Central Bank of Nigeria
Federal Government, Fertilizer Subsidy Scheme, Nigeria
This paper reviews the fertilizer subsidy scheme in Nigeria. Using descriptive statistics and econometric methods, the study shows that farmers' access to fertilizer has improved since the commencement of the subsidy scheme in 1976 and the direct involvement of the Federal Government in the procurement and distribution of the input. This also coincided with the period when remarkable improvements were recorded in the yield of virtually all the major crops, especially staples. The econometric analysis confirms that a positive correlation exists between fertilizer supply/consumption and output, while the level of subsidy on the input influences its consumption (utilization) and tends to be positively correlated with the value of agricultural output (agricultural GDP). This notwithstanding, some key issues militate against the efficacy of the subsidy scheme. Among them are: inadequate and untimely supply of the input to farmers, rising cost of imports and the apparent inability of the Federal and State governments' budgets to sustain these costs and the level of subsidies; high cost and weak base for domestic production and the near absolute lack of private sector initiative in the procurement and distribution of the input. In order to overcome these problems, it is proposed that efforts should be made to rely more on domestic supply and improve the efficiency of the distribution system. While recognizing the need to cut-back on the level of subsidy due to budgetary constraints, it is noted that its out-right elimination may act as a major disincentive to fertilizer utilization by farmers. It is advocated that farmers' access to the input should be improved through the provision of credit.
CBN Economic and Financial Review
Evbuomwan, Grace O. (1991). A Review of the Federal Government Fertilizer Subsidy Scheme in Nigeria. CBN Economic and Financial Review, 29(3), 255-278.