. For the three years from 2009/10 to 2011/12, 53 percent of the cost of the project is to be covered by a credit from the World Bank, with the balance coming from the government of Tanzania directly (World Bank 2009). In the course of this study, several concerns with NAIVS implementation were highlighted: • Retailers who present for reimbursement to the local National Microfinance Bank branch the vouchers that they have received frequently face delays of several weeks. This slows the entire fertilizer wholesaling system, as wholesalers are unwilling to provide retailers with additional stock until any credit is paid on fertilizer provided previously. • There is some concern about a parallel market having developed for vouchers. For many farmers, the subsidy is not large enough, so they are unable to make up the cash balance for the fertilizer. The farmers may seek to sell their vouchers to those who can obtain reimbursement for them. Although the parallel market will benefit these poor farmers economically, it will not contribute to sustainably increasing agricultural productivity in the country, which is the objective of NAIVS. However, objective evidence of the scale of any such parallel market for vouchers is not available. • Although farmer selection for NAIVS is seen as quite transparent, some observers mentioned the possibility of political interference in the selection of stockists who could receive the vouchers. • Finally, some reports were received of delays in program rollout resulting in delays in fertilizers’ being in place in program areas until after the proper application period at planting. 11 3. SUPPLY—FERTILIZER IMPORTATION AND MARKETING IN TANZANIA In this section, three elements of fertilizer supply in Tanzania are considered. The first is the legislation that governs importation and trade of inorganic fertilizers in the country. It is these laws that justify the regulatory framework that the Ministry of Agriculture, Food Security, and Cooperatives is putting in place and under which fertilizer importers and traders operate. The second element considered is the operations of fertilizer importers. This information is principally derived from a series of qualitative interviews conducted with fertilizer importers and others who oversee or are affected by their operations. The final element of this section is a brief discussion of the general pattern of fertilizer retailers across Tanzania. This final subsection is relatively brief since considerably more detail on fertilizer traders is provided in the following section where the results are presented of the fertilizer trader survey conducted for this study. Legislation The Fertilizers Act of 2009 was enacted to regulate the importation, distribution, storage, and marketing of fertilizer in Tanzania. The broad thrust of the act is to ensure that the fertilizers that farmers in Tanzania obtain for use are of the quality advertised. Although the act applies to all fertilizers, in its details it focuses on industrially produced fertilizers, which are primarily inorganic. The act was reported to have been jointly developed by the Ministry of Agriculture and the private sector dealing in fertilizer, and it had a particular focus, according to informants from the ministry, on ensuring continuing monitoring of the quality of fertilizer offered for sale in the country after it had cleared the port of importation. The principal officer at the Ministry of Agriculture concerned with drafting the act stated in an interview that more specifically, it was developed to respond to complaints received from farmers about poor quality fertilizers’ being sold. The 2009 act replaces the much more succinct but broad Fertilizers and Animal Foodstuffs Act of 1962. Box 3.1 discusses the key characteristics of the 2009 Act. The 2009 act establishes a framework for a comprehensive set of regulations to govern how fertilizers are to be made available to Tanzanian farmers. These regulations are to be developed by the Ministry of Agriculture to define how the act is to be implemented in practice. Although draft regulations have been developed, they still have not been approved by the Minister of Agriculture. In consequence, many of the details of the regulatory regime are not yet in place—notably, the establishment of the Tanzania Fertilizer Regulatory Authority (TFRA). The principal elements of the 2009 act are that all fertilizers manufactured, imported, or sold in Tanzania must be registered, packed, and labeled in accordance with the act. All dealers in fertilizers must be registered, with a minimum level of knowledge concerning the management and use of the products in which they deal. Finally, all premises used for activities related to fertilizers also must be registered. Importation of fertilizers into Tanzania, as well as exports of fertilizer from the country, requires a permit. Such permits will be given only to registered fertilizer dealers who seek to trade in registered products. Agricultural inspectors are to be put in place to enforce these regulations to ensure that the quality of the fertilizer is as stated on the label and that this quality is maintained along the marketing chain. TFRA is to be responsible for the implementation of the act and the regulations that are to be developed. In the absence of the new regulations, the principal office responsible for overseeing the implementation of laws and regulations governing fertilizer quality and fertilizer commerce is the Agricultural Inputs Section of the Crop Development Department of the Ministry of Agriculture, Food Security, and Cooperatives. However, section staff noted in interviews that their principal function for regulation of the fertilizer industry is to monitor the availability, distribution, and use of fertilizer in the country. To do so, they regularly check with the principal importers and wholesalers of fertilizer to determine their stock balances and importation plans. The Agricultural Inputs Section also issues import permits for nitrate fertilizers.5 Other fertilizers do not require import permits under existing regulations. Quality monitoring is not a key aspect of section staff’s work under the current pre-TFRA arrangement. 5 This permitting process is to certify that the nitrate product being imported is specifically for agricultural purposes. 