Agricultural input subsidies were commonly used to alleviate poverty in rural areas in the 1960s and 70s. However, these types of subsidies were abolished in the late 1980s as part of structural-adjustment programs implemented by development agencies. As a result, fertilizer use in Africa plummeted significantly. Today, the low use of fertilizer and other inputs has made that agricultural productivity in Africa not kept pace with population growth and has severely affected food security on the continent.
There have been significant efforts to improve farmers’ utilization of fertilizer by granting targeted (smart) subsidies to poor farmers. However, subsidies can have serious unwanted macroeconomic impacts and affect investments in other sectors such as infrastructure, health and education if care is not taken in their design and implementation. This panel discussion will address the importance of fertilizer subsidies in supporting market development and reducing the economic vulnerability of the poor, as well as their potential adverse effect on general economic growth.