Fertilizer pricing and marketing reform program (615-0243) : mid-term evaluation

Evaluation covers the period 1986-12/91. The program has succeeded in achieving its purpose. Importers and distributors now use pricing policies which reflect the cost of fertilizer to them, including a profit margin which is driven primarily by competitive forces. There is a wider retail distribution network in place: retailers are earning higher margins, which has provided an incentive for them to set up in new areas and in competition with existing retailers. In addition, fertilizer traders are beginning to develop new sources of competitive advantage in strategic activities such as marketing, sales, and service activities. This stronger market network has increased the potential for increased smallholder fertilizer use. The terms of reference for this evaluation study did not require direct estimation of the actual changes in smallholder fertilizer use. However, over the duration of the program, total fertilizer consumption in Kenya fell from 272,000 tons in 1988/89 to 228,000 tons in 1990/91, a decline of 16%. It is likely that fertilizer use by smallholders over the period would have declined by more than 16%. The decline can be explained mainly by factors other than lack of fertilizer availability. These factors include low official producer prices for scheduled crops and delays in payments to farmers, low international prices for tea and coffee exports, and a general lack of seasonal credit for smallholders. However, there are still a few areas of concern related to the development of the fertilizer marketing network. These include continued and increasing reliance on donor imports in preference to direct commercial imports, and general lack of investment in physical distribution capacity by importers and distributors. The major covenants specified in the program have been complied with in all material respects. USAID appears to have complied in most respects with planned implementation procedures. However, some of tasks and activities outlined in the monitoring and evaluation plan have not yet been fully accomplished. The following recommendations are made. (1) The program should be continued, albeit with modifications to reflect new policy reform objectives. (2) The Farm Inputs Branch should be strengthened through further training and the provision of office and logistical support, tasks which could be coordinated with the World Bank"s program. (3) The program should extend and intensify fertilizer use promotion through literature distribution and by increasing the supply of aid fertilizer in smaller packages. (4) The Kenya National Fertilizer Association (KNFA) should establish an independent secretariat that will represent importers and distributors. (5) The program should monitor and evaluate the impact of fertilizer policy changes on fertilizer imports, use, and agriculture in Kenya. (Author abstract)