12 Rather the quality of fertilizer is established at the port on importation by the Tanzania Bureau of Standards (TBS). No provision is made for further quality checks as the fertilizer moves through the marketing chain to the farmer. Box 3.1—The Fertilizers Act of 2009: Key elements • “An Act to make provisions for regulation of manufacturing, importation, exportation, sale and utilization of agricultural fertilizers.” • By the 2009 act, the Fertilizers and Animal Foodstuffs Act of 1962 was repealed. The contents of the two laws are quite different, however. The earlier act makes little distinction between fertilizers and components of animal feed and puts in place principally a truth-in-labeling set of legislation to regulate their commercialization. o The earlier act does not cater to the many administration and licensing elements related to fertilizer distribution that are provided for in the 2009 act. o The 1962 act contains several schedules stipulating the standards expected for all fertilizers (and animal foodstuffs) imported, manufactured, or sold in Tanzania. These standards are not part of the 2009 act but shall be specified in regulations that the minister responsible for agriculture will make on the advice of the Tanzania Fertilizer Regulatory Authority (TFRA) or its board (section 51.[2][i] and 51.[2][r]). • Fertilizer is defined as “any substance or mixture of substances, containing one or more of nitrogen, phosphorus, potassium or other elements represented for use as a source of plant nutrients.” • The act establishes TFRA as the regulatory body in the fertilizer industry. Its functions are to include the following: o Regulate all matters relating to fertilizer quality. Inspect fertilizer for quality assurance.  Fertilizer inspectors and analysts will be appointed by the minister to serve under the direction of the TFRA director. An inspector is permitted to enter and examine any premises or vehicles where he or she has reason to believe fertilizer activities are being undertaken, collect and have tested samples of any fertilizer obtained through inspections, collect documentation of fertilizer activities, and issue ”stop sale” notices if he or she believes the provisions of the act are being violated. o Regulate and control the importation, production, transportation, sale, storage, and disposal of fertilizer. o Register and license all fertilizer dealers and their premises.  Fertilizer is not permitted to be manufactured, stored, or sold in Tanzania except by registered and licensed dealers working from registered premises. o Issue permits for importing and exporting fertilizer. o Maintain a register of approved fertilizers.  All fertilizer imported and sold in Tanzania must be registered, packed, and labeled as prescribed by the act or the regulations established under the act.  Its quality must correspond to the composition and efficacy stated in the registration of the product. o Regulate fertilizer prices based on directives that shall be set out in appropriate regulations. • The act establishes a board for TFRA that will do the following: o Advise the minister responsible for agriculture on all matters relating to fertilizer, including legislation. o Provide recommendations to the minister about the types of fertilizers to be used in the country. o Establish a technical committee of a number of competent persons on fertilizer matters. o Through a schedule to the act, establish the composition of the TFRA board. It includes representatives from research institutions, the private sector, farmers, and the government, including a representative from the Tanzania Bureau of Standards. • Financial provisions for TFRA are established and include “any moneys raised by way of fee or charges imposed under the provisions of this Act.” • “The Minister shall … make regulations for the better carrying into effect of the provisions of this Act.” o It is these regulations that shall specify the details of the fertilizer regulatory regime for Tanzania—registration qualification requirements and procedures; proper practices for fertilizer management, packaging, and labeling; fertilizer quality standards and testing procedures; and minimum qualifications and specific duties of inspectors and analysts, among others. • The act was enacted by Parliament and approved by the President of Tanzania. Source: Summarized from The Fertilizers Act of 2009 by authors. 13 Establishment of TFRA will considerably scale up oversight on the fertilizer sector in Tanzania. In addition to a national office for the authority, the head of the Agricultural Inputs Section of the Ministry of Agriculture stated that two part-time inspectors will be trained from the staff of the District Councils in each of the more than 125 districts in Tanzania. These inspectors will randomly sample fertilizer sold in the district, submitting it for laboratory analysis, and investigate any local complaints related to fertilizer quality. TFRA, working with its district-level inspectors, will manage the registers for fertilizers, for dealers and manufacturers, and for premises, and will be responsible for issuing any permits for trade in fertilizer. In reviewing the legislation on fertilizer, at least three issues of a policy nature arise. These are the evidence base on which the new legislation was developed, a role for TBS in regulating and enforcing fertilizer quality and safety, and finally, costs related to the bureaucracy to be put in place that provide only limited public benefits. First, there is no nationally representative, objective evidence about the degree to which adulterated fertilizers are sold in Tanzania. No rigorous assessment has been done of the prevalence of poor-quality fertilizer in the Tanzanian market. Fertilizer is a bulky, relatively low-value-to-weight product, so it is not a first-choice product for agricultural input traders to adulterate—adulteration of pesticides and seeds would, on the face of it, be more lucrative for criminal traders. Yet anecdotal reports of a high level of adulterated fertilizer were reported by respondents in the study to be the principal basis for the design of the enhanced regulatory regime on fertilizer to be put in place. As such, the basis for the Fertilizers Act of 2009 consists of unsubstantiated farmer complaints about the nonperformance of the fertilizer that they obtained. In assessing the significance of such complaints, there is no way to separate out farmers’ misuse of the fertilizer due to their possessing insufficient information about proper use or about the likely response pattern they should expect (for MRP, in particular) from poor-quality and possibly adulterated fertilizer. The impetus for the formulation of the 2009 act is, first, anecdote and, second, a conceptual expectation that such laws are needed for the state to have instruments to regulate commerce when needed. This second motivation has some merit if the act can simply be in place, only lightly enforced, but with the more stringent aspects of it available to be called into use with egregious quality problems with fertilizer in the future. However, for the act to be implemented in a proactive manner would seem to be against the interests of fertilizer traders and farmers. Doing so would raise the cost of fertilizer either through regulation-related fees, including fees for the administrative overhead of TFRA; through the costs for traders to comply with the regulations; or by opening the door