Fertilizer Use in Malawi: Are Farmers Losing Money or Gaining Ground?

A new World Bank report, "Profitability of Fertilizer Use in SSA: Evidence from Malawi", reveals that fertilizer use in Malawi’s maize production is largely unprofitable under current conditions. Low nitrogen use efficiency (NUE) is a major factor, with farmers needing to increase NUE by up to 137% to make fertilizer profitable. The report calls for better fertilizer application practices, improved storage infrastructure, and more targeted subsidies to boost productivity. The study emphasizes that unless farmers can store maize and sell it during the lean season, they may be better off receiving cash subsidies instead of fertilizer.

In the heart of Sub-Saharan Africa, farmers rely heavily on agriculture to sustain their livelihoods. Yet, the profitability of key agricultural inputs like fertilizer is under scrutiny. A recent report titled "Profitability of Fertilizer Use in SSA: Evidence from Malawi", authored by Francis Addeah Darko, Jacob Ricker-Gilbert, and Talip Kilic and published by the World Bank, sheds light on the challenges and opportunities facing smallholder maize farmers in Malawi. The study explores the effectiveness of inorganic fertilizer use and offers recommendations to improve agricultural productivity in the region.

The Fertilizer Dilemma: Is It Worth the Cost?

Malawi’s smallholder farmers depend on maize, a staple food crop, but they face a critical question: Is the use of inorganic fertilizer profitable? The study reveals a startling truth—at commercial prices, the answer is often no. Fertilizer use, particularly nitrogen, is largely unprofitable for farmers who sell maize at the farm gate or during the lean season when maize prices are low.

The key factor here is nitrogen use efficiency (NUE), which refers to the amount of maize produced per kilogram of nitrogen applied. According to the report, the average NUE is just 11.89 kilograms of maize per kilogram of nitrogen, significantly lower than previous estimates. For fertilizer to be profitable, farmers would need to increase their NUE by 50% to 137%, depending on the market conditions. This low NUE is a major obstacle, and improving it is essential for Malawi’s smallholder farmers to benefit from fertilizer use.

The study finds that, while fertilizer subsidies can help improve profitability, they aren't a silver bullet. Unless farmers can store their maize and sell it during the lean season, when prices are higher, they might be better off receiving the cash equivalent of the subsidy rather than the fertilizer itself. This finding challenges long-standing assumptions about the effectiveness of input subsidy programs in boosting farm incomes.

Government Recommendations vs. Farmer Practices

Interestingly, the government-recommended rates of nitrogen application are significantly more profitable than the actual rates used by most smallholders. The study shows that farmers who follow the recommended rates could see profits increase by as much as 119%. Yet, the majority of smallholders are not applying enough fertilizer to achieve these results.

Why the gap? Many farmers are unable to afford the upfront costs of purchasing fertilizer, even when subsidies are available. Others may lack the technical knowledge to apply fertilizer efficiently. The study suggests that improving access to education and resources could go a long way in closing this gap and boosting productivity.

The issue of fertilizer profitability is further complicated by regional disparities. Southern Malawi, for instance, tends to have higher fertilizer profitability due to lower nitrogen prices and higher maize prices. This suggests that geographic targeting of subsidies and resources could help maximize the effectiveness of fertilizer use in Malawi.

Solutions to Boost Productivity and Profitability

The report offers several key recommendations to improve fertilizer profitability and, ultimately, agricultural productivity in Malawi. First and foremost, it suggests that efforts should focus on increasing NUE. Encouraging farmers to apply basal fertilizer within a week after planting and promoting the use of organic manure could help raise NUE and make fertilizer more profitable.

Another crucial recommendation is to encourage farmers to adopt the government-recommended rates of nitrogen application. Doing so would significantly improve their profitability and help them get the most out of the fertilizer they use.

But perhaps one of the most important insights from the study is the need for better grain storage solutions. Many farmers are forced to sell their maize immediately after harvest when prices are at their lowest, simply because they need cash. By investing in storage infrastructure, farmers could hold onto their maize and sell it during the lean season when prices are higher, making fertilizer use more profitable.

Lastly, the report highlights the importance of reducing input costs by investing in infrastructure, such as roads and transportation. Lowering the cost of fertilizer could make it more accessible and profitable for farmers across Malawi, particularly in regions where profitability is currently low.

A Path Forward for Malawi’s Farmers

The "Profitability of Fertilizer Use in SSA: Evidence from Malawi" report presents a clear case for rethinking how fertilizer is used and subsidized in Malawi. By focusing on increasing nitrogen use efficiency, adopting recommended application rates, promoting maize storage, and reducing input costs, Malawi’s smallholder farmers can improve their productivity and profitability.

Ultimately, this study underscores the need for a more nuanced approach to agricultural policy, one that considers the unique challenges and opportunities faced by farmers in different regions of Malawi. With the right support and strategies, Malawi’s farmers can turn the tide on unprofitable fertilizer use and achieve greater food security and economic stability.