to corrupt practices as traders seek alternatives to following the regulations in the act. These costs ultimately will come out of the pockets of farmers while also resulting in some reduction in the number of farmers using fertilizer in Tanzania. Moreover, it is important to recognize that a vibrant and competitive agricultural input market will be somewhat self-regulating of the quality of products marketed. Firms, whether wholesalers or retailers, that sell adulterated or otherwise poorly performing fertilizer are unlikely to retain their customer base in subsequent farming seasons. If the act will restrict the levels of competition by placing relatively high hurdles for firms to enter or remain in the fertilizer business in Tanzania, then the chance of adulterated product’s being sold is likely to increase. Second, the fertilizer legislation gives just a small role to TBS, the statutory agency responsible for enforcing standards in Tanzania for public health and safety and for guarding against trade in dangerous, counterfeit, and substandard products. The bureau has established standards for about a dozen of the globally produced high-analysis fertilizers. These standards cover their physical and chemical characteristics, packaging, and required labeling (World Bank 2010b). However, the primary activity of TBS about fertilizer to date has been to establish the quality of fertilizer at the port upon importation. Although no quality checks by TBS are made further along the fertilizer distribution and marketing chain, in an interview with TBS, it was noted that it has the legal basis, the statutory responsibility, and the ability to respond to complaints or do spot checks to assess fertilizer quality between the Dar es Salaam port and the farmer’s field. TBS has market surveillance inspectors up-country who could take on this role. 14 Although convincing arguments can be made that experts in agriculture should be involved in the assessment and regulatory control of pesticides and new, nonstandardized fertilizers, this is not so for the standardized high-analysis fertilizers that have low risk to human health and security, such as those commonly used in Tanzania. TBS inspectors and laboratory analysts can be expected to be able to readily assess the quality of these fertilizers. Placing the quality assurance of high-analysis fertilizers within the responsibility of TBS, rather than the Ministry of Agriculture, would permit a much broader set of distribution and marketing channels to be used for the sale of fertilizer. However, a key complementary action to such a change in the regulatory framework would be to significantly increase the information made available to consumers about proper use of fertilizer. In sum, the Ministry of Agriculture should retain a regulatory role in the importation, sale, and use of agricultural chemicals where there is a need for specialized knowledge in ensuring public safety. However, where no such need exists, as for standard, high-analysis inorganic fertilizers, this role should devolve to the statutory agency concerned with enforcing product standards, TBS. Finally, there are potentially significant indirect costs associated with following the regulations for the importation and marketing of fertilizer. The trader must be registered as a fertilizer dealer, which requires meeting a set of minimum qualifications. The importer must be assured that the fertilizers that he or she will be importing are registered for use in Tanzania. These regulations impose costs in time and money for the fertilizer manufacturers, importers, and traders—costs that they will recover by selling the fertilizer at a price sufficient to cover the cost of the fertilizer, plus all regulatory costs. The benefits in public health and security from imposing these sorts of regulatory costs on the importation and sale of a standardized global product such as high-analysis inorganic fertilizers are quite small. Strong consideration should be paid to streamlining this process, if not doing away with it all together, so that farmers derive the benefits of lower prices—benefits that likely exceed the value of any benefits from close regulation of fertilizer importation and marketing in Tanzania. To summarize this discussion of the legislation, Tanzania is developing a system of control on the importation, marketing, and use of inorganic fertilizers—although the regulations are certainly better developed in their design than in their implementation due to resource constraints. However, particularly for high-analysis fertilizers that are standardized global commodities, the regulatory system as designed is excessive—both in the direct and indirect costs associated with following the regulations and in the benefits for public health, security, and welfare, which the regulations are to promote. Selective, judicious, and restrained application of existing policies and new regulations on fertilizer is needed to reduce the regulatory burden faced by importers and dealers of fertilizer in Tanzania. Importers and Wholesalers As noted, the government of Tanzania held a monopoly on the importation and marketing of fertilizer from the late 1960s until 1994. State agencies were responsible for assessing demand, placing international orders, distributing the fertilizer obtained, and handling any subsidy or other incentive programs related to fertilizer. In addition, the government, in partnership with an international firm, built in the early 1970s and thereafter operated until the early 1990s a fertilizer factory in Tanga that made use of imported materials plus phosphate inputs from the Minjingu deposit in northern Tanzania to produce and blend fertilizer for both smallholder farmers and specialized large-scale commercial agricultural producers. This government-run system of fertilizer provision was characterized generally by inefficiencies, delays in provision of product, and high fiscal costs. As part of a broader program of structural adjustment of the public-sector role in the national economy, in 1994 the government of Tanzania opened the fertilizer market to the private sector. Several firms based in Dar es Salaam immediately entered into the market as fertilizer importers and wholesalers, most having retail outlets up-country. Several of these remain active today, including Premium Agro-chem; Export Trading Group; Shival Tank & Company, Ltd.; DRTC; and Mohammed Enterprises. Also, the Tanzania Fertilizer Company, the government parastatal fertilizer corporation, remains in business, still wholly owned by government. In the late 1990s the international fertilizer 15 manufacturer Yara (originally Norsk Hydro) established operations in Dar es Salaam. Also, a Kenya- based fertilizer firm, Mea Ltd., has established business in the country, although at the time of the study its engagement seemed to be in a lull. The degree to which these firms specialize in fertilizer varies. Export Trading Group, DRTC, and Mohammed Enterprises are diversified agricultural businesses for which fertilizer is a small part of a broader conglomeration of agricultural production, output marketing, and transport activities. In contrast, Premium, Shival Tank, Yara, Mea, and Tanzania Fertilizer Company specialize in fertilizer. These importers and wholesalers have formed an association, the Fertilizer Society of Tanzania. Currently there are 10 member firms. The primary function of the society is to provide a platform for jointly discussing issues related to fertilizer in Tanzania to have a common stance for further discussion with government to lead to a policy resolution. This includes advising the Ministry of Agriculture on the design and implementation of the NAIVS input voucher program. Importing Although most of these firms have engaged in some importing of fertilizer in the past, in 2010/11 only Yara, Premium, and Export Trading were consistently importing fertilizer. The principal constraint that most of the firms face is import financing. With volatile international prices and local, usually weather- related shocks to production levels and hence demand for fertilizer, importing fertilizer is a risky business.6 Yara, as an international firm, and Export Trading, as a large regional agribusiness, are able to finance their fertilizer imports through internal resources or by accessing international commercial finance, including some special development financing mechanisms. Not having the broad corporate resources of the other two importers, the financing for Premium Agro-chem’s imports is obtained primarily from self-financing or local commercial sources. The other wholesalers obtain their stocks from these three principal importers, with one or two of the other firms occasionally importing a shipment. Yara estimates that it currently supplies about 40 percent of the fertilizer used in Tanzania, importing 120,000 mt for the Tanzania market in 2010. Premium reported importing 110,000 mt of fertilizer in 2010, and Export Trading reported supplying 90,000 mt.7 Importers obtain fertilizer for Tanzania from most large international producers of nitrogen, phosphate, and blended NPK fertilizers—western Europe, the Persian Gulf, Russia, and North America, among others. Importers reported that they generally organize their imports on the basis of a nine-month lead time. Thus, if fertilizer needs to be in farmers’ hands in southern Tanzania by early December, orders will be placed with international suppliers in February. Virtually all of the fertilizer imported into Tanzania comes into the country through the port of Dar es Salaam. Because it is a choke point in the supply of fertilizer for the country, several studies have been done on the flow of fertilizer through the port and how port operations and the costs associated with them could be rationalized (Marine Logistics 2007, 2008). Most of these studies have been done for the Agricultural Council of Tanzania, the apex organization representing the interests of all private-sector actors engaged in agricultural production and agriculture-related businesses. The general message is that 6 The Tanzania Fertilizer Company (TFC) provides an example of the riskiness of the fertilizer business in Tanzania. The government, in response to the sharp rise in global phosphate prices in 2008 and fearful of a reduction in food production due to reduced fertilizer use, instructed TFC, as a government-owned parastatal, both to purchase 24,000 mt of Minjingu Rock Phosphate product and to import Diammonium Phosphate (DAP) from the international market. However, international prices for phosphate fertilizers fell shortly thereafter, and TFC’s competitors brought in DAP sourced at a much lower cost. TFC had to sell its imported DAP at a loss. Moreover, as farmers prefer DAP as their source of phosphate, by early 2011 TFC had sold only 8,000 mt of its 2008 Minjingu Rock Phosphate stock. The government of Tanzania provided a guarantee for these purchases. The servicing by government of this credit is putting at considerable risk the continuing commercial viability and, indeed, the continued existence of TFC. TFC has not imported fertilizer since 2008, obtaining stocks since then from Premium and Yara. 7 Note that the total quantity reported imported in 2010 by these three firms, 320,000 mt, exceeds the total amount of fertilizer reported by the Tanzania Revenue Authority as imported into the country that year, 274,000 mt. Tanzania Revenue Authority figures are used in Figure 2.1. It is unclear what the source of this inconsistency is. 16 fertilizer-related operations in the port of Dar es Salaam can be made more efficient and less costly, with considerable investment and some restructuring of how port operations are done. Among the technical constraints affecting the flow of fertilizer through the port that these studies note are the following: • Economies of scale are difficult to achieve with the fertilizer volumes brought into Dar es Salaam. This is due primarily to financing constraints, but the diverse range of fertilizers demanded in the Tanzania market also results in many smaller or mixed lots of fertilizer being obtained by importers rather than large, single-product shipments. Average fertilizer orders from international suppliers are about 10,000 mt and so only make up part of the cargo in ships that are considerably larger. Moreover, shippers will charge higher costs on cargo delivered in part because they are not assured of collecting export cargo from Dar es Salaam, given the relatively low level of exports from Tanzania. • There are insufficient berths for off-loading fertilizer in the port, so waiting times for ships to off-load can be quite significant. Importers pay shippers demurrage charges for every day that a ship is kept waiting outside the port, generally amounting to between US$1.00 and US$2.00 per mt per day on the typical fertilizer shipment size. Moreover, port regulations are that fertilizer receives lower priority for off-loading than do grain shipments. • Most of the fertilizer imported is delivered in bulk rather than in bags or containers. This means lower delivered costs. However, the port does not have optimized bulk cargo off- loading machinery, and the fertilizer is bagged on the dockside, with bagging operations run by the Tanzania Ports Authority. Although major fertilizer ports elsewhere are able to unload more than 10,000 mt per day, in 2007 the average unloading rate for the fertilizer brought into the Dar es Salaam port was 1,560 mt per day. • No conveyer belt systems are used to move the fertilizer—all movements are done by lorries at shipside and out of the port gates, with attendant congestion and delays. During the past several years, there has been considerable planning and some investment to improve the handling of bulk fertilizer shipments at the port of Dar es Salaam. This has included two separate initiatives to develop fertilizer handling facilities just outside of the port—one by the private freight handling company Dar es Salaam Corridor Group and the other by the international fertilizer company Yara. The plans for the Dar es Salaam Corridor Group facility are to off-load both fertilizer and other dry bulk cargos, move them out of the port area (initially by truck, with plans for a conveyer belt system to be installed later), and bag them at their off-port facility as a commercial venture available to all importers on a fee basis. The Yara facility will be more restricted to fertilizer, with Yara’s own logistical needs taking priority. Yara’s aim is to be able to discharge its bulk shipments at a rate of 6,000 to 7,000 mt per day. If realized, these facilities should significantly improve the technical efficiency with which fertilizer is off-loaded, bagged, and sent up-country. Importers informed us that the costs of clearing fertilizer from shipboard over the docks and out the gates of the port at Dar es Salaam amount to about US$40 per mt. These costs are not wholly rationalized and are reported to be changed quite frequently. However, no one expressed the opinion that the costs at Dar es Salaam were necessarily inconsistent with charges incurred when importing through other ports in southern and eastern Africa. The following fees were noted: • The Tanzania Ports Authority (TPA) charges a wharfage fee of 1.6 percent of the CIF (Carriage-Insurance-Freight) value of the shipment, plus a $4.00 per mt charge on bulk shipments or a $79.00 charge per container (a container will contain 25 mt of bulk or 22 to 24 mt of bagged fertilizer). • The TBS fee is 0.2 percent of the FOB value of the shipment. TBS is to take a sample of all fertilizer import shipments for testing of pre-import product quality and thereafter issue a certificate of inspection. This testing is somewhat redundant, as pre-shipment inspections of the product are generally done, and documentation of these inspections accompanies the 17 shipment. Moreover, TBS stated that it will not generally test products from regular international suppliers that have supplied good-quality product recently. In addition, the TBS laboratories are unable to test fertilizer quality in a timely and accurate manner. Although generally no delays in shipment off-loading occur while the sample is being tested, TBS does have the right to impose a delay. • TPA charges US$12.50 per mt for bagging by its own crews of the fertilizer into bags supplied by the importer. • The radiation-scanning fee is 0.4 percent of the FOB value of the shipment. No importer saw any value in this fee as no significant levels of radiation have been found in any shipment of fertilizer. Rather the fee seems to be in place as a revenue stream for the Tanzania Atomic Energy Commission. • Since early 2011 all containers coming through the port of Dar es Salaam are required to be scanned for smuggling control. If the product is containerized (not too common for fertilizer), this costs the importer $90 per container, plus a handling fee of $69 to move the container to the scanner and back to the container yard. As there is only one scanner, this operation has exacerbated congestion in the port. • The Surface and Marine Transport Regulatory Authority (SUMATRA) recently took over from the Tanzania Central Freight Bureau the role of regulating the charges that port-related service providers, such as clearing agents and TPA itself, offer to importers and exporters. SUMATRA also levies its own fee as the regulatory body for port activity costs. Fees for import shipments are based on the port of loading of the shipment—US$0.25 per mt for African, western European, and Persian Gulf ports and US$0.30 per mt for other ports. Most of these fees are applied to the shipping invoice that the importer pays rather than invoiced separately. As such, there is little scope for challenging them. Tanzania imposes no import duty on inorganic fertilizer. This zero rating is in common with the other countries of the East African Community as noted under chapter 31 of the East African Community Common External Tariff. Similarly, no value-added tax is charged on sales of fertilizer. However, a 20 percent value-added tax is levied on most of the port-related fees and charges for services detailed above as well as on the transport of the product from the port and up-country. Overall, the business of fertilizer importation in Tanzania is competitive. However, there is considerable risk of monopolistic conditions’ emerging in fertilizer supply to Tanzania. During the interviews for this study, several of Yara’s competitors expressed concern that Yara could soon assert a monopoly position for fertilizer supply to the country. In addition to being part of an international corporation with considerable assets and financial resources, Yara also was seen by some to be receiving preferential treatment by the government of Tanzania. The company intends to invest US$20 million in a product-handling facility just outside of the port of Dar es Salaam that will reduce port congestion by moving fertilizer-bagging operations out of the port. Yara received considerable assistance from the government in obtaining a long-term lease on land for this facility—land that its competitors said the government would never have assisted them to obtain if they had proposed similar plans. Moreover, to a greater degree than its competitors, Yara is also active in international development initiatives in Tanzania that should enable it to grow its business substantially.8 Yara does not have its own distribution network up-country—its business model in Tanzania is solely importation, with some attention to product development for the national market—the Chapa Meli brand of fertilizers. In an interview, the Yara manager stated that the firm intends to supply the Tanzania 8 Of particular note, Yara is one of the lead private enterprises championing the ambitious Southern Agricultural Growth Corridor of Tanzania initiative. The initiative seeks to promote agricultural growth clusters in the high-potential Southern Highlands of Tanzania through public-sector investments in transport, communication, and energy services, catalytic funding from Tanzania’s development partners, and private direct investment, primarily by international agribusinesses, including Yara (see http://www.africacorridors.com/sagcot/). http://www.africacorridors.com/sagcot/ 18 market from Dar es Salaam with both high-analysis fertilizers (which wholesalers may market under their own labels) and its blended branded fertilizers. As such, it does not compete at the wholesale level up- country. However, if the firm is successful in the coming years in its efforts to further dominate the supply of fertilizer into Tanzania, and if Export Trading and Premium Agro-chem decide in consequence to no longer import fertilizers for the smallholder farming sector, all of the wholesalers serving such farmers will be dependent on Yara for their supplies.9 With noncompetitive fertilizer importation, prices for fertilizer in Tanzania are likely to be higher than they otherwise would be. Wholesaling Most of the 10 members of the Fertilizer Society of Tanzania primarily engage in the wholesale distribution of fertilizer up-country as their core business—Yara being the principal exception to this business model. Many of the firms, including those that claim to specialize in fertilizer, will integrate their fertilizer marketing with agricultural output trade: Those firms with lorries will ship fertilizer up- country and bring back agricultural commodities. Most of the firms have wholesale depots in the principal farming areas of the country—primarily in the Southern Highlands, but some also have depots elsewhere, notably Kilimanjaro. Fertilizer will be stocked in these depots for sale to retailers before planting. However, after harvest, the depots will then be used for bulking of stocks of commodities for shipment to Dar es Salaam and elsewhere. Although the depots will be used for retail sales direct to farmers, a common pattern is for wholesalers to promote and maintain networks of private retail dealers from the farming area served by each of their depots. The firm would have established a good commercial working relationship with these dealers, so it would offer fertilizer to them on credit terms—generally expecting full payment within 30 or 90 days of delivery, depending on the firm involved and the strength of the relationship with the retailer. For example, Premium Agro-chem reported that it has four depots in the Southern Highlands, each with 50 to 100 stockists to whom it regularly supplies fertilizer. This model is seen with several of the other wholesalers. Transport costs up-country are high but competitive. Not all of the fertilizer wholesalers have their own transport fleets as there is considerable competition in the road transport sector in Tanzania. In general transport of fertilizer from Dar es Salaam to the main wholesale centers in the Southern Highlands will cost US$30 to US$50 per mt. A closer assessment of transport costs done in 2007 estimated truck transport costs at US$0.117 per mt per kilometer (km), whereas rail transport costs about half that at around US$0.050 per mt per km (Marine Logistics 2007). However, the inflexibility in place of delivery and the opportunity costs associated with delays in the operations of the rail networks in Tanzania are such that most fertilizer is delivered by road. Traders The number of retailers of fertilizer in Tanzania is not known exactly. In the course of the study, estimates were given of 3,000 retailers, but no census has been done. As such, the relative scale of operations and the diversity of inputs that these retailers provide are unclear. Moreover, respondents highlighted that the distribution of retailers across the country is patchy, with large numbers in districts with high agricultural potential where there are likely to be clear positive returns to the use of commercial agricultural inputs. In contrast, in some districts in the drier regions of central and coastal Tanzania and in the more remote areas of western Tanzania, no input retailers may be present. One of the more significant developments in private-sector fertilizer supply in Tanzania in the past several years has been the strengthening of TAGMARK with the support of CNFA, a United States– 9 Of the two other fertilizer importers, Export Trading Group, as a diversified agricultural business, would be less likely to battle to maintain its share of the fertilizer import market in Tanzania. If it finds it cannot compete with Yara, it can suspend its fertilizer trading in Tanzania and focus on the other elements of its business while perhaps maintaining its fertilizer operations in other countries where it does such business, such as in southern Africa, importing through ports in Mozambique. The stakes are considerably higher for Premium Agro-chem for which fertilizer supply in Tanzania is its core business. 19 based nongovernmental organization (NGO) with financial support from the Alliance for a Green Revolution in Africa and the World Bank. CNFA/TAGMARK brings together agro-input dealers for policy advocacy, market development, training, and networking purposes. A major element of the work of the program is in the training of agrodealers and in assisting them in gaining access to inventory credit. Training is offered on business management, product knowledge, output marketing, and corporate governance. CNFA’s Tanzania Agrodealer Strengthening Program reports that more than 2,600 agrodealers have been certified under the CNFA/TAGMARK training scheme implemented under the program. As was noted, under the NAIVS voucher program only agrodealers who have certification of training from CNFA/TAGMARK were to be permitted to offer inputs to voucher recipients. However, the commercial sustainability of these input dealers is not assured. A point made quite consistently in the interviews and in the literature reviews done for this study was the relatively limited knowledge that exists about the economics of fertilizer use in Tanzania. Although good yield responses in maize, in particular, are seen to nitrogen application and somewhat more erratically to phosphate, little economic research has been done to explore whether fertilizer use under smallholder crop management and marketing conditions makes economic sense for farmers. Agronomic studies have resulted in detailed fertilizer recommendations’ being formulated by district (Samki and Harrop 1984) and by agroecological zone within districts (Mowo et al. 1993). However, the economics underlying these recommendations are uncertain, calling into question how these recommendations should be used under different price ratios between fertilizer and the crops being fertilized. General fertilizer use patterns by smallholders seem simply to be to follow in a rote manner what they learned earlier—essentially, to comply with local fertilizer use traditions. In part to address this information constraint, under the same credit that the World Bank is providing for the NAIVS program, a program of strategic soil characterization and soil fertility management research is to be done that includes verification of existing fertilizer recommendations and improvement of the capacity of district agricultural extension staff to advise farmers on appropriate and profitable soil fertility management practices (World Bank 2009). A strong element in the work of CNFA/TAGMARK and that of the Tanzania Agricultural Partnership program of the Agricultural Council of Tanzania has been establishing with agricultural input dealers demonstration plots for farmers on fertilizer use. Several of the fertilizer wholesalers have provided the inputs to establish these demonstrations. The dealer-run demonstration generally will constitute a well-managed “mother” trial from which data can be collected and analyzed, with farmers in the surrounding farming area establishing “baby” trials under on-farm conditions to assess the response to fertilizer in the crop and to undertake a semi-quantitative economic analysis of different rates of application. Tanzania Agricultural Partnership district-level programs are reported to undertake some basic gross margins analysis from the results of these trials and then work with extension officers to assist farmers with undertaking similar economic analyses of their use of fertilizer. However, no systematic assessment seems to have been developed from these analyses. Moreover, the foundation for a strong agricultural input market in Tanzania, as elsewhere, is in strong output markets for the fertilized crops. However, the agricultural output markets in Tanzania are not yet sufficiently well developed to sustain a wholly commercial fertilizer market without state intervention. In spite of liberalization of economic activities in the agricultural sector, the government of Tanzania still intervenes regularly in the operations of food crop markets in particular. Whenever Tanzania faces a possible threat to national food security due to poor rains or the like, the government generally will close its borders to food crop exports. This was done in 2011 at the same time that the NAIVS program was absorbing significant public resources to raise production levels. The suppression of output prices that can be expected to have resulted from closing the borders to food crop trade likely rendered fertilizer use on food crops such as maize and rice insufficiently profitable in some farming areas to induce farmers to use fertilizer on a wholly commercial basis. There is a recurring policy inconsistency in Tanzanian agriculture that arises when the government tries to promote fertilizer use through massive investments at the same time as it is harming the long-term sustainability of crop output markets with sudden policy shifts in how those output markets are to operate. Moreover, with one outcome of these policy shifts being a retreat from commercial production by many smallholders and hence the use of commercial inputs such as fertilizer, the sustainability of the growing network of rural agricultural input traders in Tanzania is uncertain. 20 4. SURVEY OF TRADERS SUPPLYING FERTILIZERS One of the principal ways in which information about fertilizer marketing in Tanzania was obtained was through semistructured interviews with key individuals involved in fertilizer trade, in both the private and the public sectors. However, a more formal survey of fertilizer traders was also undertaken to obtain a broader and more generalized understanding of their operations. In this section of the paper, we provide some findings from this survey. Survey Design Using the results of the National Sample Census of Agriculture 2002/03 (NBS et al. 2006), three areas of the country with greater prevalence of fertilizer use by smallholder farmers on their crop plots were identified (see Figure 1.1): 1. Hai district on the western slopes of Mount Kilimanjaro 2. Iringa rural district near Iringa town 3. Songea rural district near Songea town in the Ruvuma region These three study areas were used as the strata for both the trader and the farmer survey for this study. Farmers were interviewed in two to four wards in each of the three districts chosen for the study. Traders were interviewed in commercial centers in or near the study areas from which farmers in the area obtained their commercial inputs. These commercial centers included Moshi, the closest major town to Hai district; Iringa; and Songea; as well as smaller trading centers in the study districts.10 The survey protocol was for 15 to 20 traders to be randomly selected from a listing of agrodealers who market fertilizer in each of the study areas that was provided from a database of agrodealers that had been compiled by CNFA/TAGMARK. However, a somewhat lower number of traders—between 9 and 12—were interviewed in each area, for a total of 31 traders interviewed.11 A standardized questionnaire, only slightly modified from that used in the parallel study in Uganda, was used to interview the selected traders. This questionnaire was organized in modules on the personal characteristics of the trader, business characteristics, fertilizer inventory, fertilizer supply and supply costs, taxes and fees related to the trader’s fertilizer business, fertilizer sales, and fertilizer business issues. The trader survey was conducted in late February and early March 2011 concurrently with the farmer survey. In the presentation of results in the tables below, the sample is disaggregated by scale of operation based on the size of the largest order of fertilizer that the trader reported obtaining from a supplier in 2010. Considerable variability was observed in the scale of operations of the fertilizer traders in the study sample. As shown in Table 4.1, if a trader reported that his or her largest order was less than 1,000 50-kg bags, the trader was classified as small scale. Although some traders sold only a handful of bags in 2010, several of the traders are large local wholesalers, selling lots of up to several hundred bags at a time. All traders in the survey sample in Songea were considered small scale by this definition, whereas close to half of those in Hai were considered large scale. 10 Samuel Mugarura managed the entry and cleaning of both the farmer and the trader survey data. Patrick Lubega and Stephen Bayite-Kasule of the IFPRI Kampala office did additional cleaning and conducted an initial analysis of these two data sets. We are grateful for this assistance. 11 Given the small sample size and that the strata where the interviewed traders are located were purposively selected based on higher prevalence of fertilizer use in the area, the results from the trader survey should not be treated as representative. Consequently, only unweighted survey results are presented. 21 Table 4.1—Fertilizer trader scale of operations; size of largest order from supplier in 2010 Size of largest order in 2010, 50-kg bags of fertilizer Small-scale traders, (largest order < 1000 bags), % n Study Area Mean Median Minimum Maximum Hai 3,088 550 10 20,000 58.3 12 Iringa 865 400 50 5,000 80.0 10 Songea 428 400 150 600 0.0 9 All 1,599 500 10 20,000 77.4 31 Source: Tanzania fertilizer trader survey. Fertilizer Trader Characteristics Table 4.2 provides descriptive statistics about the fertilizer traders in the sample for the survey, disaggregated by scale of operation. At 29.0 percent, more of the fertilizer traders are women than might be expected. The level of education attained by the traders is relatively good, with all those in the sample having completed primary school. The majority of large-scale traders completed secondary school. Large- scale traders generally have longer experience in the fertilizer trade. Table 4.2—Fertilizer trader characteristics Small-scale Large-scale All Age, mean (years) 44.0 47.7 44.8 Female (%) 33.3 14.3 29.0 Completed primary school (%) 100.0 100.0 100.0 Completed secondary (%) 20.8 57.1 29.0 Fertilizer trading experience, mean (years) 8.1 15.7 9.8 n 52 18 70 Source: Tanzania fertilizer trader survey. Table 4.3 provides descriptive statistics about the characteristics of the fertilizer businesses of the traders in the sample for the survey, disaggregated by scale of operation. The median annual sales of fertilizer by traders in the sample are 3,500 bags or 175 metric tons. Most of the small-scale traders are the sole owners of their businesses, whereas large-scale traders are more likely to have partners in the ownership of their businesses. The traders in the sample generally have more than one premise from which they trade. The start-up capital for most traders came from their own personal savings. Five traders in the sample reported using commercial loans to finance the start-up of their businesses, all of them small-scale traders. Both small- and large-scale businesses trading in fertilizer have assets beyond their business premises and storage. Almost half of the small-scale traders have pickup trucks, and almost one-third have lorries for transport of goods. All of the large-scale traders have pickups, and most have trucks. 22 Table 4.3—Fertilizer trader business characteristics Small- scale Large- scale All Annual quantity of fertilizer sold, mean, 50-kg bags 5,159 26,640 10,170 Median, 50-kg bags 3,000 20,000 3,500 Sole owner (%) 95.8 57.1 87.1 Personal savings as principal source of start- up capital (%) 50.0 85.7 58.1 Assets More than one trading premises (%) 61.1 80.0 65.2 Owns computer (%) 12.5 57.1 22.6 Owns pickup truck (%) 41.7 100.0 54.8 Owns truck of > 3 mt capacity (%) 29.2 57.1 35.5 Has warehouse or other specialized storage space (%) 95.8 100.0 96.8 Capacity of storage space for those with storage, mean, 50-kg bags 2,250 27,930 8,240 Median, 50-kg bags 1,000 6,000 1500 Composition of value of annual sales Fertilizer (% of total annual sales) 45.5 52.9 47.2 Seeds or other planting materials 17.7 16.4 17.4 Pesticides or other agrochemicals 14.5 9.4 13.3 Farming implements 1.7 3.7 2.2 Veterinary supplies 6.5 3.3 5.7 Agricultural services (not goods) 0.4 0.0 0.3 Nonagricultural items or services 11.8 10.0 11.4 Source: Tanzania fertilizer trader survey. The composition of the business sales of the traders surveyed is specialized on agriculture—few of those in the sample sold many nonagricultural items. However, most fertilizer traders are not specialized in trading in fertilizer alone. Although—as should be expected given that the sample was chosen based on fertilizer trade—the largest component of their sales on average comes from fertilizer, both pesticides and seeds are important elements of their business. Only four of the traders in the sample reported obtaining 70 percent or more of their total sales from fertilizer alone. Types and Sources of Fertilizer Sold Information about the various types of fertilizers and the quantities of those fertilizers that dealers sell is provided in Table 4.4. Urea is reported by the traders in the sample to be the most commonly sold fertilizer, followed by DAP. CAN, Ammonium Sulphate, and Minjingu Rock Phosphate are also commonly sold, if not in the quantities of urea and DAP. The principal crop on which all these fertilizers are used is maize. DAP and Minjingu are used as a basal dressing applied shortly after crop emergence and urea and the other nitrogen fertilizers as a top-dressing applied three to six weeks later when the maize plants are about knee-high, before the maize flowers. In addition to the seven fertilizer types considered in Table 4.4, four traders reported selling Triple Superphosphate (0:45:0) and one the 25:5:5 blend. Potassium fertilizers were not reported sold by any of the traders in the sample, nor did the traders report selling agricultural lime for soil amendment purposes. 23 Table 4.4—Fertilizer sales, by type Urea (46:0:0) Diammonium Phosphate (DAP – 18:46:0) Small- scale Large- scale All Small- scale Large- scale All Percentage who sell 100.0 100.0 100.0 91.7 100.0 93.5 Annual sales of those who sold, mean, 50-kg bags 2,320 14,040 4,970 820 860 830 Median, 50-kg bags 1,550 3,000 2,000 200 600 300 Price, TShs per 50-kg bag, median 42,000 42,000 42,000 64,000 63,000 64,000 Traders who accepted subsidy vouchers in 2010 (%) 87.5 100.0 90.0 81.0 100.0 85.2 Voucher sales in 2010 for those who accepted, mean, 50-kg bags 1,280 2,080 1,460 485 735 550 Used principally on Maize, rice, vegetables Maize, vegetables Calcium Ammonium Nitrate (CAN – 26:0:0) 17:17:17 Percentage who sell 87.5 85.7 87.1 29.2 0.0 22.6 Annual sales of those who sold, mean, 50-kg bags 960 280 810 130 nil 130 Median, 50-kg bags 150 200 200 50 nil 50 Price, TShs per 50-kg bag, median 39,000 38,500 39,000 48,000 — 48,000 Used principally on Maize, vegetables Maize, vegetables 20:10:10 Ammonium Sulphate (21:0:0+24S) Percentage who sell 45.8 57.1 48.4 81.0 66.7 77.8 Annual sales of those who sold, mean, 50-kg bags 210 295 235 1,060 2,860 1,420 Median, 50-kg bags 56 275 56 125 2625 200 Price, TShs per 50-kg bag, median 50,000 48,000 50,000 35,000 34,000 35,000 Used principally on Maize, vegetables Maize, vegetables Minjingu Rock Phosphate (0:28:0) Percentage who sell 91.7 100 93.5 Annual sales of those who sold, 600 755 640 Median, 50-kg bags 400 650 400 Price, TShs per 50-kg bag, median 64,000 63,000 64,000 Traders who accepted subsidy vouchers in 2010 (%) 87.5 100 90.5 Voucher sales in 2010 for those who accepted, mean, 50-kg bags) 535 255 460 Used principally on Maize Source: Tanzania fertilizer trader survey. Notes: US$1.00 = Tanzania shillings (TShs) 1,500/- at time of survey. Nutrient analysis of fertilizer is in percentage of N:P2O5:K2O by weight.. 24 The survey included questions about how the dealers obtained their supplies of fertilizer. • The traders surveyed use more than one supplier—26 percent reported using only one supplier (25 percent of small-scale traders and 29 percent of large-scale traders), whereas 48 percent use three or more (46 percent of small-scale and half of large-scale traders). • Small-scale traders tend to obtain several small orders from their suppliers during a season rather than single large orders—the median number of fertilizer orders in 2010 that small- scale traders reported obtaining from their principal suppliers was 3.5. However, for large- scale traders, a single order was the median number of orders such traders reported receiving from their principal suppli